What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-29 compared with 2020-03-20 · 1088 added, 1201 removed, 583 unchanged (80% of the section changed)

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Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2019 and 2018

Consolidated Statements of Operations for the years ended December 31, 2019 and 2018

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019 and 2018

Consolidated Statements of Stockholders’

of Independent Registered Public Accounting Firm

Balance Sheets as of December 31, 2020 and 2019

Statements of Operations for the years ended December 31, 2020 and 2019

Statements of Comprehensive Income for the years ended December 31, 2020 and 2019

Statements of Stockholders’

Equity for the years ended December 31, 2020 and 2019

Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018

Notes to Consolidated Financial Statements

Statements of Cash Flows for the years ended December 31, 2020 and 2019

to Consolidated Financial Statements

Statement Schedules

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(a Delaware corporation) and

subsidiaries (the “Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations,

comprehensive income (loss), stockholders’

equity, and cash flows for the years then ended, and the related notes

(collectively referred to as the “financial statements”).

subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of

operations, comprehensive income, stockholders’

equity, and cash flows for the years then ended, and the related

notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations

and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States

in accounting principle

discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases

as of January 1, 2019, due to the adoption of Accounting Standards Codification Topic 842, Leases.

in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results

of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in

the United States of America.

financial statements are the responsibility of the Company’s management.

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Such procedures included examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements.

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

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We believe that our audits provide a reasonable basis for our opinion.

audit matters

audit matters are matters arising from the current period audit of the financial statements that were communicated or required

to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements

and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit

GRANT THORNTON LLP

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of December 31,

(Amounts in Thousands, Except for Share and Per Share Amounts)

in Thousands, Except for Share and Per Share Amounts)

receivable, net of allowance for doubtful accounts of $404 and $487, respectively

and other assets

assets related to discontinued operations

current assets

Accounts receivable, net of allowance for doubtful accounts of $487 and $105, respectively

Unbilled receivables

Prepaid and other assets

Current assets related to discontinued operations

Total current assets

Property and equipment:

Buildings and land

Leasehold improvements

Office furniture and equipment

and equipment:

furniture and equipment

Construction-in-progress

Total property and equipment

Less accumulated depreciation

Net property and equipment

Property and equipment related to discontinued operations

Operating lease right-of-use assets

Intangibles and other long term assets:

Other intangible assets - net

Finite risk sinking fund (restricted cash)

Other assets related to discontinued operations

property and equipment

accumulated depreciation

property and equipment

and equipment related to discontinued operations

lease right-of-use assets

and other long term assets:

intangible assets - net

risk sinking fund (restricted cash)

assets related to discontinued operations

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

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in Thousands, Except for Share and per Share Amounts)

LIABILITIES AND

STOCKHOLDERS’

Current liabilities:

Accrued expenses

AND STOCKHOLDERS’

Disposal/transportation

Deferred revenue

Accrued closure

costs - current

Current portion

of long-term debt

Current portion

of operating lease liabilities

Current portion

of finance lease liabilities

closure costs - current

portion of long-term debt

portion of operating lease liabilities

portion of finance lease liabilities

liabilities related to discontinued operations

Total current liabilities

Accrued closure

Other long-term

Deferred tax liabilities

Long-term debt,

less current portion

Long-term operating

lease liabilities, less current portion

Long-term finance

lease liabilities, less current portion

current liabilities

closure costs

tax liabilities

debt, less current portion

operating lease liabilities, less current portion

finance lease liabilities, less current portion

long-term liabilities

liabilities related to discontinued operations

long-term liabilities

Total liabilities

Commitments and

Contingencies (Note 14)

and Contingencies (Note 14)

Stockholders’

Preferred Stock,

$.001 par value;

Stock, $.001 par value;

2,000,000 shares authorized, no shares issued and outstanding

Common Stock, $.001

Stock, $.001 par value;

30,000,000 shares authorized;

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12,115,878 shares outstanding, respectively

Additional paid-in

Accumulated deficit

Accumulated other

comprehensive loss

paid-in capital

other comprehensive loss

Common Stock in treasury, at cost;

Total Perma-Fix

Environmental Services, Inc.

Perma-Fix Environmental Services, Inc.

stockholders’

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the years ended December 31,

(Amounts in Thousands, Except for Per Share Amounts)

Cost of goods sold

Selling, general and administrative expenses

Research and development

Loss (gain) on disposal of property and equipment

Income (loss) from operations

Other income (expense):

Interest income

Interest expense

Interest expense-financing fees

Net gain on exchange offer of Series B Preferred Stock of subsidiary (Note 8)

Income (loss) from continuing operations before taxes

Income tax expense (benefit)

Income (loss) from continuing operations, net of taxes

Loss from discontinued operations, net of taxes of $0

Net income (loss)

Net loss attributable to non-controlling interest

Net income (loss) attributable to Perma-Fix

Environmental Services, Inc.

in Thousands, Except for Per Share Amounts)

of goods sold

general and administrative expenses

and development

on disposal of property and equipment

from operations

income (expense):

expense-financing fees

on debt extinguishment of debt

from continuing operations before taxes

tax (benefit) expense

from continuing operations, net of taxes

from discontinued operations, net of taxes of $0

loss attributable to non-controlling interest

income attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Net income (loss) per common share attributable to Perma-Fix Environmental

Services, Inc.

stockholders - basic and diluted:

Continuing operations

Discontinued operations

Net income (loss) per common share

Number of common shares used in computing net income (loss) per share:

income (loss) per common share attributable to Perma-Fix Environmental Services, Inc.

stockholders - basic:

income per common share

income (loss) per common share attributable to Perma-Fix Environmental Services, Inc.

stockholders - diluted:

income per common share

of common shares used in computing net income (loss) per share:

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

ENVIRONMENTAL SERVICES, INC.

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

STATEMENTS OF COMPREHENSIVE INCOME

the years ended December 31,

(Amounts in Thousands)

Net Income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustments

Total other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive loss attributable to non-controlling interest

Comprehensive income (loss) attributable to

Perma-Fix Environmental Services, Inc.

in Thousands)

comprehensive income:

currency translation adjustments

other comprehensive income

Comprehensive

loss attributable to non-controlling interest

Comprehensive

income attributable to Perma-Fix Environmental Services, Inc.

common stockholders

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in Thousands, Except for Share Amounts)

Stock Held In

Other Comprehensive

Non-controlling

Stockholders’

Comprehensive

Stockholders'

at December 31, 2018

of accounting standards

income (loss)

currency translation

of Common Stock upon exercise of options

of Common Stock from exchange offer of Series B Preferred Stock of subsidiary

of Common Stock for services

of Common Stock with debt

of warrant with debt

of Common Stock upon exercise of options

at December 31, 2019

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of Common Stock for services

of Common Stock with debt

of warrant with debt

of Common Stock upon exercise of options

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the years ended December 31,

(Amounts in Thousands)

Cash flows from operating activities:

Net income (loss)

in Thousands)

flows from operating activities:

loss on discontinued operations, net of taxes of $0 (Note 9)

Income (loss) from continuing operations

Adjustments to reconcile net income (loss) from continuing operations to cash provided by operating activities:

Depreciation and amortization

Interest on finance lease with purchase option

Amortization of debt issuance/debt discount costs

Deferred tax expense (benefit)

Provision for bad debt reserves

Loss (gain) on disposal of property and equipment

Gain on exchange offer of Series B Preferred Stock of subsidiary (Note 8)

Issuance of common stock for services

Stock-based compensation

Changes in operating assets and liabilities of continuing operations:

Accounts receivable

Unbilled receivables

Prepaid expenses, inventories and other assets

Accounts payable, accrued expenses and unearned revenue

Cash (used in) provided by continuing operations

Cash used in discontinued operations

Cash (used in) provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from sale of property and equipment

Cash used in investing activities of continuing operations

Cash provided by investing activities of discontinued operations

Cash used in investing activities

Cash flows from financing activities:

Borrowing on revolving credit

Repayments of revolving credit borrowings

Proceeds from issuance of long-term debt

Proceeds from finance leases

Principal repayment of finance lease liabilities

Principal repayments of long term debt

Payment of debt issuance costs

Proceeds from issuance of common stock upon exercise of options

Cash provided by (used in) financing activities of continuing operations

Effect of exchange rate changes on cash

(Decrease) increase in cash and finite risk sinking fund (restricted cash) (Note 2)

Cash and finite risk sinking fund (restricted cash) at beginning of period (Note 2)

Cash and finite risk sinking fund (restricted cash) at end of period (Note 2)

Supplemental disclosure:

Interest paid

Income taxes paid

Non-cash investing and financing activities:

Purchase of equipment through finance lease obligation

Common stock issued in exchange offer of Series B Preferred Stock of subsidiary (Note 8)

Issuance of Common Stock with debt

Issuance of Warrant with debt

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

from continuing operations

to reconcile net income from continuing operations to cash provided by (used in) operating activities:

and amortization

on finance lease with purchase option

on extinguishment of debt

of debt issuance/debt discount costs

tax (benefit) expense

of) provision for bad debt reserves

on disposal of property and equipment

of common stock for services

in operating assets and liabilities of continuing operations:

expenses, inventories and other assets

payable, accrued expenses and unearned revenue

provided by (used in) continuing operations

used in discontinued operations

provided by (used in) operating activities

flows from investing activities:

of property and equipment (net)

from sale of property and equipment

used in investing activities of continuing operations

provided by investing activities of discontinued operations

used in investing activities

flows from financing activities:

on revolving credit

of revolving credit borrowings

from issuance of long-term debt

from finance leases

repayment of finance lease liabilities

repayments of long term debt

of debt issuance costs

from issuance of common stock upon exercise of options

provided by financing activities of continuing operations

of exchange rate changes on cash

(decrease) in cash and finite risk sinking fund (restricted cash) (Note 2)

and finite risk sinking fund (restricted cash) at beginning of period (Note 2)

and finite risk sinking fund (restricted cash) at end of period (Note 2)

investing and financing activities:

purchase subject to finance lease

purchase subject to financing

of Common Stock with debt

of Warrant with debt

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

ENVIRONMENTAL SERVICES, INC.

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low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous

waste treatment, processing and disposal services primarily through three uniquely licensed and permitted treatment and storage

and Development (“R&D”) activities to identify, develop and implement innovative waste processing techniques

for problematic waste streams.

waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage

activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.

2020, we expanded our low-level radioactive waste processing and treatment capability within our Treatment Segment through the

addition of our Oak Ridge Environmental Waste Operations Center (“EWOC”) facility.

The EWOC facility serves primarily

as a multi-disciplinary equipment and component processing center for large component, size/volume reduction, sort/segregation,

waste transload, and system operability testing.

The ultimate objective will be receipt, preparation, packaging, and transportation

of low-level radioactive waste to final disposal facilities (landfills, approved radiological waste repositories).

at the facility have been limited to date as we continue to complete transition of the site.

No revenue was generated at EWOC

SEGMENT, which includes:

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and engineering;

Occupational Safety and Health services including industrial hygiene (“IH”) assessments;

hazardous materials surveys,

e.g., exposure monitoring;

Occupational Safety and Health services including IH assessments;

hazardous materials surveys, e.g., exposure monitoring;

lead and asbestos management/abatement oversight;

indoor air quality evaluations;

health risk and

exposure assessments;

health & safety plan/program development, compliance auditing and training services;

and Occupational

Safety and Health Administration (“OSHA”) citation assistance;

health risk and exposure assessments;

& safety plan/program development, compliance auditing and training services;

and OSHA citation assistance;

technical services providing consulting, engineering, project management, waste management, environmental, and decontamination

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technology-based

services including engineering, decontamination and decommissioning (“D&D”), specialty services and construction,

logistics, transportation, processing and disposal;

services including engineering, D&D, specialty services and construction, logistics, transportation, processing and disposal;

of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites.

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company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental)

health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”) instrumentation.

health physics, IH and customized NEOSH instrumentation.

company owned gamma spectroscopy laboratory for the analysis of oil and gas industry solids and liquids.

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R&D of the Company’s medical isotope production technology by our majority-owned Polish subsidiary,

Perma-Fix Medical S.A.

and its wholly-owned subsidiary Perma-Fix Medical Corporation (“PFM Corporation”) (together

known as “PF Medical”

or the Medical Segment).

The Company’s Medical Segment has not generated any revenue as

it remains in the R&D stage and has substantially reduced its R&D costs and activities due to the need for capital to

fund these activities.

All costs incurred by the Medical Segment are reflected within R&D in the accompanying consolidated

financial statements (see “Financial Position and Liquidity”

below for further discussion of Medical Segment’s

significant curtailment of its R&D costs and activities).

Company’s continuing operations consist of Diversified Scientific Services, Inc.

(“DSSI”), Perma-Fix of Florida,

Perma-Fix Medical (“PF Medical”

or the “Medical Segment”).

The Company’s Medical Segment has not

generated any revenue as it remains in the R&D stage and has substantially reduced its R&D costs and activities due to

the need for capital to fund these activities.

All costs incurred by the Medical Segment are reflected within R&D in the accompanying

consolidated financial statements.

Company’s continuing operations consist of the operations of our subsidiaries/facilities as follow:

Diversified Scientific

Services, Inc.

(“DSSI”), Perma-Fix of Florida, Inc.

(“PFF”), Perma-Fix of Northwest Richland, Inc.

(“PFNWR”), Safety & Ecology Corporation (“SEC”),

Perma-Fix Environmental Services UK Limited (“PF UK Limited”), Perma-Fix of Canada, Inc.

(“PF Canada”),

PF Medical and East Tennessee Materials & Energy Corporation (“M&EC”) (facility closure completed in 2019).

Company’s discontinued operations (see Note 9) consist of all our subsidiaries included in our Industrial Segment which

were divested in 2011 and prior, previously closed locations, and our Perma-Fix of South Georgia, Inc.

(“PFSG”) facility

which is in closure status.

Position and Liquidity

Company’s cash flow requirements during 2019 were primarily financed by our operations, credit facility availability, loan

proceeds of $2,500,000 from a loan that we consummated on April 1, 2019 (see “Note 10 –

Long Term Debt”

further information of this loan), and the receipt of the $5,000,000 in finite risk sinking funds from AIG Specialty Insurance

Company (“AIG”) in July 2019 resulting from the closure of our M&EC facility (see a discussion of this finite

risk sinking funds in “Note 14 –

Commitment and Contingencies - Insurance”).

The Company’s working capital

at December 31, 2019 was approximately $26,000 as compared to a working capital deficit of $6,753,000 at December 31, 2018.

Company’s cash flow requirements for 2020 and into the first quarter of 2021 will consist primarily of general working capital

needs, scheduled principal payments on our debt obligations, remediation projects, and planned capital expenditures.

plans to fund these requirements from our operations, credit facility availability, and cash on hand.

The Company is continually

reviewing operating costs and is committed to further reducing operating costs to bring them in line with revenue levels, when

As previously disclosed, the Company’s Medical Segment has not generated any revenue but continues on a limited

basis to evaluate strategic options to commercialize its medical isotope production technology.

These options require substantial

capital to fund research and development (“R&D”) requirements, in addition to start-up and production costs.

Company’s Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund

such activities.

The Company anticipates that its Medical Segment will not resume full R&D activities until it obtains the

necessary funding through obtaining its own credit facility or additional equity raise or obtaining new partners willing to fund

its R&D activities.

If the Medical Segment is unable to raise the necessary capital, the Medical Segment could be required

to further reduce, delay or eliminate its R&D program.

(“PFNWR”),

Safety & Ecology Corporation (“SEC”), Perma-Fix Environmental Services UK Limited (“PF UK Limited”),

Perma-Fix of Canada, Inc.

(“PF Canada”), PF Medical, East Tennessee Materials & Energy Corporation (“M&EC”)

(facility closure completed in 2019), EWOC and Perma-Fix ERRG, a variable interest entity (“VIE”) for which we are

the primary beneficiary (See “Note 19 - Variable Interest Entities (“VIE”) for a discussion of this VIE).

Company’s discontinued operations (see Note 9) consist of operations of all our subsidiaries included in our Industrial

Segment which encompasses subsidiaries divested in 2011 and prior and three previously closed locations.

OF SIGNIFICANT ACCOUNTING POLICIES

of Consolidation

consolidated financial statements include our accounts, those of our wholly-owned subsidiaries, and our majority-owned Polish

subsidiary, PF Medical, after elimination of all significant intercompany accounts and transactions.

May 24, 2019, the Company and Engineering/Remediation Resources Group, Inc.

(“ERRG”) entered into an unpopulated joint

venture agreement for project work bids within the Company’s Services Segment.

The joint venture is doing business as Perma-Fix

ERRG, a general partnership.

Perma-Fix has a 51% partnership interest in the joint venture and ERRG has a 49% partnership interest

in the joint venture.

At December 31, 2019, no activities have occurred under the Perma-Fix ERRG joint venture.

Once activities

commence under the joint venture, Perma-Fix will consolidate the operations of Perma-Fix ERRG into the Company’s financial statements.

Company prepares financial statements in conformity with accounting standards generally accepted in the United States of America

(“US GAAP”), which may require estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosures of contingent assets and liabilities at the date of the financial statements, as well as, the reported amounts

of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

See Notes 9, 12, 13 and

14 for estimates of discontinued operations and environmental liabilities, closure costs, income taxes and contingencies for details

on significant estimates.

Company’s consolidated financial statements include our accounts, those of our wholly-owned subsidiaries, our majority-owned

Polish subsidiary, Perma-Fix Medical and Perma-Fix ERRG, a VIE for which we are the primary beneficiary as discussed above, after

elimination of all significant intercompany accounts and transactions.

Company prepares financial statements in conformity with accounting standards generally accepted in U.S.

GAAP, which may require

estimates of future cash flows and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent

assets and liabilities at the date of the financial statements, as well as, the reported amounts of revenues and expenses during

the reporting period.

Due to the inherent uncertainty involved in making estimates, actual results could differ from those estimates.

and Finite Risk Sinking Fund (Restricted Cash)

December 31, 2019, we had cash on hand of approximately $390,000, which reflects primarily account balances of our foreign subsidiaries

December 31, 2020, the Company had cash on hand of approximately $7,924,000, which included account balances of our foreign subsidiaries

totaling approximately $377,000.

At December 31, 2018, the Company had cash on hand of approximately $810,000, which reflects

At December 31, 2019, the Company had cash on hand of approximately $390,000, which reflected

primarily account balances of our foreign subsidiaries totaling approximately $388,000.

At December 31, 2020 and 2019, the Company

has finite risk sinking funds of approximately $11,307,000 and $15,971,000, respectively, which represents cash held as collateral

had finite risk sinking funds of approximately $11,446,000 and $11,307,000, respectively, which represented cash held as collateral

under the Company’s financial assurance policy (see “Note 14 –

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The carrying amount of accounts receivable is reduced by an allowance

for doubtful accounts, which is a valuation allowance that reflects management’s best estimate of the amounts that will not be

The Company regularly reviews all accounts receivable balances that exceed 60 days from the invoice date and based

on an assessment of current credit worthiness, estimates the portion, if any, of the balance that will not be collected.

analysis excludes government related receivables due to our past successful experience in their collectability.

Specific accounts

that are deemed to be uncollectible are reserved at 100% of their outstanding balance.

The remaining balances aged over 60 days

have a percentage applied by aging category, based on historical experience that allows us to calculate the total allowance required.

Once the Company has exhausted all options in the collection of a delinquent accounts receivable balance, which includes collection

letters, demands for payment, collection agencies and attorneys, the account is deemed uncollectible and subsequently written

for doubtful accounts, which is a valuation allowance that reflects management’s best estimate of the amounts that will

not be collected.

The Company regularly reviews all accounts receivable balances that exceed 60 days from the invoice date and

based on an assessment of current credit worthiness, estimates the portion, if any, of the balance that will not be collected.

This analysis excludes government related receivables due to our past successful experience in their collectability.

accounts that are deemed to be uncollectible are reserved at 100% of their outstanding balance.

The remaining balances aged over

60 days have a percentage applied by aging category, based on historical experience that allows us to calculate the total allowance

Once the Company has exhausted all options in the collection of a delinquent accounts receivable balance, which includes

collection letters, demands for payment, collection agencies and attorneys, the account is deemed uncollectible and subsequently

The write off process involves approvals from senior management based on required approval thresholds.

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(in thousands):

Year Ended December 31,

Allowance for doubtful accounts - beginning of year

Provision for bad debt reserve

Allowance for doubtful accounts - end of year

receivables are generated by differences between invoicing timing and our proportional performance-based methodology used for

revenue recognition purposes.

As major processing and contract completion phases are completed and the costs are incurred, the

Company recognizes the corresponding percentage of revenue.

Within our Treatment Segment, the facilities experience delays in

processing invoices due to the complexity of the documentation that is required for invoicing, as well as the difference between

completion of revenue recognition milestones and agreed upon invoicing terms, which results in unbilled receivables.

differences occur for several reasons which include:

partially from delays in the final processing of all wastes associated with

certain work orders and partially from delays for analytical testing that is required after the facilities have processed waste

but prior to our release of waste for disposal.

The tasks relating to these delays can take months to complete but are generally

completed within twelve months.

Ended December 31,

for doubtful accounts - beginning of year

of) provision for bad debt reserve

of write-off (write-off)

for doubtful accounts - end of year

receivables are generated by differences between invoicing timing and our over time revenue recognition methodology used for revenue

recognition purposes.

As major processing and contract completion phases are completed and the costs are incurred, the Company

recognizes the corresponding percentage of revenue.

Within our Treatment Segment, the facilities experience delays in processing

invoices due to the complexity of the documentation that is required for invoicing, as well as the difference between completion

of revenue recognition milestones and agreed upon invoicing terms, which results in unbilled receivables.

The timing differences

occur for several reasons which include:

partially from delays in the final processing of all wastes associated with certain work

orders and partially from delays for analytical testing that is required after the facilities have processed waste but prior to

our release of waste for disposal.

The tasks relating to these delays can take months to complete but are generally completed

within twelve months.

receivables within our Services Segment can result from:

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which are deemed critical to the operating equipment and may also have extended lead times should the part fail and need to be

Inventories are valued at the lower of cost or market with cost determined by the first-in, first-out method.

Inventories are valued at the lower of cost or net realizable value with cost determined by the first-in, first-out

and Transportation Costs

Company accrues for waste disposal based upon a physical count of the waste at each facility at the end of each accounting period.

Current market prices for transportation and disposal costs are applied to the end of period waste inventories to calculate for

the transportation and disposal accruals.

and Equipment

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Renewals and improvements, which extend the useful lives of the assets, are capitalized.

property and equipment expenditures are financed through the use of leases.

Amortization of financed leased assets is computed

using the straight-line method over the estimated useful lives of the assets.

At December 31, 2019, assets recorded under finance

leases were $1,410,000 less accumulated depreciation of $71,000, resulting in net fixed assets under finance leases of $1,339,000.

At December 31, 2018, assets recorded under finance leases were approximately $517,000 less accumulated depreciation of $8,000

resulting in net fixed assets under finance leases of $509,000.

These assets are recorded within net property and equipment on

the Consolidated Balance Sheets.

property and equipment expenditures are financed through leases.

Amortization of financed leased assets is computed using the

straight-line method over the estimated useful lives of the assets.

At December 31, 2020, assets recorded under finance leases

were $2,285,000 less accumulated depreciation of $291,000, resulting in net fixed assets under finance leases of $1,994,000.

December 31, 2019, assets recorded under finance leases were $1,410,000 less accumulated depreciation of $71,000, resulting in

net fixed assets under finance leases of $1,339,000.

These assets are recorded within net property and equipment on the Consolidated

Balance Sheets.

assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate

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depreciation expense totaled approximately $1,357,000 and $1,086,000 in 2020 and 2019, respectively.

Company account for leases in accordance with Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”

which the Company adopted effective January 1, 2019 (see “Recently Adopted Accounting Standards”

below for a discussion

of this standard).

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based

on facts and circumstances present in that arrangement.

Lease classifications, recognition, and measurement are then determined

at the lease commencement date.

Company accounts for leases in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards

Update (“ASU”) 2016-02, “Leases (Topic 842).”

At the inception of an arrangement, the Company determines

if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement.

Lease classifications,

recognition, and measurement are then determined at the lease commencement date.

Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent primarily leases

for office/warehouse spaces used to conduct our business.

for office and warehouse spaces used to conduct our business.

These leases have remaining terms of approximately 3 to 9 years

majority of the Company’s leases includes one or more options to renew, with renewal terms ranging from 3 years to 8 years.

The Company includes renewal options in valuing its ROU assets and liabilities when it determines that it is reasonably certain

to exercise these renewal options.

Based on conditions of the Company’s existing leases, historical trend and its overall

business strategies, the Company has included the renewal options in all of its operating leases in valuing its ROU assets and

As most of our operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate

as the discount rate when determining the present value of the lease payments.

The incremental borrowing rate is determined based

on the Company’s secured borrowing rate, lease terms and current economic environment.

Some of our operating leases include

both lease (rent payments) and non-lease components (maintenance costs such as cleaning and landscaping services).

has elected the practical expedient to account for lease component and non-lease component as a single component for all leases

under ASU 2016-02.

Lease expense for operating leases is recognized on a straight-line basis over the lease term.

leases primarily consist of processing and lab equipment for our facilities as well as a building with land for our waste treatment

The Company’s finance leases for processing and lab equipment generally have terms between two to three years

and some of the leases include options to purchase the underlying assets at fair market value at the conclusion of the lease term.

The lease for the building and land has a term of two year with option to buy at the end of the lease term which the Company is

reasonably certain exercise.

which include one or more options to renew.

The Company includes renewal options in valuing its ROU assets and liabilities when

it determines that it is reasonably certain to exercise these renewal options.

As most of our operating leases do not provide

an implicit rate, the Company uses its incremental borrowing rate as the discount rate when determining the present value of the

lease payments.

The incremental borrowing rate is determined based on the Company’s secured borrowing rate, lease terms

and current economic environment.

Some of our operating leases include both lease (rent payments) and non-lease components (maintenance

costs such as cleaning and landscaping services).

The Company has elected the practical expedient to account for lease component

and non-lease component as a single component for all leases under ASU 2016-02.

Lease expense for operating leases is recognized

on a straight-line basis over the lease term.

leases primarily consist of processing and transport equipment used by our facilities’

Our finance leases also

include a building with land for our waste treatment operations.

The Company’s finance leases generally have initial terms

between one to six years and some of the leases include options to purchase the underlying assets at fair market value at the

conclusion of the lease term.

The lease for the building and land has a term of two years with an option to buy at the end of

the lease term, which the Company is reasonably certain to exercise.

See “Property and Equipment”

above for assets recorded under financed leases.

above for assets

recorded under financed leases.

Borrowing rates for our finance leases are either explicitly stated in the lease agreements or

implicitly determined from available terms in the lease agreements.

Company adopted the policy to not recognize ROU assets and liabilities for short term leases.

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and 2019 is as follows:

(Amounts in Thousands)

Interest cost capitalized

Interest cost charged to expense

Total interest

in Thousands)

cost capitalized

cost charged to expense

assets consist primarily of the recognized value of the permits required to operate our business.

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the asset over its fair value.

Significant judgments are inherent in these analyses and include assumptions for, among other factors,

forecasted revenue, gross margin, growth rate, operating income, timing of expected future cash flows, and the determination of

appropriate long-term discount rates.

Impairment testing of our permits related to our Treatment reporting unit as of October

1, 2019 and 2018 resulted in no impairment charges.

Judgments and estimates are inherent in these analyses and include assumptions for, among other

factors, forecasted revenue, gross margin, growth rate, operating income, timing of expected future cash flows, and the determination

of appropriate long-term discount rates.

Impairment testing of our indefinite-lived permits related to our Treatment reporting

unit as of October 1, 2020 and 2019 resulted in no impairment charges.

assets that have definite useful lives are amortized using the straight-line method over the estimated useful lives (with the

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asset valuation review as of October 1.

The Company had one definite-lived permit which was excluded from our annual impairment

review as noted above.

This definite-lived permit which had a net carrying value of approximately $7,000 at December 31, 2018

was fully amortized in the first quarter of 2019.

Definite-lived intangible assets are also tested for impairment whenever events

or changes in circumstances suggest impairment might exist.

Definite-lived intangible assets are also tested for impairment whenever events or changes

in circumstances suggest impairment might exist.

innovation and technical know-how are very important to the success of our business.

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and $314,000 for the years ended December 31, 2020 and 2019, respectively, incurred by our Medical Segment.

Closure Costs and Asset Retirement Obligations (“ARO”)

Closure Costs and ARO

closure costs represent our estimated environmental liability to clean up our facilities, as required by our permits, in the event

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Company performed services relating to waste generated by government clients (domestic and foreign (primarily Canadian)), either

directly as a prime contractor or indirectly for others as a subcontractor to government entities, representing approximately

indirectly for others as a subcontractor to government entities or directly as a prime contractor, representing approximately

$96,582,000, or 91.6%, of our total revenue during 2020, as compared to $59,985,000, or 81.7%, of our total revenue during 2019.

generated by the Company as a subcontractor to a customer for a remediation project performed for a government entity (the “DOE”)

within our Services Segment in 2020 and 2019 accounted for approximately $41,011,000 or 38.9% and $8,529,000 or 11.6% (included

in revenues generated relating to government clients above) of the Company’s total revenue for 2020 and 2019, respectively.

This remediation project included among other things, decontamination support of a building.

As work progressed throughout stages

of this project in 2020, additional contaminations were regularly discovered which resulted in approval in additional work to

be performed under this project.

This project is expected to be completed by the first half of 2021.

our revenues are project/event based where the completion of one contract with a specific customer may be replaced by another

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Concentration of credit risk with respect to accounts receivable

is limited due to the Company’s large number of customers and their dispersion throughout the United States as well as with the

significant amount of work that we perform for the federal and Canadian government.

Company had two government related customers whose total unbilled and net outstanding receivable balances represented 12.5% and

34.3% of the Company’s total consolidated unbilled and net accounts receivable at December 31, 2019.

The Company had a government

and a government related customers whose total unbilled and net outstanding receivable balances represented 10.7% and 10.5%, respectively

is limited due to the Company’s large number of customers and their dispersion throughout the United States as well as with

the significant amount of work that we perform for the federal and Canadian government.

Company had three government related customers whose total unbilled and net outstanding receivable balances represented 41.1%,

19.0% and 12.5% of the Company’s total consolidated unbilled and net accounts receivable at December 31, 2020.

had two government related customers whose total unbilled and net outstanding receivable balances represented 12.5% and 34.3%

of the Company’s total consolidated unbilled and net accounts receivable at December 31, 2019.

Recognition and Related Policies

May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2014-09, “Revenue from Contracts

with Customers”

followed by a series of related accounting standard updates (collectively referred to as “Topic 606”)

which superseded nearly all existing revenue recognition guidance.

Under the new standard, a five-step process is utilized in

order to determine revenue recognition, depicting the transfer of goods or services to a customer at an amount that reflects the

consideration it expects to receive in exchange for those goods or services.

The Company adopted Topic 606 under the modified

retrospective approach to all contracts as of the date of adoption.

The Company recognized the cumulative effect of initially

adopting Topic 606 as an increase of approximately $316,000 to the opening balance of accumulated deficit at January 1, 2018.

The adoption of Topic 606 did not result in significant changes to our revenues within our Treatment and Services Segments.

cumulative impact to the opening balance of accumulated deficit at January 1, 2018 was primarily driven by changes to the timing

of revenue recognition in certain immaterial waste streams within our Treatment Segment.

Under Topic 606, a performance obligation

Company recognizes revenue in accordance with FASB’s ASC 606, “Revenue from Contracts with Customers.”

provides a single, comprehensive revenue recognition model for all contracts with customers.

Under ASC 606, a five-step process

is utilized in order to determine revenue recognition, depicting the transfer of goods or services to a customer at an amount

that reflects the consideration it expects to receive in exchange for those goods or services.

Under ASC 606, a performance obligation

is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account.

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Segment Revenues:

in our Treatment Segment have a single performance obligation as the promise to receive, treat and dispose of waste is not separately

identifiable in the contract and, therefore, not distinct.

Performance obligations are generally satisfied over time using the

input method.

Under the input method, the Company uses a measure of progress divided into major phases which include receipt (generally

ranging from 9.0% to 33%), treatment/processing (generally ranging from 15% to 79%) and shipment/final disposal (generally ranging

from 9% to 52%).

As major processing phases are completed and the costs are incurred, the proportional percentage of revenue is

Transaction price for Treatment Segment contracts are determined by the stated fixed rate per unit price as stipulated

in the contract.

in our Treatment Segment primarily have a single performance obligation as the promise to receive, treat and dispose of waste

is not separately identifiable in the contract and, therefore, not distinct.

Performance obligations are generally satisfied over

time using the input method.

Under the input method, the Company uses a measure of progress divided into major phases which include

receipt (ranging from 9.0% to 50%), treatment/processing (ranging from 15% to 89%) and shipment/final disposal (ranging from 2%

As major processing phases are completed and the costs are incurred, the proportional percentage of revenue is recognized.

Transaction price for Treatment Segment contracts are determined by the stated fixed rate per unit price as stipulated in the

Segment Revenues:

for our Services Segment are generated from time and materials, cost reimbursement or fixed price arrangements:

primary obligation to customers in time and materials contracts relate to the provision of services to the customer at the direction

of the customer.

This provision of services at the request of the customer is the performance obligation, which is satisfied over

Revenue earned from time and materials contracts is determined using the input method and is based on contractually defined

billing rates applied to services performed and materials delivered.

primary performance obligation to customers in cost reimbursement contracts is to complete certain tasks and work streams.

specified work stream or task within the contract is considered to be a separate performance obligation.

The transaction price

is calculated using an estimated cost to complete the various scope items to achieve the performance obligation as stipulated

Company’s primary obligation to customers in time and materials contracts relate to the provision of services to the customer

at the direction of the customer.

This provision of services at the request of the customer is the performance obligation, which

is satisfied over time.

Revenue earned from time and materials contracts is determined using the input method and is based on

contractually defined billing rates applied to services performed and materials delivered.

Company’s primary performance obligation to customers in cost reimbursement contracts is to complete certain tasks and work

Each specified work stream or task within the contract is considered to be a separate performance obligation.

The transaction

price is calculated using an estimated cost to complete the various scope items to achieve the performance obligation as stipulated

in the contract.

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Also, the nature

of our contracts does not give rise to variable consideration.

of our contracts generally does not give rise to variable consideration.

Payment Terms

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Stock Compensation.”

Stock-based payment transactions for acquiring goods and services from nonemployees (consultants) are also accounted for under

ASC 718 resulting from the adoption of ASU No.

2018-07, “Compensation —

Stock Compensation (Topic 718):

to Nonemployee Share-Based Payment Accounting.”

by the Company effective January 1, 2019.

ASC 718 requires stock-based payments

to employees and nonemployees, including grant of options, to be recognized in the Statement of Operations based on their fair

The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards which requires

subjective assumptions.

Assumptions used to estimate the fair value of stock-based awards include the exercise price of the award,

the expected term, the expected volatility of our stock over the stock-based award’s expected term, the risk-free interest

rate over the award’s expected term, and the expected annual dividend yield.

The Company accounts for forfeitures when they

Stock-based payment transactions for acquiring goods and services from nonemployees are also accounted for under ASC 718.

718 requires stock-based payments to employees and nonemployees, including grant of options, to be recognized in the Statement

of Operations based on their fair values.

The Company uses the Black-Scholes option-pricing model to determine the fair-value

of stock-based awards which requires subjective assumptions.

Assumptions used to estimate the fair value of stock-based awards

include the exercise price of the award, the expected term, the expected volatility of our stock over the stock-based award’s

expected term, the risk-free interest rate over the award’s expected term, and the expected annual dividend yield.

accounts for forfeitures when they occur.

Comprehensive

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Adopted Accounting Standards

February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),”

which requires the recognition of ROU lease assets

and lease liabilities by lessees for those leases classified as operating leases under previous guidance.

The original guidance

required application on a modified retrospective basis with the earliest period presented.

In July 2018, the FASB issued ASU 2018-11,

“Targeted Improvements,”

to Topic 842 which included an option to not restate comparative periods in transition and

elect to use the effective date of Topic 842 as the date of initial application of transition, which the Company elected.

under Topic 842, the Company adopted several practical expedients that permit us to not reassess (1) whether any expired or existing

contract as of the adoption date is or contain a lease, (2) lease classification for any expired or existing leases as of the

adoption date, and (3) initial direct costs for any existing leases as of the adoption date.

As a result of the adoption of Topic

842 on January 1, 2019, the Company recorded both operating ROU assets of $2,602,000 and operating lease liabilities of $2,622,000.

The cumulative-effect adjustment was immaterial to our beginning accumulated deficit upon adoption of ASU 2016-02.

of Topic 842 had an immaterial impact on our Consolidated Statements of Operations and Cash Flows for the year 2019.

The Company’s

accounting for finance leases remained substantially unchanged.

February 2018, FASB issued ASU 2018-02 , “

Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification

of Certain Tax Effects from Accumulated Other Comprehensive Income.”

This ASU allows for the reclassification of certain

income tax effects related to the new Tax Cuts and Jobs Act legislation between “Accumulated other comprehensive income”

and “Retained earnings.”

This ASU relates to the requirement that adjustments to deferred tax liabilities and assets

related to a change in tax laws or rates be included in “Income from continuing operations”, even in situations where

the related items were originally recognized in “Other comprehensive income”

(rather than in “Income from continuing

operations”).

ASU 2018-02 is effective for all entities for fiscal years beginning after December 15, 2018, and interim

periods within those fiscal years, with early adoption permitted.

Adoption of this ASU is to be applied either in the period of

adoption or retrospectively to each period in which the effect of the change in the tax laws or rates were recognized.

of ASU 2018-09 by the Company effective January 1, 2019 did not have a material impact on the Company’s financial statements.

June 2018, the FASB issued ASU No.

2018-07, “Compensation —

Stock Compensation (Topic 718):

Improvements to Nonemployee

Share-Based Payment Accounting,”

which expands the scope of Topic 718 to include all share-based payment transactions for

acquiring goods and services from nonemployees.

ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions

in which the grantor acquires goods and services to be used or consumed in its own operations by issuing share-based payment awards.

ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to

the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for

under ASC 606.

ASU 2018-07 is effective for annual reporting periods, and interim periods within those years, beginning after

December 15, 2018, with early adoption permitted.

The adoption of ASU 2018-09 by the Company effective January 1, 2019 did not

have a material impact on the Company’s financial statements.

August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure

Requirements for Fair Value Measurement.”

ASU 2018-13 improves the disclosure requirements on fair value measurements.

2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

2018-13 by the Company effective January 1, 2020 did not have a material impact on the Company’s financial statements

or disclosures.

March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (“ASU 848”):

Facilitation of the Effects of

Reference Rate Reform on Financial Reporting.”

ASU 2020-04 provides optional expedients and exceptions for applying U.S.

GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Interbank

Offered Rate (“LIBOR”) or another rate that is expected to be discontinued.

The amendments in the ASU are effective

for all entities as of March 12, 2020 through December 31, 2022.

The adoption of ASU 2020-04 on March 12, 2020 by the Company

did not have a material impact on the Company’s financial statements.

The Company will continue to assess the potential

impact of this ASU through the effective period.

Issued Accounting Standards –

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June 2016, the FASB issued ASU No.

2016-13, “Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC

326”),”

which amends the current approach to estimate credit losses on certain financial assets, including trade and

other receivables, available-for-sale securities, and other financial instruments.

Generally, this amendment requires entities

to establish a valuation allowance for the expected lifetime losses of these certain financial assets.

Subsequent changes in the

valuation allowance are recorded in current earnings and reversal of previous losses is permitted.

In April 2019, the FASB issued

ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging,

and Topic 825, Financial Instruments,”

which, with respect to credit losses, among other things, clarifies and addresses

issues related to accrued interest, transfers between classifications of loans or debt securities, recoveries, and variable interest

Additionally, in May 2019, the FASB issued ASU 2019-05, “Financial Instruments - Credit Losses (Topic 326):

Transition Relief,”

which allows entities to irrevocably elect the fair value option on certain financial instruments.

standards are effective for interim and annual reporting periods beginning after December 15, 2019.

2016-13, “Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments

and subsequent amendments to the initial guidance:

ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments

- Credit Losses,”

ASU 2019-04 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic

815, Derivatives and Hedging, and Topic 825, Financial Instruments,”

ASU 2019-05 “Financial Instruments - Credit Losses

Targeted Transition Relief,”

ASU 2019-11 “Codification Improvements to Topic 326, Financial Instruments

- Credit Losses”

and ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)”

(collectively, “Topic 326”).

Topic 326 introduces an approach, based on expected losses, to 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 model) applies to most financial assets measured

at amortized cost and certain other instruments, including trade and other receivables and loans.

Entities are required to apply

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period in which the guidance is adopted.

These ASUs are effective January 1, 2020 for the Company.

The Company does not expect

the adoption of these ASUs will have a material impact on the Company’s financial statements.

August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure

Requirements for Fair Value Measurement.”

ASU 2018-13 improves the disclosure requirements on fair value measurements.

2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

ASU is effective January 1, 2020 for the Company.

The Company does not expect the adoption of this ASU will have a material impact

on the Company’s financial statements.

These ASUs are effective January 1, 2023 for the Company as a smaller reporting company.

The Company had expected to early adopt theses ASUs effective January 1, 2020;

however, due to the need for reallocation of the

Company’s resources to manage COVID-19 related matters, the Company has deferred adoption of theses ASUs effective January

1, 2020 and expect to adopt these ASUs by January 1, 2023.

December 2019, the FASB issued ASU No.

2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU

2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain

exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020,

with early adoption permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements

and related disclosures.

Simplifying the Accounting for Income Taxes,”

which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to

the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

This guidance

is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption

This ASU is effective January 1, 2021 for the Company.

The Company does not expect the adoption of this ASU will have

a material impact on the Company’s financial statements.

January 2020, the FASB issued ASU 2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and

Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), clarifying the Interactions between Topic 321, Topic 323,

and Topic 815.”

This guidance addresses

accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity

securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities.

This standard

is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2020.

Early adoption

is permitted.

This ASU is effective January 1, 2021 for the Company.

The Company does not expect the adoption of this ASU will

have a material impact on the Company’s financial statements.

August 2020, the FASB issued ASU No.

2020-06, “Debt –

Debt with Conversion and Other Options (Subtopic 470-20) and

Derivatives and Hedging –

Contracts in Entity’s Own Equity.”

ASU 2020-06 simplifies the accounting for convertible

instruments by removing major separation models and removing certain settlement condition qualifiers for the derivatives scope

exception for contracts in an entity’s own equity, and simplifies the related diluted net income per share calculation for

both Subtopics.

ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December

15, 2023, for the Company as a smaller reporting company.

Early adoption is permitted, but no earlier than fiscal years beginning

after December 15, 2020, including interim periods within those fiscal years.

The Company is currently evaluating the impact of

this ASU on its consolidated financial statements and disclosures.

October 2020, the FASB issued ASU No 2020-10, “Codification Improvements.”

ASU 2020-10 updates various codification

topics by clarifying or improving disclosure requirements.

ASU 2020-10 is effective for public entities for fiscal years beginning

after December 15, 2020, with early adoption permitted.

This ASU is effective January 1, 2021 for the Company.

The Company does

not expect the adoption of this ASU will have a material impact on the Company’s financial statements and disclosures.

COVID-19 pandemic that started in early part of 2020 continues to present potential new risks to our business and continues to

result in significant volatility in the U.S.

and international markets.

The Company continues to closely monitor the impact of

the COVID-19 pandemic on all aspects of our business.

Starting in late March 2020, the Company’s operations were impacted

by the shutdown of a number of projects and the delays of certain waste shipments.

Since the latter part of the second quarter

of 2020, all of the projects that were previously shutdown within our Services Segment restarted as stay-at-home orders and certain

other restrictions resulting from the pandemic were lifted.

Despite the shutdown of certain projects for part of 2020, revenues

generated within our Services Segment in 2020 exceeded our revenue generated in 2019 by approximately $42,188,000.

continues to experience delays in waste shipments from certain customers within our Treatment Segment directly related to the

impact of COVID-19 including generator shutdowns and limited sustained operations, along with other factors.

However, the Company

expects to see a gradual return in waste receipts from these customers starting in the first half of 2021 as they accelerate operations.

As the impact of COVID-19 remains fluid, the uncertainty in waste receipt shipments may impact our results of operations for the

first quarter of 2021 and potentially the second quarter of 2021.

The potential for a material impact on the Company’s business

increases the longer COVID-19 impacts the level of economic activities in the United States and globally as our customers may

continue to delay waste shipments and project work may shut down again.

For this reason, we cannot reasonably estimate with any

degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity which

may impact our ability to meet our financial covenant requirements under our credit facility.

Company’s cash flow requirements during 2020 were primarily financed by our operations, credit facility availability, and

proceeds from the PPP Loan (established under the CARES Act) that the Company entered into with its credit facility lender in

April 2020 (see “Note 10 –

Long Term Debt –

PPP Loan”

for further detail of this loan).

At December 31,

2020, the Company had borrowing availability under its revolving credit facility of approximately $14,220,000 which was based

on a percentage of eligible receivables and subject to certain reserves and included its cash on hand of approximately $7,924,000.

The Company’s working capital at December 31, 2020 was approximately $3,672,000 as compared to working capital of $26,000

at December 31, 2019.

Our working capital at December 31, 2020 included the classification of approximately $3,191,000 of the

outstanding PPP Loan balance of $5,318,000 at December 31, 2020 as “Current portion of long-term debt”

on our Consolidated

Balance Sheets.

We have applied for forgiveness on repayment of the entire PPP Loan balance which is subject to the review and

approval of our lender and the SBA.

this time, the Company believes it has sufficient liquidity on hand to fund cash flow requirements for the next twelve months

which consist primarily of general working capital needs, scheduled principal payments on our debt obligations, remediation projects,

and planned capital expenditures.

The Company plans to fund these requirements from our operations, credit facility availability,

and cash on hand.

The Company is continually reviewing operating costs during this volatile time and is committed to further reducing

operating costs to bring them in line with revenue levels, when necessary.

These measures include curtailing capital expenditures,

eliminating non-essential expenditures and implementing a hiring freeze as needed.

Company is closely monitoring our customers’

payment performance.

However, as a significant portion of our revenues is derived

from government related contracts, the Company does not expect its accounts receivable collections to be materially impacted due

previously disclosed, the Company’s Medical Segment has not generated any revenue.

The Company anticipates that its Medical

Segment will not resume full R&D activities until it obtains the necessary funding through obtaining its own credit facility

or additional equity raise or obtaining new partners willing to fund its R&D activities.

If the Medical Segment is unable

to raise the necessary capital, the Medical Segment could be required to further reduce, delay or eliminate its R&D program.

Disaggregation

general, the Company’s business segmentation is aligned according to the nature and economic characteristics of our services and

provides meaningful disaggregation of each business segment’s results of operations.

The following tables present further disaggregation

of our revenues by different categories for our Services and Treatment Segments:

Revenue by Contract Type

Twelve Months Ended

Tweleve Months Ended

(In thousands)

December 31, 2019

December 31, 2018

Time and materials

Cost reimbursement

Revenue by generator

Twelve Months Ended

(In thousands)

December 31, 2019

December 31, 2018

Domestic government

Domestic commercial

Foreign government

Foreign commercial

general, the Company’s business segmentation is aligned according to the nature and economic characteristics of our services

and provides meaningful disaggregation of each business segment’s results of operations.

The following tables present further

disaggregation of our revenues by different categories for our Services and Treatment Segments:

by Contract Type

and materials

reimbursement

timing of revenue recognition, billings, and cash collections results in accounts receivable and unbilled receivables (contract

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following table represents changes in our contract assets and contract liabilities balances:

(In thousands)

December 31, 2019

December 31, 2018

Contract assets

Account receivables, net of allowance

Unbilled receivables - current

Contract liabilities

Deferred revenue

receivables, net of allowance

receivables - current

the twelve months ended December 31, 2020 and 2019, the Company recognized revenue of $8,094,000 and $10,354,000, respectively,

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components of lease cost for the Company’s leases were as follows (in thousands):

Twelve Months Ended

December 31, 2019

Operating Leases:

Finance Leases:

Amortization of ROU assets

Interest on lease liability

Short-term lease rent expense

Total lease cost

Months Ended December 31,

of ROU assets

on lease liability

lease rent expense

weighted average remaining lease term and the weighted average discount rate for operating and finance leases at December 31,

Operating Leases

Finance Leases

Weighted average remaining lease terms (years)

Weighted average discount rate

average remaining lease terms (years)

Weighted average

discount rate

weighted average remaining lease term and the weighted average discount rate for operating and finance leases at December 31,

average remaining lease terms (years)

Weighted average

discount rate

following table reconciles the undiscounted cash flows for the operating and finance leases at December 31, 2020 to the operating

and finance lease liabilities recorded on the balance sheet (in thousands):

Operating Leases

Finance Leases

and thereafter

Total undiscounted lease payments

undiscounted lease payments

Imputed interest

Present value of lease payments

value of lease payments

portion of operating lease obligations

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cash flow and other information related to our leases were as follows (in thousands):

Twelve Months Ended

December 31, 2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flow used in operating leases

Operating cash flow used in finance leases

Financing cash flow used in finance leases

ROU assets obtained in exchange for lease obligations for:

Finance liabilities

Operating liabilities

Months Ended December 31,

paid for amounts included in the measurement of lease liabilities:

cash flow from operating leases

cash flow from finance leases

assets obtained in exchange for lease obligations for:

AND OTHER INTANGIBLE ASSETS

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No permit exists at our Services and Medical Segments.

Permit (amount in thousands)

Balance as of December 31, 2017

PCB permit amortized (1)

Permit in progress

Balance as of December 31, 2018

PCB permit amortized (1)

Permit in progress

Balance as of December 31, 2019

Amortization for the one definite-lived permit capitalized in 2009 that was fully amortized in the first quarter of 2019.

This permit was amortized over a ten-year period in accordance with its estimated useful life.

(amount in thousands)

as of December 31, 2018

permit amortized (1)

as of December 31, 2019

as of December 31, 2020

following table summarizes information relating to the Company’s definite-lived intangible assets:

Weighted Average

December 31, 2019

December 31, 2018

Intangibles (amount in

Customer relationships

intangible assets noted above are amortized on a straight-line basis over their useful lives with the exception of customer relationships

which are being amortized using an accelerated method.

relationships

intangible assets noted above were amortized on a straight-line basis over their useful lives with the exception of customer relationships

which were amortized using an accelerated method.

following table summarizes the expected amortization over the next five years for our definite-lived intangible assets:

(In thousands)

expense recorded for definite-lived intangible assets was approximately $239,000 and $256,000, for the years ended December 31,

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director a number of shares of the Company’s Common Stock in lieu of 65% or 100% (based on option elected by each director)

of the fee payable to the eligible director for services rendered as a member of the Board of Directors (“Board”).

The number of shares issued is determined at 75% of the market value as defined in the plan (the Company recognizes 100% of the

market value of the shares issued).

The 2003 Plan, as amended, also provides for the grant of an NQSO to purchase up to 6,000

shares of our Common Stock for each outside director upon initial election to the Board, and the grant of an NQSO to purchase

2,400 shares of our Common Stock upon each re-election.

The number of shares of the Company’s Common Stock authorized under

the 2003 Plan was 1,100,000.

At December 31, 2019, the 2003 Plan had available for issuance 262,312 shares.

Company’s 2010 Stock Option Plan (“2010 Plan”) authorized an aggregate grant of 200,000 NQSOs and Incentive

Stock Options (“ISOs”) to officers and employees of the Company for the purchase of up to 200,000 shares of the Company’s

Common Stock.

The term of each stock option granted was to be fixed by the Compensation and Stock Option Committee (the “Compensation

Committee”), but no stock option was exercisable more than ten years after the grant date, or in the case of an incentive

stock option granted to a 10% stockholder, five years after the grant date.

As a result of the approval of the 2017 Stock Option

Plan (“2017 Plan”

see below) at the Company’s 2017 Annual Meeting, no further options remained available

for issuance under the 2010 Plan immediately upon the approval of the 2017 Plan;

however, the 2010 Plan remains in full force

and effect with respect to the outstanding options issued and unexercised at the date of the approval of the 2017 Plan.

31, 2019, the 2010 Plan had an option for the purchase of up to 50,000 shares of our Common Stock at $3.97 per share with expiration

date of May 15, 2022.

of the fee payable to the eligible director for services rendered as a member of the Board.

The number of shares issued is determined

at 75% of the market value as defined in the plan (the Company recognizes 100% of the market value of the shares issued).

2003 Plan, as amended, also provides for the grant of an NQSO to purchase up to 6,000 shares of our Common Stock for each outside

director upon initial election to the Board, and the grant of an NQSO to purchase 2,400 shares of our Common Stock upon each re-election.

The number of shares of the Company’s Common Stock authorized under the 2003 Plan is 1,100,000.

At December 31, 2020, the

2003 Plan had available for issuance 218,577 shares.

Company’s 2017 Stock Option Plan (“2017 Plan”) authorizes the grant of options to officers and employees of

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The 2017 Plan

authorizes an aggregate grant of 540,000 NQSOs and ISOs, which includes a rollover of 140,000 shares that remained available for

issuance under the 2010 Plan immediately upon the approval of the 2017 Plan.

authorizes an aggregate grant of 1,140,000 NQSOs and ISOs, which includes a rollover of 140,000 shares that had remained available

for issuance under the 2010 Stock Option Plan (“2010 Plan”) immediately upon the approval of the 2017 Plan and an

increase of 600,000 shares to the 2017 Plan which was approved by the Company’s stockholders at the 2020 Annual Meeting

of Stockholders held on July 22, 2020 (“2020 Annual Meeting”).

Consultants of the Company can only be granted NQSOs.

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December 31, 2020, the 2017 Plan had available for issuance 647,500 shares.

the approval of the 2017 Plan as discussed above, no further options remained available for issuance under the 2010 Plan.

29, 2020, the 2010 Plan expired;

however, an option (ISO) issued under the 2010 Plan prior to the expiration of the 2010 Plan

for the purchase of up to 50,000 shares of our Common Stock at $3.97 per share will remain in effect until the earlier of the

exercise date by the optionee or the maturity date of May 15, 2022.

Options to Employees and Outside Director

January 17, 2019 the Company granted 105,000 ISOs from the 2017 Plan to certain employees, which included our named executive

officers as follows:

25,000 ISOs to our Chief Executive Officer (“CEO”);

15,000 ISOs to our Chief Financial Officer

(“CFO”);

and 15,000 ISOs to our Executive Vice President (“EVP”) of Strategic Initiatives.

February 4, 2020, the Company granted 6,000 NQSOs from the Company’s 2003 Plan to a new director elected by the Company’s

Board to fill a vacancy on the Board.

The options granted were for a contractual term of ten years with a vesting period of six

The exercise price of the options was $7.00 per share, which was equal to the Company’s closing stock price per

share the day preceding the grant date, pursuant to the 2003 Plan.

July 22, 2020, the Company granted an aggregate of 12,000 NQSOs from the Company’s 2003 Plan to five of the six re-elected

directors at the Company’s 2020 Annual Meeting.

Centofanti, the Company’s EVP of Strategic Initiatives

and also a Board member, was not eligible to receive options under the 2003 Plan as an employee of the Company, pursuant to the

The NQSOs granted were for a contractual term of ten years with a vesting period of six months.

The exercise price

of the NQSO was $6.70 per share, which was equal to our closing stock price the day preceding the grant date, pursuant to the

August 10, 2020, the Company granted 6,000 NQSOs from the Company’s 2003 Plan to a new director elected by the Company’s

Board to fill a vacancy on the Board.

The options granted were for a contractual term of ten years with a vesting period of six

The exercise price of the options was $7.29 per share, which was equal to the Company’s closing stock price per

share the day preceding the grant date, pursuant to the 2003 Plan.

January 17, 2019 the Company granted 105,000 ISOs from the 2017 Plan to certain employees, which included our executive officers

25,000 ISOs to our CEO;

15,000 ISOs to our CFO;

and 15,000 ISOs to our EVP of Strategic Initiatives.

The ISOs granted

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$3.90 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.

January 18, 2018, the Company granted 6,000 NQSOs from the Company’s 2003 Plan to a new director elected by the Company’s

Board to fill a vacancy on the Board.

The options granted were for a contractual term of ten years with a vesting period of six

The exercise price of the options was $4.05 per share, which was equal to our closing stock price the day preceding the

grant date, pursuant to the 2003 Plan.

July 26, 2018, the Company granted an aggregate of 12,000 NQSOs from the Company’s 2003 Plan to five of the six re-elected

directors at the Company’s July 26, 2018 Annual Meeting of Stockholders.

Centofanti (a Board member) was not

eligible to receive options under the 2003 Plan as an employee of the Company, pursuant to the 2003 Plan.

The NQSOs granted were

for a contractual term of ten years with a vesting period of six months.

The exercise price of the NQSO was $4.30 per share, which

was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Plan.

Company issued an aggregate of 14,400 shares of Common Stock to two previous retired outside directors resulting from the exercise

of options from the 2003 Plan for a total proceed of approximately $54,000 in the fourth quarter of 2019.

The Company also issued

an aggregate of 18,000 shares of Common Stock to an employee resulting from exercise of options for a total proceed of approximately

$79,000 in the fourth quarter of 2019.

2020, the Company issued 2,000 shares of its Common Stock resulting from the exercise of options from the Company’s 2017

Plan for total proceeds of $6,300.

Additionally, the Company issued 1,884 shares of its Common Stock from cashless exercises of

8,000 and 2,500 options at $3.60 per share and $3.15 per share, respectively.

The Company issued an aggregate of 32,400 shares

of Common Stock in 2019 from exercises of options resulting in total proceed of approximately $133,000.

Company estimates fair value of stock options using the Black-Scholes valuation model.

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No options were granted to employees in 2020:

Employee Stock

Option Granted

Weighted-average fair value per share

Risk -free interest rate (1)

Expected volatility of stock (2)

Weighted-average

fair value per share

-free interest rate (1)

volatility of stock (2)

48.67%-51.38 %

Dividend yield

Expected option life (3)

Outside Director Stock Options Granted

Weighted-average fair value per share

Risk -free interest rate (1)

Expected volatility of stock (2)

option life (3)

Director Stock Options Granted

Weighted-average

fair value per share

-free interest rate (1)

volatility of stock (2)

55.83%-56.68 %

Dividend yield

Expected option life (3)

option life (3)

The risk-free interest rate is based on the U.S.

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following table summarizes stock-based compensation recognized for fiscal years 2020 and 2019.

Employee Stock Options

Director Stock Options

Stock Options

December 31, 2020, the Company has approximately $274,000 of total unrecognized compensation costs related to unvested options

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Options to Consultant

Ferguson is a consultant to the Company in connection with the Company’s Test Bed Initiative (“TBI”) at its

PFNWR facility.

For Robert Ferguson’s consulting work in connection with the Company’s TBI, on July 27, 2017 (“grant

date”), the Company granted Robert Ferguson a NQSO from the Company’s 2017 Plan for the purchase of up to 100,000

shares of the Company’s Common Stock at an exercise price of $3.65 a share, which was the fair market value of the Company’s

Common Stock on the date of grant (“Ferguson Stock Option”).

The vesting of the Ferguson Stock Option is subject to

the achievement of the following milestones (“waste”

as noted below is defined as liquid LAW (“low activity

waste”) and/or liquid TRU (“transuranic waste”)):

treatment and disposal of three gallons of waste at the PFNWR facility by January 27, 2018, 10,000 shares of the Ferguson

Stock Option shall become exercisable;

treatment and disposal of 2,000 gallons of waste at the PFNWR facility by January 27, 2019, 30,000 shares of the Ferguson

Stock Option shall become exercisable;

treatment and disposal of 50,000 gallons of waste at the PFNWR facility and assistance, on terms satisfactory to the Company,

in preparing certain justifications of cost and pricing data for the waste and obtaining a long-term commercial contract relating

to the treatment, storage and disposal of waste by January 27, 2021, 60,000 shares of the Ferguson Stock Option shall become

term of the Ferguson Stock Option is seven (7) years from the grant date.

Each of the milestones is exclusive of each other;

achievement of any of the milestones above by Robert Ferguson by the designated date will provide Robert Ferguson the right to

exercise the number of options in accordance with the milestone attained.

On January 17, 2019, the Ferguson Stock Option was amended

whereby the vesting date of the Ferguson Stock Option for the second milestone as discussed above was amended from “by January

27, 2019”

to “by March 31, 2020.”

All other terms of the Ferguson Stock Option remain unchanged.

May 1, 2018, Robert Ferguson exercised the 10,000 options which became vested by Mr.

Ferguson in December 2017 for the purchase

of 10,000 shares of the Company’s Common Stock, resulting in total proceeds paid to the Company of approximately $36,500.

December 31, 2019, the Company has not recognized compensation costs (fair value of approximately $123,000 at December 31, 2019)

for the remaining Ferguson Stock Option discussed above since achievement of the performance obligation under the second milestone

is unlikely and achievement of the performance obligation under the third milestone is uncertain at December 31, 2019.

Company granted a NQSO to Robert Ferguson on July 27, 2017 from the Company’s 2017 Plan for the purchase of up to 100,000

shares of the Company’s Common Stock (“Ferguson Stock Option”) in connection with his work as a consultant to

the Company’s Test Bed Initiative (“TBI”) at our PFNWR facility at an exercise price of $3.65 per share, which

was the fair market value of the Company’s Common Stock on the date of grant.

The term of the Ferguson Stock Option is seven

years from the grant date.

The vesting of the Ferguson Stock Option is subject to the achievement of three separate milestones

by certain dates.

On January 17, 2019, the Company’s Compensation and Board approved an amendment to the Ferguson Stock

Option whereby the vesting date for the second milestone for the purchase of up to 30,000 shares of the Company’s Common

Stock was extended to March 31, 2020 from January 27, 2019.

On March 27, 2020, the Compensation Committee and the Board approved

another amendment to the Ferguson Stock Option whereby the vesting date for the second milestone was further extended to December

31, 2021 from March 31, 2020 and the vesting date for the third milestone for the purchase of up to 60,000 shares of the Company’s

Common Stock was extended to December 31, 2022 from January 27, 2021.

The 10,000 options under the first milestone were exercised

by Robert Ferguson in May 2018.

The Company has not recognized compensation costs (fair value of approximately $262,000 at December

31, 2020) for the remaining 90,000 Ferguson Stock Option under the remaining two milestones since achievement of the performance

obligation under each of the two remaining milestones is uncertain at December 31, 2020.

All other terms of the Ferguson Stock

Option remain unchanged.

of Stock Option Plans

summary of the Company’s total plans as of December 31, 2020 and 2019, and changes during the period then ended are presented

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value (3)

Options outstanding January 1, 2019

Average Remaining Contractual Term (years)

outstanding January 1, 2020

Forfeited/expired

Options outstanding end of period (1)

Options exercisable as of December 31, 2019 (1)

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value (3)

Options outstanding January 1, 2018

outstanding end of period (1)

exercisable at December 31, 2020 (2)

Average Exercise Price

Average Remaining Contractual Term (years)

outstanding January 1, 2019

Forfeited/expired

Options outstanding end of period (2)

Options exercisable at December 31, 2018 (2)

outstanding end of period (3)

exercisable as of December 31, 2019 (3)

Options with exercise prices ranging from $2.79 to $7.29

Options with exercise prices ranging from $2.79 to $7.05

(3) The intrinsic

value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise

Options with exercise prices ranging from $2.79 to $8.40

The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the

summary of the Company’s nonvested options as of December 31, 2020 and changes during the period then ended are presented

Weighted Average

Non-vested options January 1, 2019

Non-vested options at December 31, 2019

options January 1, 2020

options at December 31, 2020

connection with a $2,500,000 loan that the Company executed April 1, 2019 with Mr.

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The Company recorded approximately $250,000

and $249,000 in compensation expense (included in Selling, General &Administrative (“SG&A”) expenses) for

the twelve months ended December 31, 2019 and 2018, respectively, for the portion of director fees earned in the Company’s

Common Stock.

and $232,000 in compensation expense (included in SG&A expenses) for the twelve months ended December 31, 2020 and 2019, respectively,

for the portion of director fees earned in the Company’s Common Stock.

December 31, 2020, the Company has reserved approximately 658,400 shares of our Common Stock for future issuance under all of

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following table reconciles the income (loss) and average share amounts used to compute both basic and diluted loss per share:

(Amounts in Thousands, Except for Per Share Amounts)

Net income (loss) attributable to Perma-Fix Environmental Services, Inc., common stockholders:

Income (loss) from continuing operations, net of taxes

Net loss attributable to non-controlling interest

Income (loss) from continuing operations attributable to Perma-Fix Environmental Services,

in Thousands, Except for Per Share Amounts)

income attributable to Perma-Fix Environmental Services, Inc., common stockholders:

from continuing operations, net of taxes

loss attributable to non-controlling interest

from continuing operations attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Loss from discontinuing operations attributable to Perma-Fix

Environmental Services, Inc.

from discontinuing operations attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Net income (loss) attributable to Perma-Fix Environmental Services,

income attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Basic income (loss) per share attributable to

Perma-Fix Environmental Services, Inc.

income per share attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Diluted income (loss) per share attributable to

Perma-Fix Environmental Services, Inc.

income per share attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Weighted average shares outstanding:

Basic weighted average shares outstanding

Weighted average

shares outstanding:

Basic weighted

average shares outstanding

dilutive effect of stock options

dilutive effect of warrants

Diluted weighted average shares outstanding

Potential shares excluded from above weighted average share calculations due to their

anti-dilutive effect include:

Stock options

B PREFERRED STOCK

1,284,730 shares of the Series B Preferred Stock (the “Series B Preferred Stock”) of the Company’s wholly-owned

consolidated subsidiary, M&EC, were non-voting and non-convertible, had a $1.00 liquidation preference per share and were

redeemable at the option and sole discretion of M&EC at any time, and from time to time, from and after one year from the

date of issuance (June 25, 2001) of the Series B Preferred Stock for the purchase price of $1.00 per share.

As previously disclosed,

the Company completed the closure of its M&EC facility in 2019 in accordance with M&EC’s license and permit requirements.

Holders of shares of M&EC Series B Preferred Stock were entitled to receive, when, as and if declared by M&EC’s

Board out of funds legally available for payment, cumulative dividends at the rate per annum of 5% per share on the liquidation

preference of $1.00 per share of Series B Preferred Stock.

Dividends on the Series B Preferred Stock accrued without interest

beginning one year from the date of original issuance (June 25, 2001), and was payable in cash, if, when, and as declared by M&EC

Board, quarterly each year commencing on the first dividend due date following the expiration of one year from the date of original

On April 24, 2018, the Company announced a private exchange offer (“Exchange Offer”), to all 13 holders

of the M&EC Series B Preferred Stock, to exchange in a private placement exempt from registration, for every share of Series

B Preferred Stock tendered, (a) 0.1050805 shares of newly issued Common Stock of the Company, par value $.001 per share (“Common

Stock”), and (b) cash in lieu of fractional shares of Common Stock that would otherwise be issuable to the tendering holder

of Series B Preferred Stock, in an amount equal to such fractional share of Common Stock multiplied by the closing price per share

of the Common Stock on the last trading day immediately preceding the expiration date of the Exchange Offer.

The Exchange Offer

was made on an all-or-none basis, for all 1,284,730 shares of Series B Preferred Stock outstanding and had an expiration date

of May 30, 2018.

The Company owns 100% of the voting capital stock of M&EC.

On May 30, 2018, the Exchange Offer was consummated,

resulting in the issuance of an aggregate 134,994 unregistered shares of the Company’s Common Stock in exchange for the

1,284,730 shares of Series B Preferred Stock and the payment of an aggregate of approximately $29.00 in cash in lieu of the fractional

shares of the Company’s Common Stock that would otherwise have been issuable to the tendering holders of the Series B Preferred

The fair value of the 134,994 shares of the Company’s Common Stock issued was determined to be approximately $648,000

which was based on the closing price of the Company’s Common Stock on May 30, 2018 of $4.80 per share.

Upon the consummation

of the Exchange Offer, the previous holders of the M&EC Series B Preferred Stock forfeited all rights of a holder of Series

B Preferred Shares, including the right to receive quarterly cash dividends, and the rights to the cumulative accrued and unpaid

dividends with M&EC Series B Preferred Stock in the amount of approximately $1,022,000 at May 30, 2018.

The M&EC Board

never declared dividends on the Series B Preferred Stock and our credit facility prohibits the payment of cash dividends without

the lender’s consent.

After the Exchange Offer, the 1,284,730 shares of the Series B Preferred Stock acquired by the Company

were contributed by the Company to M&EC and the Series B Preferred Stock was no longer outstanding.

The Company recorded a

gain of approximately $1,596,000 in 2018, which was net of approximately $63,000 in legal costs incurred for the completion of

the transaction.

shares of Company Common Stock issued in exchange for shares of M&EC’s Series B Preferred Stock were issued pursuant

to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), and, as a result,

were considered restricted securities when issued.

Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment:

(1) subsidiaries divested

in 2011 and prior, (2) two previously closed locations, and (3) our PFSG facility which is in closure status and which final closure

is subject to regulatory approval of necessary plans and permits.

weighted average shares outstanding

shares excluded from above weighted average share calculations due to their anti-dilutive effect include:

Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries

divested in 2011 and prior and three previously closed locations.

Company incurred losses from discontinued operations of $412,000 and $541,000 for the years ended December 31, 2020 and 2019 (net

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The loss for the year ended 2019 included an increase of approximately $50,000

in remediation reserve for our Perma-Fix of Memphis, Inc.

(“PFM”) due to reassessment of the remediation reserve.

The loss for the year ended 2018 included an increase of approximately $50,000 in remediation reserve for our Perma-Fix of Dayton

(“PFD”) subsidiary due to reassessment of the remediation reserve.

The remaining loss for each of the periods noted

above was primarily due to costs incurred in the administration and continued monitoring of our discontinued operations.

in remediation reserve for our PFM subsidiary due to reassessment of the remediation reserve.

The remaining loss for each of the

periods noted above was primarily due to costs incurred in the administration and continued monitoring of our discontinued operations.

following table presents the major class of assets of discontinued operations at December 31, 2020 and December 31, 2019.

and liabilities were held for sale at each of the periods noted.

(Amounts in Thousands)

December 31, 2019

December 31, 2018

in Thousands)

current assets

Total current assets

plant and equipment, net (1)

long-term assets

Property, plant and equipment, net (1)

Total long-term assets

expenses and other liabilities

Environmental

current liabilities

Accounts payable

Accrued expenses and other liabilities

Environmental liabilities

Total current liabilities

Environmental

long-term liabilities

Closure liabilities

Environmental liabilities

Total long-term liabilities

Total liabilities

net of accumulated depreciation of $10,000 for each period presented.

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May 2016 resulting from the sale of property at our Perma-Fix of Michigan, Inc.

This note requires 60 equal monthly

installment payments by the buyer of approximately $7,250 (which includes interest).

At December 31, 2019, the outstanding amount

on this note receivable totaled approximately $118,000, of which approximately $82,000 is included in “Current assets related

to discontinued operations”

and approximately $36,000 is included in “Other assets related to discontinued operations”

in the accompanying Consolidated Balance Sheets.

(“PFMI”) subsidiary.

This note required

60 equal monthly installment payments by the buyer of approximately $7,250 (which includes interest).

On July 24, 2020, the purchaser

of the property paid off the outstanding note receivable balance of approximately $105,000.

Environmental

Company has three remediation projects, which are currently in progress at our PFD, PFM (closed location), and PFSG (in closure

status) subsidiaries.

Company has three remediation projects, which are currently in progress relating to our PFD, PFM and PFSG (closed locations) subsidiaries.

The Company divested PFD in 2008;

however, the environmental liability of PFD was retained by the Company

upon the divestiture of PFD.

These remediation projects principally entail the removal/remediation of contaminated soil and, in

most cases, the remediation of surrounding ground water.

The remediation activities are closely reviewed and monitored by the

applicable state regulators.

December 31, 2019, the Company had total accrued environmental remediation liabilities of $927,000, an increase of $40,000 from

the December 31, 2018 balance of $887,000.

The net increase presents an increase of approximately $50,000 made to the reserve

at our PFM subsidiary as discussed above and payments of approximately $10,000 on remediation projects for our PFD subsidiary.

current and long-term accrued environmental liability at December 31, 2019 is summarized as follows (in thousands).

Total liability

however, the environmental liability of PFD was retained by the Company upon the divestiture

These remediation projects principally entail the removal/remediation of contaminated soil and, in most cases, the remediation

of surrounding ground water.

The remediation activities are closely reviewed and monitored by the applicable state regulators.

December 31, 2020, we had total accrued environmental remediation liabilities of $854,000, a decrease of $73,000 from the December

31, 2019 balance of $927,000.

The decrease represents payments made on remediation projects for our PFSG and PFD subsidiaries.

At December 31, 2020, $744,000 of the total accrued environmental liabilities was recorded as current.

current and long-term accrued environmental liabilities at December 31, 2020 are summarized as follows (in thousands).

debt consists of the following at December 31, 2020 and December 31, 2019:

(Amounts in Thousands)

December 31, 2019

December 31, 2018

Revolving Credit facility dated October 31, 2011, as amended, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on March 24, 2021.

Effective interest rate for 2019 and 2018 was 6.6% and 5.8%, respectively.

Term Loan dated October 31, 2011, as amended, payable in equal monthly installments of principal, balance due on March 24, 2021.

Effective interest rate for 2019 and 2018 was 6.9% and 5.5%, respectively.

Promissory Note dated April 1, 2019, payable in twelve monthly installments of interest only, starting May 1, 2019 followed with twelve monthly installments of approximatelyt $208 in principal plus accrued interest.

in Thousands)

Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base

calculation, balance due on May 15, 2024.

interest rate for 2020 and 2019 was 6.1% and 6.6%, respectively.

Loan dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2024.

Effective interest

rate for 2020 and 2019 was 5.2% and 6.9%, respectively.

Note dated April 1, 2019, payable in twelve monthly installments of interest only, starting May 1, 2019 followed with

twelve monthly installments of approximately $208 in principal plus accrued interest.

Interest accrues at annual rate of

Less current portion of long-term debt

Long-term debt

Note dated April 14, 2020, balance subject to loan forgiveness.

Interest accrues at annual rate of 1.0%.

Payable dated June 10, 2020, payable in 36 monthly installments, starting in July 2020 at annual interest rate of $5.64%.

current portion of long-term debt

Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property,

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$35,500 from approximately $101,600.

See discussion of the amendment dated June 20, 2019 to the Company’s loan agreement

See “Revolving Credit and Term Loan Agreement”

below for terms of the Company’s

credit facility prior to the New Loan Agreement dated May 8, 2020.

Net of debt issuance costs of ($105,000) and ($92,000) at December 31, 2020 and December 31, 2019, respectively.

Uncollateralized note.

Net of debt discount/debt issuance costs of ($248,000) at December 31, 2019.

The Promissory Note provides for prepayment

of principal over the term of the Note without penalty.

The Company made prepayments of principal totaling $520,000 in 2019 which

was reflected in the current portion of the debt.

Net of debt discount/debt issuance costs of ($0) and ($248,000) at December 31, 2020 and December 31, 2019, respectively.

The Promissory Note provided for prepayment of principal over the term of the Note without penalty.

In 2019, the Company made

total prepayment of principal of $520,000 which was reflected in the current portion of the debt.

In 2020, the outstanding principal

balance of $1,980,000 was paid-in-full of which of which $416,000 was prepaid.

Entered into with the Company’s credit facility lender under the PPP under the CARES Act (see “PPP Loan”

below for further information on this loan and its terms).

Credit and Term Loan Agreement

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The Amended Loan Agreement

has been amended from time to time since the execution of the Amended Loan Agreement.

had been amended from time to time since the execution of the Amended Loan Agreement.

The Amended Loan Agreement, as subsequently

amended (“Revised Loan Agreement”), provides the Company with the following credit facility with a maturity date of

amended (“Revised Loan Agreement”), provided the Company with the following credit facility with a maturity date of

March 24, 2021:

(a) up to $12,000,000 revolving credit (“revolving credit”) and (b) a term loan (“term loan”)

of approximately $6,100,000, which requires monthly installments of approximately $101,600 (based on a seven-year amortization).

The maximum that the Company can borrow under the revolving credit is based on a percentage of eligible receivables (as defined)

at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from time

March 29, 2019, the Company entered into an amendment to its Revised Loan Agreement with its lender under the credit facility

which provided the following:

the Company’s failure to meet the minimum quarterly fixed charge coverage ratio (“FCCR”) requirement for

the fourth quarter of 2018;

the quarterly FCCR testing requirement for the first quarter of 2019;

the methodology to be used in calculating the FCCR in each of the second and third quarters of 2019 (with continued requirement

to maintain a minimum 1.15:1 ratio in each of the quarters);

the minimum Tangible Adjusted Net Worth requirement (as defined in the Revised Loan Agreement) from $26,000,000 to $25,000,000;

the London InterBank Offer Rate (“LIBOR”) interest payment option of paying annual rate of interest due on our

term loan and revolving credit until the Company becomes compliant with its FCCR requirement again.

Prior to this amendment,

the Company had the option of paying annual rate of interest due on the revolving credit at prime (4.75% at December 31, 2019)

plus 2% or LIBOR plus 3% and the term loan at prime plus 2.5% or LIBOR plus 3.5%;

consent for the $2,500,000 loan that the Company entered into with Robert Ferguson on April 1, 2019 discussed below.

prepayment on this loan was allowed until the Company received the restricted finite risk sinking funds of approximately $5,000,000

held as collateral by AIG Specialty Insurance Company (“AIG”) under our financial assurance policy resulting from

the closure of the Company’s M&EC facility (see “Note 14 –

Commitments and Contingencies –

Insurance”

for a discussion of the receipt of this $5,000,000 in finite risk sinking funds on July 22, 2019);

the annual rate used to calculate the Facility Fee (as defined in the Revised Loan Agreement) (unused revolving credit line

fee) from 0.250% to 0.375%.

June 20, 2019, we entered into another amendment to our Revised Loan Agreement with our lender under the credit facility which

provided the following, among other things:

of the FCCR calculation requirement for the second, third and fourth quarter of 2019.

Starting in the first quarter of 2020,

the Company will again be required to maintain a minimum FCCR of not less than 1.15 to 1.0 for the four-quarter period ending

March 31, 2020 and for each fiscal quarter thereafter;

the Company to maintain a minimum Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted

EBITDA”

as defined in the Amendment) of at least (i) $475,000 for the one quarter period ending June 30, 2019;

$2,350,000 for the two quarter period ending September 30, 2019;

and (iii) $3,750,000 for the three quarter period ending

December 31, 2019;

release of $450,000 of the $1,000,000 indefinite reduction in borrowing availability that PNC had previously imposed;

release of another $300,000 of the remaining $550,000 reduction in borrowing availability if the Company meets it minimum

Adjusted EBITDA requirement for the quarter ending September 30, 2019 as discussed above (which our lender released in November

2019), in addition to the Company having received no less than $4,000,000 of the restricted finite risk sinking funds held

as collateral by AIG under our financial assurance policy;

and the release the final $250,000 reduction in borrowing availability

if we meet our Adjusted EBITDA requirement for the three quarter period ending December 31, 2019;

the term loan monthly principal payment starting July 1, 2019 from $101,600 to approximately $35,547, with the remaining balance

of the term loan due at the maturity of the Revised Loan Agreement which is March 24, 2021.

of the other terms of the Revised Loan Agreement, as amended, remain principally unchanged.

In connection with amendment dated

March 29, 2019 and June 20, 2019, the Company paid its lender a fee of $20,000 and $50,000, respectively.

to the Revised Loan Agreement, as amended, the Company may terminate the Revised Loan Agreement, as amended, upon 90 days’

prior written notice upon payment in full of its obligations under the Revised Loan Agreement, as amended.

No early termination

fee shall apply if the Company pays off its obligations after March 23, 2019.

December 31, 2019, the borrowing availability under our revolving credit was approximately $8,714,000, based on our eligible receivables

and includes an indefinite reduction of borrowing availability of $250,000 that the Company’s lender has imposed.

This $8,714,000

in borrowing availability under our revolving credit also included a reduction in borrowing availability of approximately $2,639,000

from outstanding standby letters of credit.

Company’s credit facility with PNC contains certain financial covenants, along with customary representations and warranties.

A breach of any of these financial covenants, unless waived by PNC, could result in a default under our credit facility allowing

our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments

to extend further credit.

As discussed above, our lender waived/removed our FCCR testing requirement for each of the quarters

The Company met its “Adjusted EBITDA”

minimum requirement in the second, third and fourth quarters of 2019

in accordance to the amendment dated June 20, 2019 as discussed above.

Additionally, the Company met its remaining financial covenant

requirements in each of the quarters of 2019.

As a result of the Company meeting the “Adjusted EBITDA”

minimum requirement

for the fourth quarter of 2019, the Company’s lender is expected to release the remaining $250,000 reduction in borrowing

availability subsequent to the filing of our 2019 Form 10-K.

of approximately $6,100,000.

The maximum that the Company can borrow under the revolving credit was based on a percentage of eligible

receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender

may impose from time to time.

of annual rate of interest due on the revolving credit under the Revised Loan Agreement was at prime (3.25% at December 31, 2020)

plus 2% and the term loan at prime plus 2.5%.

May 8, 2020, the Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement (the “New

Loan Agreement”) with PNC, replacing our previous Revised Loan Agreement with PNC.

The New Loan Agreement provides the Company

with the following credit facility:

to $18,000,000 revolving credit facility, subject to the amount of borrowings based on a percentage of eligible receivables

and subject to certain reserves;

term loan of $1,741,818, which requires monthly installments of $35,547.

New Loan Agreement terminates as of May 15, 2024, unless sooner terminated.

to our Revised Loan Agreement, the New Loan Agreement requires the Company to meet certain customary financial covenants, including,

among other things, a minimum Tangible Adjusted Net Worth requirement of $27,000,000 at all times;

maximum capital spending of

$6,000,000 annually;

and a minimum FCCR requirement of 1.15:1.

the New Loan Agreement, payment of annual rate of interest due on the credit facility is as follows:

credit at prime plus 2.50% or LIBOR plus 3.50% and the term loan at prime plus 3.00% or LIBOR plus 4.00%.

The Company can

only elect to use the LIBOR interest payment option after it becomes compliant with meeting the minimum FCCR of 1.15:1;

the achievement of a FCCR of greater than 1.25:1, the Company has the option of paying an annual rate of interest due on the

revolving credit at prime plus 2.00% or LIBOR plus 3.00% and the term loan at prime plus 2.50% or LIBOR plus 3.50%.

met this FCCR in each of the quarters in 2020.

Upon meeting the FCCR of 1.25:1, this interest payment option will remain in

place in the event that the Company’s future FCCR falls below 1.25:1.

the LIBOR option of interest payment noted above, a LIBOR floor of 0.75% shall apply in the event that LIBOR falls below 0.75%

at any point in time.

to the New Loan Agreement, the Company may terminate the New Loan Agreement upon 90 days’

prior written notice upon payment

in full of our obligations under the New Loan Agreement.

The Company has agreed to pay PNC 1.0% of the total financing in the

event we pay off our obligations on or before May 7, 2021 and 0.5% of the total financing if we pay off our obligations after

May 7, 2021 but prior to or on May 7, 2022.

No early termination fee shall apply if we pay off our obligations under the New Loan

Agreement after May 7, 2022.

connection with New Loan Agreement, the Company paid its lender a fee of $50,000 and incurred other direct costs of approximately

$35,000, which are being amortized over the term of the New Loan Agreement as interest expense-financing fees.

As a result of

the termination of the Revised Loan Agreement, the Company recorded approximately $27,000 in loss on extinguishment of debt in

accordance with ASC 470-50, “Debt –

Modifications and Extinguishment.”

December 31, 2020, the borrowing availability under our revolving credit was approximately $14,220,000, based on our eligible

receivables and includes a reduction in borrowing availability of approximately $3,026,000 from outstanding standby letters of

Company’s credit facility under its Revised and New Loan Agreement with PNC contains certain financial covenants, along

with customary representations and warranties.

A breach of any of these financial covenants, unless waived by PNC, could result

in a default under our credit facility allowing our lender to immediately require the repayment of all outstanding debt under

our credit facility and terminate all commitments to extend further credit.

The Company met its financial covenant requirements

in 2020, including its quarterly FCCR requirements.

and Securities Purchase Agreement, Promissory Note and Subordination Agreement

2 unchanged sentences

note (the “Loan”).

The Lender is a shareholder of the Company.

The Lender also currently serves as a consultant to

the Company in connection with the Company’s TBI at its PFNWR subsidiary.

The proceeds from the Loan were used for general

working capital purposes.

The Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00%

The Loan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest

payment due May 1, 2019 and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second

year of the Loan.

The Loan also allows for prepayment of principal payments over the term of the Loan without penalty with such

prepayment of principal payments to be applied to the second year of the loan payments at the Company’s discretion.

the Company made total prepayments in principal of $520,000.

In connection with the above Loan, the Lender agreed under the terms

of the Loan and a Subordination Agreement with our credit facility lender, to subordinate payment under the Loan, and agreed that

the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding

In connection with this capital raise transaction described above and consideration for us receiving the Loan, the Company

issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise

The Lender is a shareholder of the Company and also serves as a consultant to the Company in connection

with the Company’s TBI at its PFNWR subsidiary.

Proceeds from the Loan were used for general working capital purposes.

Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00% per annum.

The Loan provides

for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due May 1, 2019

and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second year of the Loan.

Loan also allows for prepayment of principal payments over the term of the Loan without penalty with such prepayment of principal

payments to be applied to the second year of the loan payments at the Company’s discretion.

In December 2020, the Loan was

paid-in-full.

In connection with this capital raise transaction described above and consideration for us receiving the Loan, the

Company issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise

price of $3.51 per share, which was the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding

the execution of the Loan and Warrant.

The Warrant is exercisable six months from April 1, 2019 and expires on April 1, 2024 and

remains outstanding at December 31, 2019.

The fair value of the Warrant was estimated to be approximately $93,000 using the Black-Scholes

option pricing model with the following assumptions:

50.76% volatility, risk free interest rate of 2.31%, an expected life of

five years and no dividends.

As further consideration for this capital raise transaction relating to the Loan, the Company issued

75,000 shares of its Common Stock to the Lender.

The Company determined the fair value of the 75,000 shares of Common Stock to

be approximately $263,000 which was based on the closing bid price for a share of the Company’s Common Stock on NASDAQ.com

immediately preceding the execution of the Loan, pursuant to the Loan and Securities Purchase Agreement.

The fair value of the

Warrant and Common Stock and the related closing fees incurred totaling approximately $398,000 from the transaction was recorded

as debt discount/debt issuance costs, which is being amortized over the term of the loan as interest expense –

The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased under the Warrant

were and will be issued in a private placement that was and will be exempt from registration under Rule 506 and/or Sections 4(a)(2)

and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend against resale except

in a transaction registered under the Act or in a transaction exempt from registration thereunder.

default, the Lender will have the right to elect to receive in full and complete satisfaction of the Company’s obligations

under the Loan either:

(a) the cash amount equal to the sum of the unpaid principal balance owing under the loan and all accrued

and unpaid interest thereon (the “Payoff Amount”) or (b) upon meeting certain conditions, the number of whole shares

of the Company’s Common Stock (the “Payoff Shares”) determined by dividing the Payoff Amount by the dollar amount

equal to the closing bid price of our Common Stock on the date immediately prior to the date of default, as reported or quoted

on the primary nationally recognized exchange or automated quotation system on which our Common Stock is listed;

provided however,

that the dollar amount of such closing bid price shall not be less than $3.51, the closing bid price for our Common Stock as disclosed

on NASDAQ.com immediately preceding the signing of this loan agreement.

issued, the Payoff Shares will not be registered and the Lender will not be entitled to registration rights with respect to the

Payoff Shares.

The aggregate number of shares, warrant shares, and Payoff Shares that are or will be issued to the Lender pursuant

to the Loan, together with the aggregate shares of the Company’s Common Stock and other voting securities owned by the Lender

or which may be acquired by the Lender as of the date of issuance of the Payoff Shares, shall not exceed the number of shares

of the Company’s Common Stock equal to 14.9% of the number of shares of the Company’s Common Stock issued and outstanding

as of the date immediately prior to the default, less the number of shares of the Company’s Common Stock owned by the Lender

immediately prior to the date of such default plus the number of shares of our Common Stock that may be acquired by the Lender

under warrants and/or options outstanding immediately prior to the date of such default.

The Warrant expires on April 1, 2024 and remains outstanding at December 31, 2020.

consideration for this capital raise transaction relating to the Loan, the Company also issued 75,000 shares of its Common Stock

to the Lender.

The fair value of the Warrant and Common Stock and the related closing fees incurred from the transaction totaled

approximately $398,000 and was recorded as debt discount/debt issuance costs which has been fully amortized as interest expense

financing fees.

The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased

under the Warrant were and will be issued in a private placement that was and will be exempt from registration under Rule 506

and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend

against resale except in a transaction registered under the Act or in a transaction exempt from registration thereunder.

April 14, 2020, the Company entered into a promissory note with PNC, our credit facility lender, in the amount of approximately

$5,666,000 (“PPP Loan”) under the PPP.

The PPP was established under the CARES Act and is administered by the SBA.

On June 5, 2020, the Flexibility Act was signed into law which amended the CARES Act.

The note evidencing the PPP Loan contains

events of default relating to, among other things, payment defaults, breach of representations and warranties, and provisions

of the promissory note.

During the third quarter of 2020, the Company repaid approximately $348,000 of the PPP Loan to PNC resulting

from clarification made in the loan calculation at the time of the loan origination.

the terms of the Flexibility Act, the Company can apply for and be granted forgiveness for all or a portion of the PPP Loan.

forgiveness will be determined, subject to limitations, based on the use of loan proceeds by the Company for eligible payroll

costs, mortgage interest, rent and utility costs and the maintenance of employee and compensation levels for the covered period

(which is defined as a 24 week period, beginning April 14, 2020, the date in which proceeds from the PPP Loan was disbursed to

the Company by PNC).

At least 60% of such forgiven amount must be used for eligible payroll costs.

On October 5, 2020, the Company

applied for forgiveness on repayment of the loan balance as permitted under the program, which is subject to the review and approval

of our lender and the SBA.

If all or a portion of the PPP Loan is not forgiven, all or the remaining portion of the loan will

be for a term of two years but can be prepaid at any time prior to maturity without any prepayment penalties.

The annual interest

rate on the PPP Loan is 1.0% and no payments of principal or interest are due until SBA remits the loan forgiveness amount to

While the Company’s PPP Loan currently has a two year maturity, the Flexibility Act permits the Company to request

a five year maturity with our lender.

At December 31, 2020, the Company has not received a determination on potential forgiveness

on any portion of the PPP Loan balance;

therefore, the Company has classified approximately $3,191,000 of the PPP Loan balance

as “Current portion of long-term debt,”

on its Consolidated Balance Sheets, which was based on payment of the PPP

Loan starting in July 2021 (10 months from end of our covered period) in accordance with the terms of our PPP Loan agreement.

following table details the amount of the maturities of long-term debt maturing in future years at December 31, 2020 (excludes

debt issuance/debt discount costs of $340,000).

Year ending December 31:

(In thousands)

debt issuance costs of $105,000).

expenses include the following (in thousands) at December 31:

Salaries and employee benefits

Accrued sales, property and other tax

Interest payable

Insurance payable

Total accrued expenses

of our executives has an individual Management Incentive Plan (“MIP”) for fiscal years 2019 and 2018 which provides

for the potential payment of performance compensation (see “Note 16 –

and employee benefits

sales, property and other tax

accrued expenses

expenses for 2020 included a total of approximately $419,000 in compensation expenses accrued under the 2020 Management Incentive

Plans (“MIPs”) for our executives (see “Note 16 –

Related Party Transactions –

for further discussion of the MIPs).

The Company accrued an aggregate of approximately $270,700 in compensation expenses for the

three MIPs in 2019 for the Company’s 2019 three named executive officers (“NEOs”) (Mr.

Mark Duff, Mr.

Ben Naccarato,

Louis Centofanti.

No performance compensation payments were earned under any of the MIPs for 2018 for the NEOs.

discussion of the 2020 MIPs) in addition to a 2020 discretionary bonus of approximately $27,000 payable to the Company’s

EVP of Nuclear and Technical Services approved by the Company’s Compensation Committee.

Accrued expenses for 2019 included

an aggregate of approximately $360,000 in compensation expenses accrued under 2019 MIPs for our executive officers and our SVP

of Nuclear and Technical Services, which total amount was paid at the end of May 2020.

CLOSURE COSTS AND ARO

3 unchanged sentences

31, 2020 and 2019, were as follows:

Amounts in thousands

Balance as of December 31, 2017

Accretion expense

Adjustment to closure liability

Balance as of December 31, 2018

Accretion expense

Adjustment to closure liability

Balance as of December 31, 2019

as of December 31, 2018

to closure liability

as of December 31, 2019

as of December 31, 2020

Company recorded an additional $330,000 of closure costs and current closure liabilities in 2019 due to finalization of closure

2 unchanged sentences

of its M&EC facility in accordance with M&EC’s license and permit requirements.

The Company had recorded an additional

$3,323,000 in closure costs and current closure liabilities in 2018 due to changes in estimated future closure costs for the M&EC

spending of approximately $1,359,000 in 2019 was primarily for the closure of the Company’s M&EC facility.

the Company had total spending of approximately $5,293,000, of which $4,991,000 was for activities related to the closure of the

M&EC facility with the remaining for the PFNWR facility in connection with the closure of certain processing equipment/enclosure.

December 31, 2019 and 2018, M&EC’s closure liabilities totaled approximately $84,000 and $1,142,000, respectively, with

the entire amount classified as current.

spending of approximately $11,000 and $1,359,000 in 2020 and 2019, respectively, was primarily for the closure of the Company’s

M&EC facility.

Closure liabilities of M&EC are classified as current in the Consolidated Balance Sheets for 2020 and 2019.

reported closure asset or ARO, is reported as a component of “Net Property and equipment”

1 unchanged sentence

Sheets at December 31, 2020 and 2019 with the following activity for the years ended December 31, 2020 and 2019:

Amounts in thousands

Balance as of December 31, 2017

Amortization of closure and post-closure asset

Balance as of December 31, 2018

Amortization of closure and post-closure asset

Balance as of December 31, 2019

components of income (loss) before income tax expense (benefit) by jurisdiction for continuing operations for the years ended

as of December 31, 2018

of closure and post-closure asset

as of December 31, 2019

of closure and post-closure asset

as of December 31, 2020

components of income (loss) before income tax (benefit) expense by jurisdiction for continuing operations for the years ended

December 31, consisted of the following (in thousands):

United Kingdom

income (loss) before tax expense (benefit)

components of current and deferred federal and state income tax expense (benefit) expense for continuing operations for the years

ended December 31, consisted of the following (in thousands):

Federal income tax expense (benefit) - deferred

State income tax expense - current

State income tax (benefit) expense - deferred

Total income tax expense (benefit)

overall reconciliation between the expected tax expense (benefit) using the federal statutory rate of 21% for each of the years

ended 2019 and 2018 and the expense (benefit) for income taxes from continuing operations as reported in the accompanying Consolidated

income before tax (benefit) expense

components of current and deferred federal and state income tax (benefit) expense for continuing operations for the years ended

December 31, consisted of the following (in thousands):

income tax expense - deferred

income tax (benefit) expense - current

income tax (benefit) expense - deferred

income tax (benefit) expense

overall reconciliation between the expected tax (benefit) expense using the federal statutory rate of 21% for each of the years

ended 2020 and 2019 and the (benefit) expense for income taxes from continuing operations as reported in the accompanying Consolidated

Statement of Operations is provided below (in thousands).

Federal tax expense (benefit) at statutory rate

State tax expense (benefit), net of federal benefit

Change in deferred tax rates

Permanent items

Difference in foreign rate

Change in deferred tax liabilities

(Decrease) increase in valuation allowance

Income tax expense (benefit)

provision of the Tax Cuts and Jobs Act of 2017 (the “TCJA”) which was signed into law in December 2017 provides an

indefinite carryforward period for net operating losses (“NOLs”) generated starting in 2018.

Also, the law limits

the utilization of these NOLs to 80% of taxable income in the year in which the NOL is utilized.

The Company had been carrying

on its balance sheet a deferred tax liability related to indefinite-lived intangible assets.

A common accounting interpretation

of the TCJA provisions is that deferred tax assets related to indefinite-lived NOLs may be used to offset indefinite-lived deferred

tax liabilities, up to 80% of the amount of the liability.

During 2018, the Company forecasted a substantial tax loss for the

full year due to the closure of the M&EC facility.

As a result, the Company released a portion of the valuation allowance

against deferred tax assets equal to 80% of the deferred tax liability related to indefinite-lived intangible assets and recorded

a tax benefit in the amount of approximately $1,235,000 in accordance to the provisions of the TCJA.

global intangible low-taxed income (“GILTI”) provisions under the TCJA require the Company to include in its U.S.

income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets.

The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred

tax impacts of GILTI in its consolidated financial statements for the years ended December 31, 2019 and 2018.

As the foreign subsidiaries

are all in loss positions for 2019, there is no GILTI inclusion for the current year.

base-erosion and anti-abuse tax provisions (“BEAT”) in the TCJA eliminates the deduction of certain base-erosion payments

made to related foreign corporations, and imposes a minimum tax if greater than regular tax.

The Company does not expect it will

be subject to this tax due to the immaterial amounts of outbound U.S.

payments and therefore has not included any tax impacts

of BEAT in its consolidated financial statements for the years ended December 31, 2019 and 2018.

tax expense at statutory rate

tax (benefit) expense, net of federal benefit

in deferred tax rates

in foreign rate

in deferred tax liabilities

in valuation allowance

tax (benefit) expense

global intangible low-taxed income (“GILTI”) provisions under the Tax Cuts and Jobs Act of 2017 (the “TCJA”)

require the Company to include in its U.S.

income tax return foreign subsidiary earnings in excess of an allowable return on the

foreign subsidiary’s tangible assets.

The Company has elected to account for GILTI tax in the period in which it is incurred,

and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended

December 31, 2020 and 2019.

As the foreign subsidiaries are all in loss positions for 2020, there is no GILTI inclusion for the

current year.

March 27, 2020, the CARES Act was enacted and signed into law.

The CARES Act included a number of income tax law changes, including

modifications to the interest limitation under Internal Revenue Code (“IRC”) §163(j) and reinstatement of the

ability to carry back net operating losses.

The income tax items in the CARES Act did not have a material impact on the

Company’s 2020 income tax provision.

Company had temporary differences and net operating loss carry forwards from both our continuing and discontinued operations,

which gave rise to deferred tax assets and liabilities at December 31, 2020 and 2019 as follows (in thousands):

Deferred tax assets:

Net operating losses

Environmental and closure reserves

Lease liability

Deferred tax liabilities:

Depreciation and amortization

Goodwill and indefinite lived intangible assets

Right-of-use lease asset

481(a) adjustment

Prepaid expenses

Valuation allowance

Net deferred income tax liabilities

2019 and 2018, the Company concluded that it was more likely than not that $9,106,000 and $10,479,000 of our deferred income

tax assets would not be realized, and as such, a full valuation allowance was applied against those deferred income tax assets.

operating losses

Environmental

and closure reserves

tax liabilities:

and amortization

and indefinite lived intangible assets

deferred income tax liabilities

2020 and 2019, the Company concluded that it was more likely than not that $8,572,000 and $9,106,000 of our deferred income tax

assets would not be realized, and as such, a full valuation allowance was applied against those deferred income tax assets.

Company has estimated net operating loss carryforwards (“NOLs”) for federal and state income tax purposes of approximately

7 unchanged sentences

31, 2017 and thus do not expire.

However, as a result of various stock offerings and certain acquisitions, which in the aggregate constitute

a change in control, the use of these NOLs will be limited under the provisions of Section 382 of the Internal Revenue Code of

1986, as amended.

Additionally, NOLs may be further limited under the provisions of Treasury Regulation 1.1502-21 regarding Separate

Return Limitation Years.

tax years 2017 through 2019 remain open to examination by taxing authorities in the jurisdictions in which the Company operates.

uncertain tax positions were identified by the Company for the years currently open under statute of limitations, including 2019

However, as a result of various stock offerings and certain acquisitions, which in the aggregate

constitute a change in control, the use of these NOLs will be limited under the provisions of Section 382 of the Internal Revenue

Code of 1986, as amended.

Additionally, NOLs may be further limited under the provisions of Treasury Regulation 1.1502-21 regarding

Separate Return Limitation Years.

tax years 2017 through 2020 remain open to examination by taxing authorities in the jurisdictions in which the Company

uncertain tax positions were identified by the Company for the years currently open under statute of limitations.

Company had no federal income tax payable for the years ended December 31, 2020 and 2019.

AND CONTINGENCIES

connection with our waste management services, we process both hazardous and non-hazardous waste, which we transport to our own,

or other, facilities for destruction or disposal.

As a result of disposing of hazardous substances, in the event any cleanup is

required at the disposal site, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence

of fault on our part.

connection with our waste management services, the Company processes both hazardous and non-hazardous waste, which we transport

to our own, or other, facilities for destruction or disposal.

As a result of disposing of hazardous substances, in the event any

cleanup is required at the disposal site, the Company could be a potentially responsible party for the costs of the cleanup notwithstanding

any absence of fault on our part.

the normal course of conducting our business, we are involved in various litigation.

We are not a party to any litigation or governmental

proceeding which our management believes could result in any judgments or fines against us that would have a material adverse

proceeding which our management believes could result in any judgments or fines against us that could would have a material adverse

effect on our financial position, liquidity or results of future operations.

July 2020, Tetra Tech EC, Inc.

(“Tetra Tech”) filed a complaint in the United States District Court for the Northern

District of California against CH2M Hill, Inc.

(“CH2M”) and four subcontractors of CH2M, including the Company (“Defendants”).

The complaint alleges claims for negligence, negligent misrepresentation and equitable indemnification against all defendants

related to alleged damages suffered by Tetra Tech in respect of certain draft reports prepared by defendants at the request of

Navy as part of an investigation and review of certain whistleblower complaints about Tetra Tech’s environmental

restoration at the Hunter’s Point Naval Shipyard in San Francisco.

was hired by the Navy in 2016 to review Tetra Tech’s work.

CH2M subcontracted with environmental consulting and cleanup

firms Battelle Memorial Institute, Cabrera Services, Inc., SC&A, Inc.

and the Company to assist with the review, according

to the complaint.

complaint alleges that the subject draft reports were prepared negligently and in a biased manner, made public, and

caused damage to Tetra Tech’s reputation;

triggering related lawsuits and costing it opportunities for both government

and commercial contracts.

Company has provided notice of this lawsuit to our insurance carrier.

Our insurance carrier is providing a defense on our behalf

in connection with this lawsuit, subject to a $100,000 self-insured retention and the terms and limitations contained in the insurance

January 7, 2021 Defendants’

motion to dismiss the complaint in its entirety was granted without prejudice, with leave to

Tetra Tech subsequently filed a First Amended Complaint (“FAC”) and Defendants filed a motion to dismiss Tetra

Tech’s FAC.

At this time, the Company continues to believe it does not have any liability to Tetra Tech.

Company has a 25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG which

provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure.

Closure Policy, as amended, provided for a maximum allowable coverage of $39,000,000 which included available capacity to allow

Closure Policy, as amended, provides for a maximum allowable coverage of $28,177,000 which includes available capacity to allow

for annual inflation and other performance and surety bond requirements.

As a result of the closure of the Company’s M&EC

facility, on July 22, 2019, AIG released $5,000,000 of the finite risk sinking funds held as collateral under the 2003 Closure

Policy to the Company.

The finite risk sinking funds received by the Company are to be used for general working capital needs.

In conjunction with the release of the finite risk sinking funds by AIG, total coverage under the 2003 Closure Policy was amended

from $30,549,000 to $19,314,000.

Additionally, the maximum coverage allowable under the 2003 Closure Policy was amended from $39,000,000

to approximately $28,177,000 which includes available capacity to allow for annual inflation and other performance and surety

bond requirements.

At December 31, 2019 and December 31, 2018, finite risk sinking funds contributed by the Company related to

the 2003 Closure Policy which is included in other long term assets on the accompanying Consolidated Balance Sheets totaled $11,307,000

and $15,971,000, respectively, which included interest earned of $1,836,000 and $1,500,000 on the finite risk sinking funds as

of December 31, 2019 and December 31, 2018, respectively.

Interest income for the year ended 2019 and 2018 was approximately $336,000

and $295,000, respectively.

If we so elect, AIG is obligated to pay us an amount equal to 100% of the finite risk sinking fund

account balance in return for complete release of liability from both us and any applicable regulatory agency using this policy

as an instrument to comply with financial assurance requirements.

Total coverage under the 2003 Closure Policy, as amended,

was $19,651,000 at December 31, 2020.

At December 31, 2020 and December 31, 2019, finite risk sinking funds contributed by the

Company related to the 2003 Closure Policy which is included in other long term assets on the accompanying Consolidated Balance

Sheets totaled $11,446,000 and $11,307,000, respectively, which included interest earned of $1,975,000 and $1,836,000 on the finite

risk sinking funds as of December 31, 2020 and December 31, 2019, respectively.

Interest income for the year ended 2020 and 2019

was approximately $139,000 and $337,000, respectively.

If the Company so elects, AIG is obligated to pay us an amount equal to

100% of the finite risk sinking fund account balance in return for complete release of liability from both us and any applicable

regulatory agency using this policy as an instrument to comply with financial assurance requirements.

of Credits and Bonding Requirements

20 unchanged sentences

David Centofanti is the son of our EVP of Strategic Initiatives and a Board member.

Louis Centofanti.

Louis Centofanti previously held the position of President and CEO until September 8, 2017.

Ferguson previously served as an advisor to the Company’s Board until the first quarter of 2019 and continues to serve as

a consultant to the Company relating to our TBI at our PFNWR facility (see “Note 6 –

Capital Stock, Stock Plan, Warrants,

and Stock Based Compensation”

for a discussion of the options granted to Robert Ferguson in connection with the TBI initiatives).

For his services to the Company, Robert Ferguson was paid $4,000 monthly plus reasonable expenses.

Ferguson ceased to be a

related party to the Company when he ceased providing advisory services to the Board.

Company entered into employment agreements with each of Mark Duff (President and CEO), Ben Naccarato (CFO), and Dr.

Company entered into an employment agreement with each of Mark Duff, President and CEO, Dr.

Louis Centofanti, EVP of Strategic

Initiatives, Ben Naccarato, EVP and CFO, Andrew Lombardo, EVP of Nuclear and Technical Services, and Richard Grondin, EVP of Waste

Treatment Operations, with each employment agreement dated July 22, 2020 (each employment agreement referred to as the “New

Employment Agreement”).

The Company had entered into an employment agreement with each of Mark Duff, Dr.

Louis Centofanti

(EVP of Strategic Initiatives), with each employment agreement dated September 8, 2017.

Each of the employment agreements is effective

for three years from September 8, 2017 (the “Initial Term”) unless earlier terminated by us or by the executive officer.

At the end of the Initial Term of each employment agreement, each employment agreement will automatically be extended for one

additional year, unless at least six months prior to the expiration of the Initial Term, the Company or the executive officer

provides written notice not to extend the terms of the employment agreement.

Each employment agreement provides for annual base

salaries, performance bonuses as provided in the MIP as approved by our Board, and other benefits commonly found in such agreements.

In addition, each employment agreement provides that in the event the executive officer terminates his employment for “good

reason”

(as defined in the agreements) or is terminated by the Company without cause (including the executive officer terminating

his employment for “good reason”

or is terminated by us without cause within 24 months after a Change in Control (as

defined in the agreement)), the Company will pay the executive officer the following:

(a) a sum equal to any unpaid base salary;

(b) accrued unused vacation time and any employee benefits accrued as of termination but not yet been paid (“Accrued Amounts”);

and (d) two times the performance compensation (under the MIP) earned with respect to the fiscal

year immediately preceding the date of termination provided the performance compensation earned with respect to the fiscal year

immediately preceding the date of termination has not been paid.

If performance compensation earned with respect to the fiscal

year immediately preceding the date of termination has been made to the executive officer, the executive officer will be paid

an additional year of the performance compensation earned with respect to the fiscal year immediately preceding the date of termination.

If the executive terminates his employment for a reason other than for good reason, the Company will pay to the executive the

amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP.

and Ben Naccarato on September 8, 2017 which each of the employment agreement was terminated effective July, 22, 2020 upon the

execution of the New Employment Agreement with Mark Duff, Dr.

Louis Centofanti and Ben Naccarato.

New Employment Agreement is effective for three years from July 22, 2020 (the “Initial Term”) unless earlier terminated

by the Company or by the executive officer.

At the end of the Initial Term of each New Employment Agreement, each New Employment

Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial

Term, we or the executive officer provides written notice not to extend the terms of the New Employment Agreement.

Each New Employment

Agreement provides for annual base salary, performance bonuses (as provided in the MIP as approved by our Compensation Committee

and Board) and other benefits commonly found in such agreement.

to each New Employment Agreement, if the executive officer’s employment is terminated due to death/disability or for cause

(as defined in the agreements), the Company will pay to the executive officer or to his estate an amount equal to the sum of any

unpaid base salary and accrued unused vacation time through the date of termination and any benefits due to the executive officer

under any employee benefit plan (the “Accrued Amounts”) plus any performance compensation payable pursuant to the

MIP with respect to the fiscal year immediately preceding the date of termination.

the executive officer terminates his employment for “good reason”

(as defined in the agreements) or is terminated

by us without cause (including any such termination for “good reason”

or without cause within 24 months after a Change

in Control (as defined in the agreement)), the Company will pay the executive officer the Accrued Amounts, two years of full base

salary, and two times the performance compensation (under the MIP) earned with respect to the fiscal year immediately preceding

the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the

date of termination has not been paid.

If performance compensation earned with respect to the fiscal year immediately preceding

the date of termination has been made to the executive officer, the executive officer will be paid an additional year of the performance

compensation earned with respect to the fiscal year immediately preceding the date of termination.

If the executive terminates

his employment for a reason other than for good reason, the Company will pay to the executive an amount equal to the Accrued Amounts

plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of

there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase common stock held by the

4 unchanged sentences

for the lesser of the original option term or twelve months from the date of the executive officer’s death.

of an executive officer terminating his employment for “good reason”

or is terminated by us without cause, all outstanding

stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on

the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date

of the executive’s date of termination.

January 17, 2019, the Company’s Board and the Compensation Committee approved individual MIP for the CEO, CFO, and EVP of

Strategic Initiatives.

Each MIP is effective January 1, 2019 and applicable for the year ended December 31, 2019.

Each MIP provides

guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification.

Each MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established

as a percentage of the executive’s annual 2019 base salary.

The potential target performance compensation ranges from 5%

to 150% of the 2019 base salary for the CEO ($14,350 to $430,500), 5% to 100% of the 2019 base salary for the CFO ($11,762 to

$235,231), and 5% to 100% of the 2019 base salary for the EVP of Strategic Initiatives ($11,449 to $228,985).

The amount payable

under the 2019 MIP was approximately $110,700, $81,100, and $78,900, for the CEO, CFO, and EVP of Strategic Initiatives, respectively,

which we anticipate will be paid in April 2020.

of the executives also had a MIP for the year ended December 31, 2018, which also provides guidelines for the calculation of annual

cash incentive-based compensation, similar to the 2019 MIPs discussed above.

No performance compensation was earned or payable

under each of the 2018 MIPs.

an executive officer terminates his employment for “good reason”

or is terminated by the Company without cause, all

outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing

on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the

date of the executive’s date of termination.

Severance benefits payable with respect to a termination (other than Accrued

Amounts) shall not be payable until the termination constitutes a “separation from service”

(as defined under Treasury

Regulation Section 1.409A-1(h)).

January 16, 2020, the Company’s Board and the Compensation Committee approved individual MIP for each Mark Duff, CEO and

President, Ben Naccarato, EVP and CFO, Dr.

Louis Centofanti, EVP of Strategic Initiatives and Andy Lombardo, who was appointed

by our Board to the position of EVP of Nuclear and Technical Services and an executive officer of the Company on January 16, 2020.

Lombardo previously held the position of SVP of Nuclear and Technical Services.

Additionally, on July 22, 2020, the Company’s

Board and the Compensation Committee approved a MIP for Richard Grondin who was appointed by the Board to the position of EVP

of Waste Treatment Operations and an executive officer of the Company.

Grondin previously held the position of Vice President

of Western Operations within our Treatment Segment.

Each of the MIPs is effective January 1, 2020 and applicable for year ended

December 31, 2020.

Each MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation

Committee oversight and modification.

Each MIP awards cash compensation based on achievement of performance thresholds, with the

amount of such compensation established as a percentage of the executive’s 2020 annual base salary.

The potential target

performance compensation ranges from 5% to 150% of the base salary for the CEO ($17,220 to $516,600), 5% to 100% of the base salary

for the CFO ($14,000 to $280,000), 5% to 100% of the base salary for the EVP of Strategic Initiatives ($11,667 to $233,336), 5%

to 100% of the base salary for the EVP of Nuclear and Technical Services ($14,000 to $280,000) and 5% to 100% ($12,000 to $240,000)

of the base salary for the EVP of Waste Treatment Operations.

of the three executives in 2019 (Mark Duff, Ben Naccarato, Dr.

Louis Centofanti) also had a MIP for 2019 which also provided guidelines

for the calculation of annual cash incentive-based compensation, similar to the 2020 MIPs discussed above.

An aggregate of approximately

$271,000 in compensation expenses was earned under the MIPs for the Company’s three executives for 2019 which was paid to

the executives at the end of May 2020.

Prior to being named an executive officer of the Company on January 16, 2020, Andy Lombardo

had a MIP for 2019 as the SVP of Nuclear and Technical Services.

Andy Lombardo earned approximately $89,000 under the 2019 MIP

which was also paid by the Company to him at the end of May 2020.

January 16, 2020, the Board, with the approval of the Compensation Committee approved the following salary increase for the Company’s

NEO effective January 1, 2020:

base salary for Mark Duff, CEO and President, was increased to $344,400 from $287,000.

base salary for Ben Naccarato, who was promoted to EVP and CFO from VP and CFO, was increased

to $280,000 from $235,231;

base salary for Andy Lombardo, who was appointed to the position of EVP of Nuclear and

Technical Services as discussed above, was increased to $280,000 from $258,662, which

was the annual base salary that Mr.

Lombardo earned as SVP of Nuclear and Technical Services

and prior to his appointment as an executive officer of the Company by the Board.

Additionally,

as a result of Mr.

Grondin’s appointment by the Board to the position of EVP of Waste Treatment and an executive officer

on July 22, 2020, his annual salary was increased from $208,000 as Vice President of Western Operations within our Treatment Segment

to $240,000, effective July 22, 2020.

accordance with ASC 280, “Segment Reporting”, we define an operating segment as a business activity:

4 unchanged sentences

currently have three reporting segments, which include Treatment and Services Segments, which are based on a service offering

and Medical, whose primary purpose is the R&D of a new medical isotope production technology.

The Medical Segment

has not generated any revenues and all costs incurred are reflected within R&D in the accompanying consolidated financial

As previously disclosed, the Medical Segment has substantially reduced its R&D costs and activities due to the

need for capital to fund these activities.

The Company anticipates that the Medical Segment will not resume full R&D activities

until the necessary capital is obtained through its own credit facility or additional equity raise, or obtains partners willing

to provide funding for its R&D.

Our reporting segments exclude our corporate headquarter and our discontinued operations (see

and Medical, whose primary purpose is the R&D of a medical isotope production technology.

The Medical Segment has

not generated any revenues and all costs incurred are reflected within R&D in the accompanying consolidated financial statements.

As previously disclosed, the Medical Segment has substantially reduced its R&D costs and activities due to the need for capital

to fund these activities.

The Company anticipates that the Medical Segment will not resume full R&D activities until the necessary

capital is obtained through its own credit facility or additional equity raise, or obtains partners willing to provide funding

Our reporting segments exclude our corporate headquarter, business center and our discontinued operations (see

“Note 9 –

3 unchanged sentences

Reporting as of and for the year ended December 31, 2020

Segments Total

Corporate (2)

Consolidated Total

Revenue from external customers

from external customers

$ 105,426 (3)(4)

Intercompany revenues

Research and development

Interest income

Interest expense

Interest expense-financing fees

Depreciation and amortization

Segment income (loss) before income taxes

Income tax expense

Segment income (loss)

Segment assets (1)

Expenditures for segment assets (net)

and development

expense-financing fees

and amortization

income (loss) before income taxes

tax (benefit) expense

income (loss)

for segment assets (net)

Reporting as of and for the year ended December 31, 2019

Segments Total

Corporate (2)

Consolidated Total

Revenue from external customers

from external customers

$ 73,459 (3)(4)

Intercompany revenues

Research and development

Interest income

Interest expense

Interest expense-financing fees

Depreciation and amortization

Segment income (loss) before income taxes

Income tax (benefit) expense

Segment income (loss)

Segment assets (1)

Expenditures for segment assets (net)

assets have been adjusted for intercompany accounts to reflect actual assets for each segment.

and development

expense-financing fees

and amortization

income (loss) before income taxes

income (loss)

for segment assets (net)

assets have been adjusted for intercompany accounts to reflect actual assets for each

reflect the activity for corporate headquarters not included in the segment information.

Company performed services relating to waste generated by government clients (domestic and foreign (primarily Canadian)),

either directly as a prime contractor or indirectly for others as a subcontractor to government entities, representing approximately

Company performed services relating to waste generated by government clients (domestic

and foreign (primarily Canadian)), either directly as a prime contractor or indirectly

for others as a subcontractor to government entities, representing approximately 96,582,000

or 91.6% of total revenue for 2020 and $59,985,000 or 81.7% of total revenue for 2019.

The following reflects

such revenue generated by our two segments:

Domestic government

Foreign government

The following reflects such revenue generated by our two segments:

following table reflects revenue based on customer location:

United States

United Kingdom

includes assets from our discontinued operations of $221,000 and $306,000 at December 31, 2019 and 2018, respectively.

of debt discount/debt issuance costs of ($340,000) and ($80,000) for 2019 and 2018, respectively (see “Note 10 –

includes assets from our discontinued operations of $103,000 and $221,000 at December

31, 2020 and 2019, respectively.

of debt discount/debt issuance costs of ($105,000) and ($340,000) for 2020 and 2019,

respectively (see “Note 10 –

“Long-Term Debt”

for additional information).

includes a net gain of $1,596,000 recorded resulting from the exchange offer of the Series B Preferred Stock of the Company’s

M&EC subsidiary (see “Note 8 –

Series B Preferred Stock”)

the year ended December 31, 2018, amount includes a tax benefit recorded in the amount of approximately $1,235,000 resulting

from certain provisions of the TCJA (see “Note 13 –

Income Taxes”

for further information of this tax benefit).

of financed amount of $393,000 and $545,000 for the year ended December 31, 2019 and 2018, respectively.

long-lived asset (net) for our PF Canada, Inc.

subsidiary of $41,000 and $0, for the year ended December 31, 2019 and 2018,

for additional

information).

of financed amount of $883,000 and $393,000 for the year ended December 31, 2020 and

2019, respectively.

January 16, 2020, the Company’s Board and the Compensation Committee approved individual MIP for each Mark Duff, CEO and

President, Ben Naccarato, CFO, and Dr.

Louis Centofanti, EVP of Strategic Initiatives.

Additionally, the Board and the Compensation

Committee approved a MIP for Andy Lombardo, who was elected EVP of Nuclear and Technical Services and an executive officer of

Lombardo previously held the position of Senior Vice President (“SVP”) of Nuclear and Technical Services.

The MIPs are effective January 1, 2020 and applicable for year ended December 31, 2020.

Each MIP provides guidelines for the calculation

of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification.

Each MIP awards cash

compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage

of the executive’s 2020 annual base salary (see below for salary of each executive officers for 2020).

The potential target

performance compensation ranges from 5% to 150% of the base salary for the CEO ($17,220 to $516,600), 5% to 100% of the base salary

for the CFO ($14,000 to $280,000), 5% to 100% of the base salary for the EVP of Strategic Initiatives ($11,667 to $233,336) and

5% to 100% of the base salary for the EVP of Nuclear and Technical Services ($14,000 to $280,000).

January 16, 2020, the Board, with the approval of the Compensation Committee approved the following salary increase for the Company’s

NEO effective January 1, 2020:

base salary for Mark Duff, CEO and President, was increased to $344,400 from $287,000.

base salary for Ben Naccarato, who was promoted to EVP and CFO from VP and CFO, was increased to $280,000 from $235,231;

base salary for Andy Lombardo, who was elected to EVP of Nuclear and Technical Services as discussed above, was increased

to $280,000 from $258,662, which was the annual base salary that Mr.

Lombardo was paid as SVP of Nuclear and Technical Services

and prior to his election as an executive officer of the Company by the Board.

Coronavirus (“Covid-19”)

The spread of Coronavirus around the

world in the first quarter of 2020 has resulted in significant volatility in the U.S.

and international markets.

there is significant uncertainty around the breadth and duration of business disruptions related to the Coronavirus, as well

as its impact on the U.S and international economies.

As a result of the Coronavirus, the Company has been informed that

certain field projects for remediation work are being suspended until further notice due to precautions associated with the

risk of potential virus spread among staff and client.

Additionally, certain customers have delayed waste shipments to us

into the second quarter of 2020 that were originally scheduled for the first quarter of 2020.

At this time, the Company is

unable to determine if the Coronavirus will have a material impact to its operations.

long-lived asset (net) for our PF Canada, Inc.

subsidiary of $33,000 and $41,000 for

the year ended December 31, 2020 and 2019, respectively.

OF EMPLOYMENT TAX DEPOSITS

CARES Act, as amended by the Flexibility Act which was signed into law on June 5, 2020, provides employers the option to defer

the payment of an employer’s share of social security taxes beginning on March 27, 2020 through December 31, 2020 with 50%

of the amount of social security taxes deferred to become due on December 31, 2021 with the remaining 50% due on December 31,

The Company elected to defer such taxes starting in mid-April 2020.

At December 31, 2020, the Company has deferred payment

of approximately $1,252,000 in its share of social security taxes, of which approximately $626,000 is included in “Other

long-term liabilities,”

with the remaining balance included in “Accrued expenses”

within current liabilities

in the Company’s Consolidated Balance Sheets.

INTEREST ENTITIES (“VIE”)

May 24, 2019, the Company and Engineering/Remediation Resources Group, Inc.

(“ERRG”) entered into an unpopulated joint

venture agreement for project work bids within the Company’s Services Segment.

The joint venture is doing business as Perma-Fix

ERRG, a general partnership.

The Company has a 51% partnership interest in the joint venture and ERRG has a 49% partnership interest

in the joint venture.

Activities under Perma-Fix ERRG did not commence until the first quarter of 2020.

Company determines whether joint ventures in which it has invested meet the criteria of a VIE at the start of each new venture

and when a reconsideration event has occurred.

A VIE is a legal entity that satisfies any of the following characteristics:

the legal entity does not have sufficient equity investment at risk;

(b) the equity investors at risk as a group, lack the characteristics

of a controlling financial interest;

or (c) the legal entity is structured with disproportionate voting rights.

Company consolidates a VIE if it is determined to be the primary beneficiary of the VIE.

The primary beneficiary has both the

power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation

to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

on the Company’s evaluation of Perma-Fix ERRG and related agreements with Perma-Fix ERRG, the Company determined that Perma-Fix

ERRG is a VIE in which we are the primary beneficiary.

At December 31, 2020, Perma-Fix ERRG had total assets of $2,723,000 and

total liabilities of $2,723,000 which are all recorded as current.

evaluated events occurring subsequent to December 31, 2020 through March 29, 2021, the date these consolidated financial

statements were available for issuance, and other than as noted below determined that no material recognizable subsequent events

January 21, 2021, the Company’s Compensation Committee and the Board approved individual MIP for the calendar year 2021

for each CEO, EVP and CFO, EVP of Strategic Initiatives, EVP of Nuclear and Technical Services and EVP of Waste Treatment Operations.

Each of the MIPs is effective January 1, 2021 and applicable for year 2021.

Each MIP provides guidelines for the calculation of

annual cash incentive-based compensation, subject to Compensation Committee oversight and modification.

Each MIP awards cash compensation

based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the executive’s

2021 annual base salary at the time of the approval of the MIP.

The potential target performance compensation ranges from 5% to

150% of the base salary for the CEO ($17,220 to $516,600), 5% to 100% of the base salary for the CFO ($14,000 to $280,000), 5%

to 100% of the base salary for the EVP of Strategic Initiatives ($11,667 to $233,336), 5% to 100% of the base salary for the EVP

of Nuclear and Technical Services ($14,000 to $280,000) and 5% to 100% ($12,000 to $240,000) of the base salary for the EVP of

Waste Treatment Operations.

Officer Salary

February 2021, the Company’s Compensation Committee approved an annual salary cost of living adjustment of approximately

2.3% to take into effect April 1, 2021 for each of our executive officers.

January 21, 2021, the Company’s Compensation Committee and the Board approved the following revision to the compensation

of each non-employee Board member and the Board Committee(s) for which the Board member serves, effective January 1, 2021.

director is to be paid a quarterly fee of $11,500 from $8,000;

Chairman of the Board is to be paid an additional quarterly fee of $8,750 from $7,500;

Chairman of the Audit Committee is to be paid an additional quarterly fee of $6,250 from

Chairman of each of the Compensation Committee, the Corporate Governance and Nominating

Committee (the “Nominating Committee”), and the Strategic Advisory Committee

(the “Strategic Committee”) is to receive $3,125 in quarterly fee.

quarterly fee was previously paid.

The Chairman of the Board is not eligible to receive

a quarterly fee for serving as the Chairman of any the aforementioned Committees ;

Audit Committee member (excluding the Chairman of the Audit Committee) is to receive

$1,250 in quarterly fee;

member of the Compensation Committee, the Nominating Committee, and the Strategic Committee

is to receive a quarterly fee of $500.

Such fee is payable only if the member does not

serve as the Chairman of the Audit Committee, the Nominating Committee, the Strategic

Committee or as the Chairman of the Board.

non-employee Board member will continue to receive $1,000 for each board meeting attendance and a $500 fee for meeting attendance

via conference call.

Each non-employee director may continue to elect to have either 65% or

100% of such fees payable in Common Stock under the 2003 Plan, with the balance, if any, payable in cash (see “Note 7 –

Stock, Stock Plans, Warrants, and Stock Based Compensation –

Stock Option Plans”

for a discussion of the 2003 Plan).

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data