PERMA FIX ENVIRONMENTAL SERVICES INC 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our Common Stock is traded on the NASDAQ Capital Markets (“NASDAQ”) under the symbol “PESI.” The following table sets forth the high and low market trade prices quoted for the Common Stock during the periods shown. The source of such quotations and information is the NASDAQ online trading history reports. 2020 2019 Low High Low High Common Stock 1 st Quarter $ 3.82 $ 9.50 $ 2.50 $ 3.94 2 nd Quarter 4.76 6.54 3.40 4.46 3 rd Quarter 5.94 7.40 3.10 4.77 4 th Quarter 5.80 7.13 4.30 9.98 At February 12, 2021, there were approximately 137 stockholders of record of our Common Stock. The actual number of our stockholders is greater than this number, and includes beneficial owners whose shares are held in “street name” by banks, brokers, and other nominees. 18 Since our inception, we have not paid any cash dividends on our Common Stock and have no dividend policy. Our loan agreement dated May 8, 2020 prohibits us from paying any cash dividends on our Common Stock without prior approval from our lender. We do not anticipate paying cash dividends on our outstanding Common Stock in the foreseeable future. There were no purchases made by us or on behalf of us or any of our affiliated members of shares of our Common Stock during 2020. We adopted a preferred share rights plan (the “Rights Plan”), as amended, which is designed to protect us against certain creeping acquisitions, open market purchases, and certain mergers and other combinations with acquiring companies. The Rights Plan is to terminate at the earliest of (1) close of business on May 2, 2021 (the “Final Expiration Date”), (2) the time at which the Rights are redeemed, (3) the time at which the Rights are exchange, or (4) closing of any merger or acquisition of the Company approved by the Board prior to any person becoming acquiring person. See Item 1A. - Risk Factors – “Our Preferred Share Rights Plan may adversely affect our stockholders” as to further discussion relating to the terms of our Rights Plan in addition to its termination date. See Note 7 “Capital Stock, Stock Plans, Warrants, and Stock Based Compensation” in Part II, Item 8, “Financial Statements and Supplementary Data” and “Equity Compensation Plans” in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matter” for securities authorized for issuance under equity compensation plans which are incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA Not required under Regulation S-K for smaller reporting companies. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain statements contained within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) may be deemed “forward-looking statements” within the meaning of Section 27A of the Act, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, the “Private Securities Litigation Reform Act of 1995”). See “Special Note regarding Forward-Looking Statements” contained in this report. Management’s discussion and analysis is based, among other things, upon our audited consolidated financial statements and includes our accounts, the accounts of our wholly-owned subsidiaries, the accounts of our majority-owned Polish subsidiary, and the account of a variable interest entity for which we are the primary beneficiary, after elimination of all significant intercompany balances and transactions. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report. COVID-19 Impact Since the outbreak of COVID-19 in early part of 2020, we have remained focused on keeping our employees working and, at the same time, focusing on protecting the health and wellbeing of our employees and the communities in which we operate while assuring the continuity of our business operations. Our management team has proactively implemented our business continuity and safety plans and has taken a variety of measures to ensure the ongoing availability of our waste treatment and remediation services, while taking health and safety measures, including separating employee and customer contact, social distancing between employees, implementing enhanced cleaning and hygiene protocols in all of our facilities, and implementing remote work policies, when necessary. 19 The COVID-19 pandemic presents potential new risks to our business and results in significant volatility in the U.S. and international markets. We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business. Starting in late March 2020, our 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. We continue 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, we expect 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 our 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 during the next twelve months. At this time, we believe we have sufficient liquidity on hand to continue business operations during the next twelve months. At December 31, 2020, our borrowing availability under our revolving credit facility was approximately $14,220,000 which was based on a percentage of eligible receivables and subject to certain reserves and included our cash on hand of approximately $7,924,000. In April 2020, we entered into a promissory note (“PPP Loan”) with our credit facility lender in the amount of approximately $5,666,000 under the Paycheck Protection Program (“PPP”) that was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” - see “CARES Act – PPP Loan” under “Liquidity and Capital Resources” below for a discussion of the PPP Loan). During the third quarter of 2020, we repaid approximately $348,000 of the PPP Loan resulting from clarification in the loan calculation at the time of the loan origination. On October 5, 2020, we applied for forgiveness on the entire PPP Loan balance as permitted under the program, which is subject to the review and approval of our lender and Small Business Administration (“SBA”). Proceeds from the PPP Loan have allowed us to avoid having to furlough or layoff certain eligible employees as a result of the COVID-19 pandemic, although there are no assurances that such will not be required going forward. We continue to assess reducing operating costs during this volatile time, which include curtailing capital expenditures, eliminating non-essential expenditures and implementing a hiring freeze as needed. We elected to defer payment of our share of social security taxes as permitted under the CARES Act, as amended (see “CARES Act – Deferral of Employment Tax Deposits” within this MD&A for a discussion of this deferral). Based on our current projection, we believe that we will be able to meet the current covenant requirements under our loan agreement for the next twelve months despite the impact of COVID-19. We are closely monitoring our customers’ payment performance. However, since a significant portion of our revenues is derived from government related contracts, we do not expect our accounts receivable collections to be materially impacted due to COVID-19. Review Revenue increased $31,967,000 or 43.5% to $105,426,000 for the twelve months ended December 31, 2020 from $73,459,000 for the corresponding period of 2019. The increase was entirely within our Services Segment where revenue increased $42,188,000 or 127.5% from increased projects and the sizable value of certain projects. Our Treatment Services revenue decreased by $10,221,000 or 25.3% primarily due to delays in waste shipments from certain customers resulting from the impact of COVID-19 as discussed above. The delays in waste shipments were also partly attributed to the transition of new prime contractors at certain DOE sites which resulted in delays in waste shipments to us as subcontractors under certain contracts. Additionally, lower averaged price waste from revenue mix contributed to the decrease in revenue within the Treatment Segment. Gross profit increased $309,000 or 2.0% due to the increase in revenues in the Services Segment. Selling, General, and Administrative (“SG&A”) expenses decreased by approximately $88,000 or 0.7% for the twelve months ended December 31, 2020 as compared to the corresponding period of 2019. At December 31, 2020, we had working capital of 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 as “Current portion of long-term debt” on our Consolidated Balance Sheets. As previously discussed, 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. 20 Business Environment and Outlook Our Treatment and Services Segments’ business continues to be heavily dependent on services that we provide to governmental clients directly as the contractor or indirectly as a subcontractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including, without limitation, the economic conditions, the manner in which the applicable government will be required to spend funding to remediate various sites, and/or the impact resulting from COVID-19 as discussed above. In addition, our governmental contracts and subcontracts relating to activities at governmental sites in the United States are generally subject to termination or renegotiation on 30 days’ notice at the government’s option, and our governmental contracts/task orders with the Canadian government authorities allow the authorities to terminate the contract/task orders at any time for convenience. Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flows. As previously disclosed, our Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund such activities. We anticipate that our 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. We are continually reviewing methods to raise additional capital to supplement our liquidity requirements, when needed, and reducing our operating costs. We continue to aggressively bid on various contracts, including potential contracts within the international markets. Results of Operations The reporting of financial results and pertinent discussions are tailored to our three reportable segments: The Treatment Segment (“Treatment”), the Services Segment (“Services”), and the Medical Segment (“Medical”). Our Medical Segment has not generated any revenue and all costs incurred are included within R&D. Summary - Years Ended December 31, 2020 and 2019 Below are the results of continuing operations for years ended December 31, 2020 and 2019 (amounts in thousands): (Consolidated) 2020 % 2019 % Net revenues $ 105,426 100.0 $ 73,459 69.7 Cost of goods sold 89,533 84.9 57,875 78.8 Gross profit 15,893 15.1 15,584 21.2 Selling, general and administrative 11,774 11.2 11,862 16.1 Research and development 762 .7 750 1.0 Loss on disposal of property and equipment 29 — 3 — Income from operations 3,328 3.2 2,969 4.0 Interest income 140 .1 337 .5 Interest expense (398 ) (.4 ) (432 ) (.6 ) Interest expense – financing fees (294 ) (.3 ) (208 ) (.3 ) Other 211 .2 223 .3 Loss on extinguishment of debt (27 ) — — — Income from continuing operations before taxes 2,960 2.8 2,889 3.9 Income tax (benefit) expense (189 ) (.2 ) 157 .2 Income from continuing operations $ 3,149 3.0 $ 2,732 3.7 21 Revenue Consolidated revenues increased $31,967,000 for the year ended December 31, 2020 compared to the year ended December 31, 2019, as follows: (In thousands) 2020 % Revenue 2019 % Revenue Change % Change Treatment Government waste $ 21,234 20.1 $ 27,277 37.1 $ (6,043 ) (22.2 ) Hazardous/non-hazardous (1) 5,072 4.8 6,376 8.7 (1,304 ) (20.5 ) Other nuclear waste 3,837 3.6 6,711 9.1 (2,874 ) (42.8 ) Total 30,143 28.6 40,364 54.9 (10,221 ) (25.3 ) Services Nuclear 73,458 69.7 30,371 41.4 43,087 141.9 Technical 1,825 1.7 2,724 3.7 (899 ) (33.0 ) Total 75,283 71.4 33,095 45.1 42,188 127.5 Total $ 105,426 100.0 $ 73,459 100.0 $ 31,967 43.5 1) Includes wastes generated by government clients of $1,976,000 and $2,422,000 for the twelve months ended December 31, 2020 and 2019, respectively. Treatment Segment revenue decreased $10,221,000 or 25.3 % for the twelve months ended December 31, 2020 over the same period in 2019. The revenue decrease was primarily due to lower revenue generated from lower waste volume resulting from waste shipment delays since late March 2020 from certain of our customers due to the impact of COVID-19 including generator shutdowns and limited sustained operations. The delays in waste shipments were also partly attributed to the transition of new prime contractors at certain DOE sites which resulted in delays in waste shipments to us as subcontractors under certain contracts. Additionally, lower averaged price waste from revenue mix contributed to the decrease in revenue. Our Services Segment revenue increased $42,188,000 or 127.1% due to the increase in number of projects and the sizeable value of certain projects. Our Services Segment experienced this increase in revenue despite a number of our projects being shut down starting in late March 2020 due to COVID-19. These projects did not restart until the latter part of the second quarter of 2020. Our Services Segment revenues are project based; as such, the scope, duration and completion of each project vary. As a result, our Services Segment revenues are subject to differences relating to timing and project value. Cost of Goods Sold Cost of goods sold increased $31,658,000 for the year ended December 31, 2020, as compared to the year ended December 31, 2019, as follows: (In thousands) 2020 % Revenue 2019 % Revenue Change Treatment $ 24,652 81.8 $ 28,116 69.7 $ (3,464 ) Services 64,881 86.2 29,759 89.9 35,122 Total $ 89,533 84.9 $ 57,875 78.8 $ 31,658 Cost of goods sold for the Treatment Segment decreased approximately $3,464,000 or 12.3%. Treatment Segment costs of goods sold for the twelve months ended December 31, 2019 included additional closure costs recorded in the amount of $330,000 for our East Tennessee Materials and Energy Corporation (“M&EC”) facility due to finalization of closure requirements in connection with the closure of the facility. Excluding the closure costs recorded in 2019, Treatment Segment cost of goods sold decreased $3,134,000 or 11.3% primarily due to the decrease in revenue. Excluding the closure costs recorded in 2019, Treatment Segment variable costs decreased by approximately $3,516,000 primarily due to lower disposal, transportation, material and supplies and outside services costs. Our overall fixed costs were higher by approximately $382,000 resulting from the following: maintenance expenses were higher by $280,000; regulatory expenses were higher by approximately $190,000; depreciation expenses were higher by approximately $219,000 primarily due to more financed leases; general expenses were lower by approximately $61,000 in various categories; salaries and payroll costs were lower by approximately $175,000; and travel expenses were lower by approximately $71,000 due to restrictions implemented resulting from COVID-19. Services Segment cost of goods sold increased $35,122,000 or 118.0% primarily due to increased revenue as discussed above. The increase in cost of goods sold within our Services Segment was primarily due to higher salaries and payroll costs, travel, and outside services expenses totaling approximately $31,068,000, higher material and supplies, regulatory and disposal costs totaling approximately $3,312,000, and higher general expenses of $742,000 in various categories. Payroll costs within our Services Segment included higher expenses for project related incentives. Included within cost of goods sold is depreciation and amortization expense of $1,555,000 and $1,301,000 for the twelve months ended December 31, 2020, and 2019, respectively. 22 Gross Profit Gross profit for the year ended December 31, 2020 was $309,000 higher than 2019 as follows: (In thousands) 2020 % Revenue 2019 % Revenue Change Treatment $ 5,491 18.2 $ 12,248 30.3 $ (6,757 ) Services 10,402 13.8 3,336 10.1 7,066 Total $ 15,893 15.1 $ 15,584 21.2 $ 309 Treatment Segment gross profit decreased $6,757,000 or 55.2% and gross margin decreased to 18.2% from 30.3%. Excluding the additional closure costs of $330,000 recorded in the twelve months ended December 31, 2019 in connection with the closure of our M&EC facility as discussed above, gross profit decreased $7,087,000 or 56.3% and gross margin decreased to 18.2% from 31.2% primarily due to lower revenue from lower waste volume and lower averaged price waste from revenue mix. In the Services Segment, gross profit increased $7,066,000 or 211.8% and gross margin increased from 10.1% to 13.8% primarily due to the increase in revenue. Our overall Services Segment gross margin is impacted by our current projects which are competitively bid on and will therefore, have varying margin structures. SG&A SG& A expenses decreased $88,000 for the year ended December 31, 2020 as compared to the corresponding period for 2019 as follows: (In thousands) 2020 % Revenue 2019 % Revenue Change Administrative $ 5,537 — $ 5,395 — $ 142 Treatment 3,819 12.7 3,955 9.8 (136 ) Services 2,418 3.2 2,512 7.6 (94 ) Total $ 11,774 11.2 $ 11,862 16.1 $ (88 ) The increase in Administrative SG&A was primarily due to the following: general expenses were higher by approximately $84,000 in various categories; director stock option expenses were higher by approximately $75,000 due to options granted to new directors in addition to higher fair value of options granted to re-elected directors; outside services expenses were higher by approximately $16,000 resulting from more consulting/subcontract matters; depreciation expenses were higher by approximately $14,000; salaries and payroll costs were higher by approximately $13,000; and travel expenses were lower by approximately $60,000 due to restrictions implemented resulting from the impact of COVID-19. Treatment SG&A was lower primarily due to the following: travel expenses were lower by approximately $109,000 due to restrictions implemented resulting from the impact of COVID-19; general expenses were lower by $123,000 in various categories which included lower trade show expenses of $122,000 resulting from the cancellation of certain trade shows due to impact of COVID-19; and salaries and payroll costs were higher by approximately $96,000. Services Segment SG&A was lower primarily due to the following: travel expenses were lower by approximately $119,000 due to restrictions implemented resulting from the impact of COVID-19; bad debt expenses were lower by approximately $432,000 as certain customer accounts which we had previously reserved for were collected in 2020 and additional bad debt expenses were recorded in 2019 for a certain account receivable which was determined not to be collectible at December 31, 2019 ; and salaries and payroll costs were higher by approximately $457,000. Included in SG&A expenses is depreciation and amortization expense of $41,000 and $41,000 for the twelve months ended December 31, 2020 and 2019, respectively. 23 R&D R&D expenses increased $12,000 for the year ended December 31, 2020 as compared to the corresponding period of 2019 as follows: (In thousands) 2020 2019 Change Administrative $ 76 $ 23 $ 53 Treatment 243 401 (158 ) Services 132 12 132 PF Medical 311 314 (3 ) Total $ 762 $ 750 $ 12 Research and development costs consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development of new technologies and technological enhancement of new potential waste treatment processes. Interest Income Interest income decreased by approximately $197,000 for the twelve months ended December 31, 2020 as compared to the corresponding period of 2019. The decrease was primarily due to lower interest earned on the finite risk sinking funds from lower interest rate. The decrease in interest income was also attributed to lower interest earned from lower finite risk sinking fund balance resulting from the release of $5,000,000 in finite risk sinking funds by AIG Specialty Insurance Company (“AIG”) to us at the end of July 2019 in connection with the closure of our M&EC facility. The $5,000,000 in finite sinking funds represented a partial release of the total collateral held under our finite risk insurance policy. Interest Expense Interest expense decreased by approximately $34,000 for the twelve months ended December 31, 2020 as compared to the corresponding period of 2019 primarily due to lower interest expense from our declining term loan balance outstanding and lower interest rate. Also, interest expense was lower from accelerated declining loan balance outstanding resulting from payments of principal on the $2,500,000 loan that we entered into with Robert Ferguson on April 1, 2019. This loan was paid-in-full by us by the end December 2020. The overall decrease in interest expense was partially offset by higher interest expense from more finance leases and interest accrued for the PPP Loan (see “Liquidity and Capital Resources – Financing Activities” and “The CARES Act – PPP Loan” for further information of these loans). Interest Expense- Financing Fees Interest expense-financing fees increased approximately $86,000 for the twelve months ended December 31, 2020 as compared to the corresponding period of 2019. The increase was primarily due to debt discount/debt issuance costs amortized as financing fees in connection with the issuance of our Common Stock and a purchase Warrant as consideration for us receiving the $2,500,000 loan from Robert Ferguson which was paid off early by us at the end of December 2020. Income Taxes We had income tax benefit of $189,000 and income tax expense of $157,000 for continuing operations for the years ended December 31, 2020 and 2019, respectively. The Company’s effective tax rates were approximately 6.4% and 5.4% for the twelve months ended December 31, 2020 and 2019, respectively. The tax benefit for the year ended December 31, 2020 resulted primarily from state tax true-ups related to our amended tax returns and a reduction in the naked credit deferred tax liabilities (“DTL”) resulting from a reduction in estimated state apportionment percentage. 24 Discontinued Operations Our 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. Our discontinued operations had no revenue for the twelve months ended December 31, 2020 and 2019. We incurred net losses of $412,000 and $547,000 for our discontinued operations for the twelve months ended December 31, 2020 and 2019, respectively (net of taxes of $0 for each period). The losses incurred for each period were primarily due to the administration and continued monitoring of our discontinued operations. Our net loss for the year ended December 31, 2019 also included an increase of approximately $50,000 in remediation reserve for our Perma-Fix of Memphis (“PFM”) subsidiary due to reassessment of the remediation reserve. Liquidity and Capital Resources Our cash flow requirements during 2020 were primarily financed by our operations, credit facility availability, and the PPP Loan that we received under the CARES Act as discussed below (see “CARES Act – PPP Loan”). We generated approximately $7,867,000 of cash from our continuing operations. Subject to the impact of COVID-19 as discussed above, our cash flow requirements for the next twelve months will consist primarily of general working capital needs, scheduled principal payments on our debt obligations, remediation projects, and planned capital expenditures. We plan to fund these requirements from our operations, credit facility availability, and cash on hand which was approximately $7,924,000 at December 31, 2020. We continue to explore all sources of increasing our capital to supplement our liquidity requirements, when needed, and to improve our revenue and working capital. We are continually reviewing operating costs and reviewing the possibility of further reducing operating costs and non-essential expenditures to bring them in line with revenue levels, when necessary. At this time, we believe that our cash flows from operations, our available liquidity from our credit facility, and our cash on hand should be sufficient to fund our operations for the next twelve months. However, due to the uncertainty of COVID-19, there are no assurances such will be the case in the events that certain of our customers continue to delay waste shipments and/or elect to shut down projects again due to COVID-19. As previously disclosed, our Medical Segment substantially reduced its R&D costs and activities due to the need for capital to fund such activities. We continue to seek various sources of potential funding for our Medical Segment. We anticipate that our 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. The following table reflects the cash flow activity for the year ended December 31, 2020 and the corresponding period of 2019: (In thousands) 2020 2019 Cash provided by (used in) operating activities of continuing operations $ 7,867 $ (4,023 ) Cash used in operating activities of discontinued operations (499 ) (660 ) Cash used in investing activities of continuing operations (1,711 ) (1,533 ) Cash provided by investing activities of discontinued operations 118 121 Cash provided by financing activities of continuing operations 1,892 992 Effect of exchange rate changes on cash 6 19 Increase (decrease) in cash and finite risk sinking fund (restricted cash) $ 7,673 $ (5,084 ) At December 31, 2020, we were in a positive cash position with no revolving credit balance. At December 31, 2020, we had cash on hand of approximately $7,924,000, which included account balances of our foreign subsidiaries totaling approximately $377,000. At December 31, 2020, we had finite risk sinking funds (restricted cash) of approximately $11,446,000, which represents cash held as collateral under our financial assurance policy. 25 Operating Activities Accounts receivable, net of allowances for doubtful accounts, totaled $9,659,000 at December 31, 2020, a decrease of $3,519,000 from the December 31, 2019 balance of $13,178,000. The decrease was primarily due to timing of invoicing which was reflective of the increase in our unbilled receivables and timing of our accounts receivable collection. We provide a variety of payment terms to our customers; therefore, our accounts receivable are impacted by these terms and the related timing of accounts receivable collections. The amount of our accounts receivables and collection could be materially impacted the longer COVID-19 persists. Accounts payable, totaled $15,382,000 at December 31, 2020, an increase of $6,105,000 from the December 31, 2019 balance of $9,277,000. The increase in accounts payable was attributed to an increase in costs within our Services Segment resulting from the significant increase in revenue. Additionally, our accounts payable are impacted by the timing of payments as we are continually managing payment terms with our vendors to maximize our cash position throughout all segments. We had working capital of $3,672,000 (which included working capital of our discontinued operations) at December 31, 2020, as compared to working capital of $26,000 at December 31, 2019. The improvement in our working capital was primarily due to the proceeds that we received from the PPP Loan under the Paycheck Protection Program (see “PPP Loan” under “CARES Act” below for a discussion of this loan) and the increase in our unbilled receivables from the significant increase in revenues within our Services Segment. The improvement in our working capital was partially offset by the increase in our accounts payable. Additionally, at December 31, 2020, we classified approximately $3,191,000 of the outstanding PPP Loan balance of $5,318,000 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. Investing Activities During 2020, our purchases of capital equipment totaled approximately $2,598,000, of which $883,000 was subject to financing, with the remaining funded from cash from operations and our credit facility. We have budgeted approximately $2,000,000 for 2021 capital expenditures primarily for our Treatment and Services Segments to maintain operations and regulatory compliance requirements and support revenue growth. Certain of these budgeted projects may either be delayed until later years or deferred altogether. We plan to fund our capital expenditures from cash from operations and/or financing. The initiation and timing of projects are also determined by financing alternatives or funds available for such capital projects. Financing Activities We entered into an Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Amended Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. 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”), provided us 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. The maximum that we 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. Payment 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%. On May 8, 2020, we 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 us with the following credit facility: ● up 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; and 26 ● a term loan of $1,741,818, which requires monthly installments of $35,547. The New Loan Agreement terminates as of May 15, 2024, unless sooner terminated. Similar to our Revised Loan Agreement, the New Loan Agreement requires us 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 fixed charge coverage ratio (“FCCR”) requirement of 1.15:1. Under the New Loan Agreement, payment of annual rate of interest due on the credit facility is as follows: ● revolving credit at prime plus 2.50% or London InterBank Offer Rate (“LIBOR”) plus 3.50% and the term loan at prime plus 3.00% or LIBOR plus 4.00%. We can only elect to use the LIBOR interest payment option after we become compliant with meeting the minimum FCCR of 1.15:1; and ● Upon the achievement of a FCCR of greater than 1.25:1, we have 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%. We met this FCCR in each of the quarters of 2020. Upon meeting the FCCR of 1.25:1, this interest payment option will remain in place in the event that our future FCCR falls below 1.25:1. Under 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. Pursuant to the New Loan Agreement, we may terminate the New Loan Agreement upon 90 days’ prior written notice upon payment in full of our obligations under the New Loan Agreement. We have 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 pays 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. At 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 credit. Our credit facility under our Revised and New Loan Agreement with PNC contains certain financial covenant requirements, along with customary representations and warranties. A breach of any of these financial covenant requirements, 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. We met our financial covenant requirements in 2020, including our quarterly FCCR requirements. We expect to meet our financial covenant requirements in the next twelve months; however, if we fail to meet any of our financial covenant requirements and our lender does not waive the non-compliance or revise our covenant so that we are in compliance, our lender could accelerate the repayment of borrowings under our credit facility and terminate our credit facility. In the event that our lender accelerates the payment of our borrowings and terminate our credit facility, we may not have sufficient liquidity to repay our debt under our credit facility and other indebtedness. 27 As previously disclosed, on April 1, 2019, we completed a lending transaction with Robert Ferguson (the “Lender”), whereby we borrowed from the Lender the sum of $2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lender is a shareholder of ours and also serves as a consultant to us in connection with our Test Bed Initiative (“TBI”) at our Perma-Fix Northwest Richland, Inc. (“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% 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. 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 our 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, we 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 expires on April 1, 2024 and remains outstanding at December 31, 2020. As further consideration for this capital raise transaction relating to the Loan, we 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. The CARES Act PPP Loan On April 14, 2020, we entered into a promissory note with PNC, our credit facility lender, in the amount of approximately $5,666,000 under the PPP (the “PPP Loan”). The PPP was established under the CARES Act and is administered by the SBA. On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (“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, we repaid approximately $348,000 of the PPP Loan to PNC resulting from clarification in the loan calculation at the time of the loan origination. Under the terms of the Flexibility Act, we can apply for and be granted forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds by us 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 us by PNC). At least 60% of such forgiven amount must be used for eligible payroll costs. On October 5, 2020, we 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 the date that the SBA remits the loan forgiveness amount to our lender. While our PPP Loan currently has a two year maturity, the Flexibility Act permits us to request a five year maturity with our lender. At December 31, 2020, we have not received a determination on potential forgiveness on any portion of the PPP Loan balance; therefore, we have classified approximately $3,191,000 of the PPP Loan balance as “Current portion of long-term debt,” on our 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. Deferral of Employment Tax Deposits The CARES Act, as amended by the Flexibility Act, 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, 2022. We elected to defer such taxes starting in mid-April 2020. At December 31, 2020, we deferred payment of approximately $1,252,000 in our 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. 28 Off Balance Sheet Arrangements From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. At December 31, 2020, the total amount of standby letters of credit outstanding totaled approximately $3,026,000 and the total amount of bonds outstanding totaled approximately $46,388,000. We also provide closure and post-closure requirements through a financial assurance policy for certain of our Treatment Segment facilities through AIG. At December 31, 2020, the closure and post-closure requirements for these facilities were approximately $19,651,000. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared based upon the selection and application of accounting principles generally accepted in the United States of America (“US GAAP”), which may require us to make estimates, judgments and assumptions that affect amounts reported in our financial statements and accompanying notes. The accounting policies below are those we believe affect the more significant estimates and judgments used in preparation of our financial statements. Our other accounting policies are described in the accompanying notes to our consolidated financial statements of this Form 10-K (see “Item 8 – Financial Statements and Supplementary Data” – “Notes to Consolidated Financial Statements” – “Note 2 – Summary of Significant Accounting Policies”): Intangible Assets . Intangible assets consist primarily of the recognized value of the permits required to operate our business. We continually monitor the propriety of the carrying amount of our permits to determine whether current events and circumstances warrant adjustments to the carrying value. Indefinite-lived intangible assets are not amortized but are reviewed for impairment annually as of October 1, or when events or changes in the business environment indicate that the carrying value may be impaired. If the fair value of the asset is less than the carrying amount, we perform a quantitative test to determine the fair value. The impairment loss, if any, is measured as the excess of the carrying value of 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, 2020 and 2019 resulted in no impairment charges. Intangible assets that have definite useful lives are amortized using the straight-line method over the estimated useful lives (with the exception of customer relationships which are amortized using an accelerated method) and are excluded from our annual intangible asset valuation review as of October 1. Intangible assets with definite useful lives are also tested for impairment whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. Accrued Closure Costs and Asset Retirement Obligations (“ARO”). Accrued closure costs represent our estimated environmental liability to clean up our facilities as required by our permits, in the event of closure. Accounting Standards Codification (“ASC”) 410, “Asset Retirement and Environmental Obligations” requires that the discounted fair value of a liability for an ARO be recognized in the period in which it is incurred with the associated ARO capitalized as part of the carrying cost of the asset. The recognition of an ARO requires that management make numerous estimates, assumptions and judgments regarding such factors as estimated probabilities, timing of settlements, material and service costs, current technology, laws and regulations, and credit adjusted risk-free rate to be used. This estimate is inflated, using an inflation rate, to the expected time at which the closure will occur, and then discounted back, using a credit adjusted risk free rate, to the present value. ARO’s are included within buildings as part of property and equipment and are depreciated over the estimated useful life of the property. In periods subsequent to initial measurement of the ARO, we must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flow. Increases in the ARO liability due to passage of time impact net income as accretion expense and are included in cost of goods sold in the Consolidated Statements of Operations. Changes in the estimated future cash flows costs underlying the obligations (resulting from changes or expansion at the facilities) require adjustment to the ARO liability calculated and are capitalized and charged as depreciation expense, in accordance with our depreciation policy. 29 Recent Accounting Pronouncements See “Item 8 – Financial Statements and Supplementary Data” – “Notes to Consolidated Financial Statements” – “Note 2 – Summary of Significant Accounting Policies” for the recent accounting pronouncements that have been adopted during the year ended December 31, 2020, or will be adopted in future periods. Known Trends and Uncertainties Economic Conditions. Our business continues to be heavily dependent on services that we provide to governmental clients, primarily as subcontractors for others who are prime contractors to government authorities (particularly the U.S Department of Energy and U.S. Department of Defense) or directly as the prime contractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including the economic conditions and the manner in which the government entity will be required to spend funding to remediate various sites. In addition, our U.S. governmental contracts and subcontracts relating to activities at governmental sites are generally subject to termination or renegotiation on 30 days notice at the government’s option. The TOAs with the Canadian government generally provide that the government may terminate a TOA at any time for convenience. Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flows. Significant Customers . Our Treatment and Services Segments have significant relationships with the U.S and Canadian governmental authorities through contracts entered into indirectly as subcontractors for others who are prime contractors or directly as the prime contractor to government authorities. Our inability to continue under existing contracts that we have with the U.S government and Canadian government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition. We 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 our total revenue during 2020, as compared to $59,985,000, or 81.7%, of our total revenue during 2019. Revenue generated by us 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 revenue generated relating to government clients above) of our 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 for additional work to be performed under this project. This project is expected to be completed by the first half of 2021. As our revenues are project/event based where the completion of one contract with a specific customer may be replaced by another contract with a different customer from year to year, we do not believe the loss of one specific customer from one year to the next will generally have a material adverse effect on our operations and financial condition. COVID-19 Impact. The extent of the impact of the COVID-19 pandemic on our business is uncertain and difficult to predict, as the responses to the pandemic continue to evolve rapidly. Since the latter part of the second quarter of 2020, all of the projects within our Services Segment that were previously shutdown have restarted as stay-at-home orders and certain other restrictions resulting from the pandemic were lifted. Within our Treatment Segment, we continue to experience delays in waste shipment from certain customers directly related to the impact of COVID-19 including generator shutdowns and limited sustained operations, along with other factors. However, we expect to see a gradual return in waste receipts from these customers starting in the first half of 2021 as they accelerate operations. COVID-19 disruption could have a material adverse effect on our business as our customers could curtail and reduce capital and overall spending. 30 The severity of the impact the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the extent and severity of the impact on our customers, the impact on governmental programs and budgets, distribution of COVID-19 vaccines, the rate at which people are inoculated with the vaccines, and how quickly and to what extent normal economic and operating conditions resume, all of which are uncertain and cannot be predicted with any accuracy or confidence at this time. Our future results of operations and liquidity could be adversely impacted by continued delays in waste shipments and/or the recurrence of project work shut downs as well as potential partial/full shutdown of any of our facilities due to COVID-19. Environmental Contingencies We are engaged in the waste management services segment of the pollution control industry. As a participant in the on-site treatment, storage and disposal market and the off-site treatment and services market, we are subject to rigorous federal, state and local regulations. These regulations mandate strict compliance and therefore are a cost and concern to us. Because of their integral role in providing quality environmental services, we make every reasonable attempt to maintain complete compliance with these regulations; however, even with a diligent commitment, we, along with many of our competitors, may be required to pay fines for violations or investigate and potentially remediate our waste management facilities. We routinely use third party disposal companies, who ultimately destroy or secure landfill residual materials generated at our facilities or at a client’s site. In the past, numerous third-party disposal sites have improperly managed waste and consequently require remedial action; consequently, any party utilizing these sites may be liable for some or all of the remedial costs. Despite our aggressive compliance and auditing procedures for disposal of wastes, we could further be notified, in the future, that we are a potentially responsible party (“PRP”) at a remedial action site, which could have a material adverse effect. We have three remediation projects, which are currently in progress relating to our Perma-Fix of Dayton, Inc. (“PFD”), PFM and Perma-Fix of South Georgia, Inc. (“PFSG”) subsidiaries, all within our discontinued operations. 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. While no assurances can be made that we will be able to do so, we expect to fund the expenses to remediate these sites from funds generated internally. At 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. Related Party Transactions David Centofanti David Centofanti serves as our Vice President of Information Systems. For such position, he received annual compensation of $181,000 and $177,000 for 2020 and 2019, respectively. David Centofanti is the son of Dr. Louis Centofanti, our Executive Vice President (“EVP”) of Strategic Initiatives and a member of our Board of Directors (“Board”). We believe the compensation received by David Centofanti for his technical expertise which he provides to us is competitive and comparable to compensation we would have to pay to an unaffiliated third party with the same technical expertise. Employment Agreements We entered into an employment agreement with each of Mark Duff, President and Chief Executive Officer (“CEO”), Dr. Louis Centofanti, EVP of Strategic Initiatives, Ben Naccarato, Chief Financial Officer (“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”). We had entered into an employment agreement with each of Mark Duff, Dr. Louis Centofanti 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. 31 Each 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 Management Incentive Plan (“MIP”) as approved by our Compensation and Stock Option Committee (the “Compensation Committee”) and Board) and other benefits commonly found in such agreement. Pursuant 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), we 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. If 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)), we 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, we 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 termination. If there is a Change in Control (as defined in the agreements), 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 through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event 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)). 32 MIPs On January 16, 2020, our 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. Mr. Lombardo previously held the position of Senior Vice President (“SVP”) of Nuclear and Technical Services. Additionally, on July 22, 2020, our Board and our Compensation Committee approved a MIP for Richard Grondin who was appointed by our Board to the position of EVP of Waste Treatment Operations and an executive officer of the Company. Mr. 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. The total incentive compensation earned under the 2020 MIPs for the executive officers was approximately $419,000 and is payable on or about 90 days after year-end, or sooner, based on finalization of our audited financial statements for 2020 in accordance to the MIPs. On January 21, 2021, our Board and the Company Compensation Committee 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. Salary On January 16, 2020, the Board, with the approval of the Compensation Committee approved the following salary increase for the Company’s executive officers effective January 1, 2020: ● Annual base salary for Mark Duff, CEO and President, was increased to $344,400 from $287,000. ● Annual base salary for Ben Naccarato, who was promoted to EVP and CFO from VP and CFO, was increased to $280,000 from $235,231; and ● Annual 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 Richard 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. In February 2021, the 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. 33