What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-04-06 compared with 2021-03-29 · 1632 added, 1422 removed, 249 unchanged (92% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

STATEMENTS AND SUPPLEMENTARY DATA

to Consolidated Financial Statements

Financial Statements

of Independent Registered Public Accounting Firm

of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Balance Sheets as of December 31, 2021 and 2020

1 unchanged sentence

Statements of Comprehensive Income for the years ended December 31, 2021 and 2020

Statements of Stockholders’

Equity for the years ended December 31, 2020 and 2019

Statements of Stockholders’ Equity for the years ended December 31, 2021 and 2020

Statements of Cash Flows for the years ended December 31, 2021 and 2020

1 unchanged sentence

Statement Schedules

accordance with the rules of Regulation S-X, schedules are not submitted because they are not applicable to or required by the

accordance with the rules of Regulation S-X, schedules are not submitted because they are not applicable to or required by the Company.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

4 unchanged sentences

(a Delaware corporation) (and

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, 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.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

subsidiaries) (the “Company”) as of December 31, 2021 and 2020, 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, 2021 and 2020, 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.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),

the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal

Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”),

and our report dated April 6, 2022 expressed an adverse opinion.

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

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not

for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

critical audit matters communicated below

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.

The communication of critical audit matters does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate

opinions on the critical audit matters or on the accounts or disclosures to which they relate.

recognition for certain revenue contracts

described further in Note 2 to the financial statements, the Company has certain fixed price contracts that are long term in nature.

A subset of these contracts that commenced in 2021 have non-standard terms that impact revenue recognition and require significant effort

and judgment by management.

We identified revenue recognition for these contracts as a critical audit matter.

principal consideration for our determination that revenue recognition for these contracts is a critical audit matter are that there

is considerable auditor effort and judgment required to analyze and evaluate contracts for the types of terms and conditions that impact

revenue recognition.

In addition, as described in our report on the Company’s internal control over financial reporting as of December

31, 2021 a material weakness was identified related to revenue recognition for non-standard revenue contracts.

audit procedures related to revenue recognition for these contracts included the following, among others,

obtained and inspected a selection of long-term, non-standard contracts to understand the terms and conditions and the related impact

on revenue recognition, specifically the identification of:

Determination

of measure of progress

obtained and recalculated management’s estimate to complete the project(s)

sampled underlying costs supporting the measure of progress and agreed to underlying documentation

evaluated the appropriateness of the recording of revenue for both billed and unbilled amounts related to these contracts.

Realizability

of deferred tax assets

described further in Note 13 to the financial statements, deferred tax assets are reduced by a valuation allowance if, based on the evaluation

of positive and negative evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred

tax assets will not be realized.

Once established, the valuation allowance is released when, based on the evaluation of positive and

negative evidence, management concludes that related deferred tax assets are more likely than not to be realized.

During the year ended

December 31, 2021, management concluded that sufficient positive evidence existed to release its valuation allowance related to its federal

deferred tax assets, resulting in an income tax benefit of $2.4 million for the year ended December 31, 2021.

We identified the realizability

of deferred tax assets as a critical audit matter.

principal considerations for our determination that the realizability of deferred tax assets is a critical audit matter is that the projected

financial information related to the profitability of the Company which is reliant on the ability to predict future revenue is subject

to significant management judgments in determining whether the net deferred tax assets are more likely than not to be realized in the

future, which in turn led to a high degree of auditor judgment and effort in performing procedures and evaluating audit evidence relating

to management’s assessment of the realization of deferred tax assets.

audit procedures related to the realizability of deferred tax assets included the following, among others.

evaluated the design and tested the operating effectiveness of the key controls over the Company’s assessment of the positive

and negative evidence and evaluation of the realizability of deferred tax assets.

evaluated the prospective financial information related to future profitability including inspecting specific long-term contracts.

evaluated management’s assessment of potential net operating loss carryforward limitations.

utilized individuals with specialized skill and knowledge in income taxes to evaluate the application of tax laws and regulations

used in the Company’s assumptions and calculations.

have served as the Company’s auditor since 2014.

GRANT THORNTON LLP

have served as the Company’s auditor since 2014.

April 6, 2022

ENVIRONMENTAL SERVICES, INC.

1 unchanged sentence

of December 31,

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

(Amounts in Thousands, Except

for Share and Per Share Amounts)

(Amounts in Thousands, Except

for Share and Per Share Amounts)

Current assets:

and equipment:

furniture and equipment

Construction-in-progress

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)

Accounts receivable, net

of allowance for doubtful accounts of $ 85 and $ 404 , respectively

Unbilled receivables

Prepaid and other assets

assets related to discontinued operations

Total current assets

Property and equipment:

Buildings and land

Leasehold improvements

Office furniture and equipment

Construction-in-progress

Total property and equipment

Less accumulated depreciation

Net property and equipment

Property and equipment related to discontinued

Operating lease right-of-use assets

Intangibles and other long term assets:

Other intangible assets

Finite risk sinking fund

(restricted cash)

Deferred tax assets

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

2 unchanged sentences

of December 31,

in Thousands, Except for Share and per Share Amounts)

AND STOCKHOLDERS’

(Amounts in Thousands, Except

for Share and per Share Amounts)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Disposal/transportation

closure costs - current

portion of long-term debt

portion of operating lease liabilities

portion of finance lease liabilities

Deferred revenue

Accrued closure costs -

Current portion of long-term

Current portion of operating

lease liabilities

Current portion of finance

lease liabilities

liabilities related to discontinued operations

current liabilities

closure costs

tax liabilities

debt, less current portion

operating lease liabilities, less current portion

finance lease liabilities, less current portion

Total current liabilities

Accrued closure costs

Deferred tax liabilities

Long-term debt, less current portion

Long-term operating lease liabilities, less

current portion

Long-term finance lease liabilities, less current

Other long-term liabilities

Long-term liabilities

liabilities related to discontinued operations

related to discontinued operations

long-term liabilities

and Contingencies (Note 14)

Stockholders’

Stock, $.001 par value;

Total liabilities

Commitments and Contingencies (Note 15)

Stockholders’ Equity:

Preferred Stock, $ .001

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

Stock, $.001 par value;

Common Stock, $ .001 par

30,000,000 shares authorized;

13,222,552 and 12,161,539 shares issued, respectively;

12,153,897 and

12,115,878 shares outstanding, respectively

paid-in capital

other comprehensive loss

13,214,910 and 12,153,897 shares outstanding,

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive

Common Stock in treasury, at cost;

Perma-Fix Environmental Services, Inc.

stockholders’

Total Perma-Fix Environmental

Services, Inc.

stockholders’ equity

Non-controlling

stockholders’

liabilities and stockholders’

stockholders’ equity

Total liabilities and

stockholders’ equity

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

2 unchanged sentences

the years ended December 31,

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

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

(Amounts in Thousands, Except

for Per Share Amounts)

(Amounts in Thousands, Except

for Per Share Amounts)

Cost of goods sold

Selling, general and administrative expenses

Research and development

Loss on disposal of property

and equipment

income from operations

Other income (expense):

Interest income

Interest expense

Interest expense-financing fees

Gain (loss) on extinguishment of debt

Loss on deconsolidation

of subsidiary (Note 14)

(Loss) income from continuing operations before

Income tax benefit

Income from continuing operations, net of taxes

from discontinued operations (Note 9)

Net loss attributable

to non-controlling interest

attributable to Perma-Fix Environmental Services, Inc.

Net 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.

Continuing operations

Discontinued operations

Net income per common

Net 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:

Continuing operations

Discontinued operations

Net income per common

Number of common shares used in computing net

income (loss) per share:

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

2 unchanged sentences

the years ended December 31,

in Thousands)

comprehensive income:

currency translation adjustments

(Amounts in Thousands)

Other comprehensive income:

Comprehensive

loss attributable to non-controlling interest

Comprehensive

income attributable to Perma-Fix Environmental Services, Inc.

Foreign currency translation reclass to loss on deconsolidation of subsidiary

Foreign currency translation

Total other comprehensive

Comprehensive income

Comprehensive loss attributable to non-controlling

Comprehensive income

attributable to Perma-Fix Environmental Services, Inc.

common stockholders

1 unchanged sentence

ENVIRONMENTAL SERVICES, INC

STATEMENTS OF STOCKHOLDERS’

STATEMENTS OF STOCKHOLDERS’ EQUITY

the years ended December 31,

3 unchanged sentences

at December 31, 2019

income (loss)

currency translation

of Common Stock for services

of Common Stock with debt

of warrant with debt

Net income (loss)

Foreign currency translation

Deconsolidation of subsidiary (Note 14)

Issuance of Common Stock for services

Stock-Based Compensation

of Common Stock upon exercise of options

at December 31, 2019

income (loss)

currency translation

of Common Stock for services

Sale of Common Stock,

net of offering costs (Note 7)

Sale of Common Stock,

net of offering costs (Note 7)

Balance at December

Net (loss) income

Foreign currency translation

Deconsolidation of subsidiary (Note 14)

Issuance of Common Stock for services

Stock-Based Compensation

of Common Stock upon exercise of options

at December 31, 2020

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

Sale of Common Stock,

net of offering costs (Note 7)

Balance at December

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

ENVIRONMENTAL SERVICES, INC.

1 unchanged sentence

the years ended December 31,

in Thousands)

flows from operating activities:

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

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

(Amounts in Thousands)

Cash flows from operating activities:

loss on discontinued operations (Note 9)

Income from continuing

Adjustments to reconcile

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

Depreciation and amortization

Interest on finance lease

with purchase option

Loss on deconsolidation

of subsidiary (Note 14)

(Gain) loss on extinguishment

of debt (Note 10)

Amortization of debt issuance/debt

discount costs

Deferred tax benefit

Provision for (recovery

of) bad debt reserves

Loss on disposal of property

and equipment

Issuance of common stock

Stock-based compensation

Changes in operating assets

and liabilities of continuing operations:

Accounts receivable

Unbilled receivables

Prepaid expenses, inventories

and other assets

payable, accrued expenses and unearned revenue

provided by (used in) continuing operations

Cash (used in) provided

by 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

Cash (used in) provided

by operating activities

Cash flows from investing activities:

Purchases of property and

equipment (net)

Proceeds from sale of property

and equipment

Deconsolidation

of subsidiary - cash

Cash 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

Cash used in investing

Cash flows from financing activities:

Borrowing on revolving

Repayments of revolving

credit borrowings

Proceeds from issuance

of long-term debt

Principal repayment of

finance lease liabilities

Principal repayments of

long term debt

Payment of debt issuance

Proceeds from sale of Common

Stock, net of offering costs paid (Note 7)

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

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:

Equipment purchase subject to finance lease

Equipment purchase subject to financing

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

2 unchanged sentences

31, 2021 and 2020

OF BUSINESS AND BASIS OF PRESENTATION

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Environmental Services, Inc.

(the Company, which may be referred to as we, us, or our), an environmental and technology know-how

company, is a Delaware corporation, engaged through its subsidiaries, in three reportable segments:

(the Company, which may be referred to as we, us, or our), an environmental and technology know-how company,

is a Delaware corporation, engaged through its subsidiaries, in three reportable segments:

SEGMENT, which includes:

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 four uniquely licensed and permitted treatment and storage

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

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:

services, which include:

radiological measurement and site survey of large government and commercial installations using advanced methods, technology

and engineering;

radiological measurement and site survey of large government and commercial installations using advanced methods, technology and

Occupational Safety and Health services including IH assessments;

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

lead and asbestos management/abatement oversight;

asbestos management/abatement oversight;

indoor air quality evaluations;

health risk and exposure assessments;

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

health & 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

and decommissioning field, technical, and management personnel and services to commercial and government customers;

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

decommissioning field, technical, and management personnel and services to commercial and government customers;

waste management services to commercial and governmental customers.

12 unchanged sentences

and emergency response;

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

health physics, IH and customized NEOSH instrumentation.

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

SEGMENT, which includes:

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

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, 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

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

physics, IH and customized NEOSH instrumentation.

SEGMENT, which included:

R&D of the Company’s medical isotope production technology by the Company’s majority-owned (approximately

60.54 %) Polish subsidiary, Perma-Fix Medical S.A (“PFM Poland”), and PFM Poland’s wholly-owned subsidiary, Perma-Fix

Medical Corporation (“PFMC”).

The Company’s Medical Segment (or “PF Medical”) had not generated any revenue.

During December 2021, the Company made the strategic decision to cease all R&D activities under the Medical Segment which resulted

in the sale of 100 % of PFM Poland (See “Note 14 – PF Medical” for a discussion of this sale).

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

Diversified Scientific Services,

(“DSSI”), Perma-Fix of Florida, Inc.

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

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), Oak Ridge Environmental Waste Operations Center (“EWOC”) and Perma-Fix ERRG, a variable interest

entity (“VIE”) for which we are the primary beneficiary (See “Note 20 - 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.

Positions and Liquidity

Company’s 2021 financial results continued to be impacted by COVID-19 where we experienced continued waste shipment delays from

certain customers within our Treatment Segment.

However, the Company expects to see a gradual return in waste receipts from these customers

starting in the second quarter of 2022 as the Company expects these customers to start easing up on COVID-19 restrictions, including

reinstating return-to-work schedule in the upcoming months.

Additionally, as a result of the constraint in supply chain, our Treatment

Segment experienced a delay in the delivery of a new technology waste processing unit from our supplier which negatively impacted our

revenue as the associated revenue was not able to be generated.

Delivery of this unit had been expected during the third quarter of 2021

but did not occur until the first quarter of 2022.

The Company’s Services Segment experienced delays in procurement actions and

contract awards resulting primarily from the impact of COVID-19 in the first half of 2021.

Since the end of the second quarter of 2021,

the Services Segment was awarded a number of new contracts but due to customer administrative delay and/or continued COVID-19 impact

experienced by certain customers, work under certain of these new awards was temporarily curtailed/delayed which negatively impacted

We expect to see a ramp-up in activities from certain of these new projects starting in the second quarter

Company’s cash flow requirements during the twelve months ended December 31, 2021 were primarily financed by our operations, our

credit facility availability and an equity raise that the Company consummated at the end of the third quarter of 2021.

The Company received

approximately $ 6,200,000 in gross proceeds from this equity raise for the sale and issuance of 1,000,000 shares of the Company’s

Common Stock (see “Note 7 – Common Stock Subscription Agreement” for a discussing of this equity raise).

31, 2021, the Company had borrowing availability under its revolving credit facility of approximately $ 8,692,000 which was based on a

percentage of eligible receivables and subject to certain reserves and included its cash on hand of approximately $ 4,440,000 .

has ceased all R&D activities under its Medical Segment and sold its majority-owned subsidiary, PFM Poland (see “Note 14 –

PF Medical” for a discussion of the sale of PFM Poland).

The Company’s 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, our capital expenditure

line, and cash on hand.

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, our capital expenditure line and our cash on hand should be sufficient

to fund our operations for the next twelve months.

the situations surrounding COVID-19 continues to remain fluid, the full impact and extent of the pandemic on our financial results and

liquidity cannot be estimated with any degree of certainty.

We continue to closely monitor the impact of the COVID-19 pandemic on all

aspects of our business.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Consolidation

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.

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

subsidiary (see “Note 15 – PF Medical” for a discussion on the sale of PFM Poland in December 2021), 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 the United States (“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)

1 unchanged sentence

totaling approximately $ 26,000 .

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

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 –

Commitment and Contingencies –

Insurance”

for a discussion of this fund).

receivable are customer obligations due under normal trade terms requiring payment within 30 or 60 days from the invoice date

based on the customer type (government, broker, or commercial).

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 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.

following table sets forth the activity in the allowance for doubtful accounts for the years ended December 31, 2020 and 2019

(in thousands):

At 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, 2021 and 2020, the Company had finite risk sinking

funds of approximately $ 11,471,000 and $ 11,446,000 , respectively, which represented cash held as collateral under the Company’s

financial assurance policy (see “Note 15 – Commitment and Contingencies – Insurance” for a discussion of this

receivable are customer obligations due under normal trade terms requiring payment within 30 or 60 days from the invoice date based on

the customer type (government, broker, or commercial).

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 collected.

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.

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 off.

The write off process involves approvals from senior

management based on required approval thresholds.

following table sets forth the activity in the allowance for doubtful accounts for the years ended December 31, 2021 and 2020 (in thousands):

SCHEDULE OF CREDIT LOSSES FOR FINANCING RECEIVABLES, CURRENT

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

Allowance for doubtful accounts

- beginning of year

Provision for (recovery of) bad debt reserve

(Write-off) recovery of

Allowance 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:

(1) revenue recognized by our Earned Value Management program (a program

which integrates project scope, schedule, and cost to provide an objective measure of project progress) but invoice milestones

have not yet been met and/or (2) contract claims and pending change orders, including Requests for Equitable Adjustments (“REAs”)

when work has been performed and collection of revenue is reasonably assured.

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

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.

relating to these delays can take months to complete but are generally completed within twelve months.

receivables within our Services Segment can result from work performed under contracts but invoice milestones have not yet been met and/or

contract claims and pending change orders, including REA when work has been performed and collection of revenue is reasonably assured.

consist of treatment chemicals, saleable used oils, and certain supplies.

Additionally, the Company has replacement parts in inventory,

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 net realizable value with cost determined by the first-in, first-out

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

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

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.

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

and equipment expenditures are capitalized and depreciated using the straight-line method over the estimated useful lives of the

assets for financial statement purposes, while accelerated depreciation methods are principally used for income tax purposes.

Generally, asset lives range from ten to forty years for buildings (including improvements and asset retirement costs) and three

to seven years for office furniture and equipment, vehicles, and decontamination and processing equipment.

Leasehold improvements

are capitalized and amortized over the lesser of the term of the lease or the life of the asset.

Maintenance and repairs are charged

directly to expense as incurred.

The cost and accumulated depreciation of assets sold or retired are removed from the respective

accounts, and any gain or loss from sale or retirement is recognized in the accompanying Consolidated Statements of Operations.

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

and equipment expenditures are capitalized and depreciated using the straight-line method over the estimated useful lives of the assets

for financial statement purposes, while accelerated depreciation methods are principally used for income tax purposes.

Generally, asset

lives range from ten to forty years for buildings (including improvements and asset retirement costs) and three to seven years for office

furniture and equipment, vehicles, and decontamination and processing equipment.

Leasehold improvements are capitalized and amortized

over the lesser of the term of the lease or the life of the asset.

Maintenance and repairs are charged directly to expense as incurred.

The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any gain or loss from sale

or retirement is recognized in the accompanying Consolidated Statements of Operations.

Renewals and improvements, which extend the useful

lives of the assets, are capitalized.

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

that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison

of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying

amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying

amount of the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet

and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated.

Amortization of financed leased assets is computed using the straight-line

method over the estimated useful lives of the assets.

At December 31, 2021, assets recorded under finance leases were $ 2,409,000 less

accumulated depreciation of $ 475,000 , resulting in net fixed assets under finance leases of $ 1,934,000 .

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 .

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 that

the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the

carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.

If the carrying amount

of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of

the asset exceeds the fair value of the asset.

Assets to be disposed of are separately presented in the balance sheet and reported at

the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated.

depreciation expense totaled approximately $ 1,476,000 and $ 1,357,000 in 2021 and 2020, respectively.

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 and warehouse spaces used to conduct our business.

These leases have remaining terms of approximately 3 to 9 years

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.

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 accounts for leases in accordance with FASB’s 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.

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 and warehouse spaces used to conduct our business.

These leases have remaining terms of approximately two to eight years which

include additional 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.

of our operating leases include both lease (rent payments) and non-lease components (maintenance costs such as cleaning and landscaping

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’ operations.

The Company’s finance

leases also included a building with land utilized for our waste treatment operations which included a purchase option.

During the third

quarter of 2021, the Company concluded that it was more likely than not that it would not exercise this purchase option but will continue

to lease the property.

Accordingly, a reassessment of this lease was performed which resulted in reclassification of this lease to an

operating lease.

The Company’s finance leases have remaining terms of approximately one to four years and some of the leases include

options to purchase the underlying assets at fair market value at the conclusion of the lease term.

See “Property and Equipment”

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.

Company’s policy is to capitalize interest cost incurred on debt during the construction of projects for its use.

A reconciliation

of our total interest cost to “Interest Expense”

as reported on our Consolidated Statements of Operations for 2020

and 2019 is as follows:

in Thousands)

cost capitalized

cost charged to expense

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

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, a quantitative

test is performed 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.

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

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.

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

in circumstances suggest impairment might exist.

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, a quantitative test is performed

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

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

Impairment testing of our indefinite-lived permits related to our Treatment reporting unit as of October 1, 2021 and 2020 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 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.

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.

Our goal is to discover, develop, and bring

to market innovative ways to process waste that address unmet environmental needs and to develop new company service offerings.

The Company conducts research internally and also through collaborations with other third parties.

R&D costs consist primarily

of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development

and enhancement of new potential waste treatment processes and new technology and are charged to expense when incurred in accordance

with ASC Topic 730, “Research and Development.”

The Company’s R&D expenses included approximately $311,000

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

Our goal is to discover, develop, and bring to market

innovative ways to process waste that address unmet environmental needs and to develop new company service offerings.

The Company conducts

research internally and also through collaborations with other third parties.

R&D costs consist primarily of employee salaries and

benefits, laboratory costs, third party fees, and other related costs associated with the development and enhancement of new potential

waste treatment processes and new technology and are charged to expense when incurred in accordance with ASC Topic 730, “Research

and Development.”

Closure Costs and ARO

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

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, the Company 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

Increases in the ARO liability due to passage of time impact net income as accretion expense, which is included in cost

of goods sold.

Changes in costs resulting from changes or expansion at the facilities require adjustment to the ARO liability

and are capitalized and charged as depreciation expense, in accordance with the Company’s depreciation policy.

taxes are accounted for in accordance with ASC 740, “Income Taxes.”

Under ASC 740, the provision for income taxes

is comprised of taxes that are currently payable and deferred taxes that relate to the temporary differences between financial

reporting carrying values and tax bases of assets and liabilities.

Deferred tax assets and liabilities are measured using enacted

income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that

includes the enactment date.

740 requires that deferred income tax assets be reduced by a valuation allowance if it is more likely than not that some portion

or all of the deferred income tax assets will not be realized.

The Company regularly assesses the likelihood that the deferred

tax asset will be recovered from future taxable income.

The Company considers projected future taxable income and ongoing tax

planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred income taxes to an amount

that is more likely than not to be realized.

740 sets out a consistent framework for preparers to use to determine the appropriate recognition and measurement of uncertain

tax positions.

ASC 740 uses a two-step approach wherein a tax benefit is recognized if a position is more-likely-than-not to be

The amount of the benefit is then measured to be the highest tax benefit which is greater than 50% likely to be realized.

ASC 740 also sets out disclosure requirements to enhance transparency of an entity’s tax reserves.

The Company recognizes

accrued interest and income tax penalties related to unrecognized tax benefits as a component of income tax expense.

Company reassesses the validity of our conclusions regarding uncertain income tax positions on a quarterly basis to determine

if facts or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position’s

sustainability under audit.

Company’s foreign subsidiaries include PF UK Limited, PF Canada and PF Medical.

Assets and liabilities are translated to

dollars at the exchange rate in effect at the balance sheet date and revenue and expenses at the average exchange rate for

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

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

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, the Company 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 flows.

Increases in the ARO liability due to passage of

time impact net income as accretion expense, which is included in cost of goods sold.

Changes in costs resulting from changes or expansion

at the facilities require adjustment to the ARO liability and are capitalized and charged as depreciation expense, in accordance with

the Company’s depreciation policy.

taxes are accounted for in accordance with ASC 740, “Income Taxes.” Under ASC 740, the provision for income taxes is comprised

of taxes that are currently payable and deferred taxes that relate to the temporary differences between financial reporting carrying

values and tax bases of assets and liabilities.

Deferred tax assets and liabilities are measured using enacted income tax rates expected

to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Any effect on deferred

tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

740 requires that deferred income tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all

of the deferred income tax assets will not be realized.

The Company regularly assesses the likelihood that the deferred tax asset will

be recovered from future taxable income.

The Company considers projected future taxable income and ongoing tax planning strategies, then

records a valuation allowance to reduce the carrying value of the net deferred income taxes to an amount that is more likely than not

to be realized.

(See “Note 13 – Income Taxes” for a discussion of the release of valuation allowance on deferred tax

assets made by the Company in the third quarter of 2021).

740 sets out a consistent framework for preparers to use to determine the appropriate recognition and measurement of uncertain tax positions.

ASC 740 uses a two-step approach wherein a tax benefit is recognized if a position is more-likely-than-not to be sustained.

of the benefit is then measured to be the highest tax benefit which is greater than 50% likely to be realized.

ASC 740 also sets out

disclosure requirements to enhance transparency of an entity’s tax reserves.

The Company recognizes accrued interest and income

tax penalties related to unrecognized tax benefits as a component of income tax expense.

Company reassesses the validity of our conclusions regarding uncertain income tax positions on a quarterly basis to determine if facts

or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position’s sustainability

Company’s foreign subsidiaries include PF UK Limited and PF Canada and also included PF Medical.

Assets and liabilities

are translated to U.S.

dollars at the exchange rate in effect at the balance sheet date and revenue and expenses at the average exchange

rate for the period.

Foreign currency translation adjustments for these subsidiaries are accumulated as a separate component of accumulated

other comprehensive income (loss) in stockholders’

Gains and losses resulting from foreign currency transactions

are recognized in the Consolidated Statements of Operations.

other comprehensive income (loss) in stockholders’ equity.

Gains and losses resulting from foreign currency transactions are recognized

in the Consolidated Statements of Operations.

Concentration

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

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.

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

for others as a subcontractor to government entities or directly as a prime contractor, representing approximately $ 60,812,000 ,

of our total revenue during 2021, as compared to

$ 96,582,000 ,

of our total revenue during 2020.

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 2021 and 2020 accounted for approximately $ 8,526,000

and $ 41,011,000

(included in revenues generated relating to government clients above) of the Company’s total revenue for 2021 and 2020, 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

contract with a different customer from year to year, the Company does 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.

instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and

accounts receivable.

The Company maintains cash with high quality financial institutions, which may exceed Federal Deposit Insurance

Corporation (“FDIC”) insured amounts from time to time.

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 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.

This project was completed in the second

quarter of 2021.

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, the Company does 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.

instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts

The Company maintains cash with high quality financial institutions, which may exceed Federal Deposit Insurance Corporation

(“FDIC”) insured amounts from time to time.

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 government entities.

Company had two government related customers whose total unbilled and net outstanding receivable balances represented 18.2 %

of the Company’s total consolidated unbilled

and net accounts receivable at December 31, 2021.

The Company had three government related customers whose total unbilled and net outstanding

receivable balances represented 41.1 %,

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

Recognition and Related Policies

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.

A contract transaction

price is allocated to each distinct performance obligation and recognized as revenues as the performance obligation is satisfied.

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

A contract transaction price is allocated to each distinct

performance obligation and recognized as revenues as the performance obligation is satisfied.

Segment Revenues:

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%

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

treatment/processing (ranging from 15 %

and shipment/final disposal (ranging from 9.0 %

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

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

Segment Revenues:

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

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.

An estimate is prepared for each individual scope item in the contract and the transaction price is allocated

on a time and materials basis as services are provided.

Revenue from cost reimbursement contracts is recognized over time using

the input method based on costs incurred, plus a proportionate amount of fee earned.

fixed price contracts, the objective of the project is not attained unless all scope items within the contract are completed and

all of the services promised within fixed fee contracts constitute a single performance obligation.

Transaction price is estimated

based upon the estimated cost to complete the overall project.

Revenue from fixed price contracts is recognized over time using

the output or input method.

For the output method, revenue is recognized based on milestone attained on the project.

For the input

method, revenue is recognized based on costs incurred on the project relative to the total estimated costs of the project.

majority of our revenue is derived from short term contracts with an original expected length of one year or less.

Also, the nature

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

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

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

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.

fixed price contracts, the objective of the project is not attained unless all scope items within the contract are completed and all

of the services promised within fixed fee contracts constitute a single performance obligation.

Transaction price is estimated based

upon the estimated cost to complete the overall project.

Revenue from fixed price contracts is recognized over time primarily using the

input method.

For the input method, revenue is recognized based on costs incurred on the project relative to the total estimated costs

of the project.

majority of our contracts with our customers are short term with an original expected length of one year or less.

The Company’s

contracts and subcontracts relating to activities at governmental sites (both U.S.

and Canadian) generally allow for termination for

convenience at any time at the government’s option without payment of a substantial penalty.

Consideration

Company’s contracts generally do not give rise to variable consideration.

However, during the third quarter of 2021, the Company

recognized approximately $ 1,286,000 in revenue from a REA under one of the Company’s Treatment Services contracts that resulted

in cumulative catch-up adjustment in the transaction price that had been constrained in prior periods.

Payment Terms

is based on schedules established in customer contracts.

Payment terms vary by customers but are generally established at 30 days

from invoicing.

Payment terms vary by customers but are generally established at 30 days from

Costs to Obtain a Contract

incurred to obtain contracts with our customers are immaterial and as a result, the Company expenses (within selling, general

and administration expenses (“SG&A”)) incremental costs incurred in obtaining contracts with our customer as incurred.

incurred to obtain contracts with our customers are immaterial and as a result, the Company expenses (within selling, general and administration

expenses (“SG&A”)) incremental costs incurred in obtaining contracts with our customer as incurred.

Performance Obligations

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that have original expected durations of one year or less.

our Services Segment, there are service contracts which provide that the Company has a right to consideration from a customer

in an amount that corresponds directly with the value to the customer of our performance completed to date.

For those contracts,

the Company has utilized the practical expedient in ASC 606-10-55-18, which allows the Company to recognize revenue in the amount

for which we have the right to invoice;

accordingly, the Company does not disclose the value of remaining performance obligations

for those contracts.

compensation granted to employees are accounted for in accordance with ASC 718, “Compensation –

Stock Compensation.”

our Services Segment, there are service contracts which provide that the Company has a right to consideration from a customer in an amount

that corresponds directly with the value to the customer of our performance completed to date.

For those contracts, the Company has utilized

the practical expedient in ASC 606-10-55-18, which allows the Company to recognize revenue in the amount for which we have the right

accordingly, the Company does not disclose the value of remaining performance obligations for those contracts.

Company’s contracts and subcontracts relating to activities at governmental sites generally allow for termination for convenience

at any time at the government’s option without payment of a substantial penalty.

The Company does not disclose remaining performance

obligations on these contracts.

compensation granted to employees are accounted for in accordance with ASC 718, “Compensation – Stock Compensation.”

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.

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 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.

The Company accounts for forfeitures when they occur.

Comprehensive

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(Loss) Per Share

income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable

Diluted income (loss) per share is based on the weighted-average number of outstanding common shares plus the weighted-average

number of potential outstanding common shares.

In periods where they are anti-dilutive, such amounts are excluded from the calculations

of dilutive earnings per share.

income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable period.

Diluted income (loss) per share is based on the weighted-average number of outstanding common shares plus the weighted-average number

of potential outstanding common shares.

In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive

earnings per share.

Income (loss) per share is computed separately for each period presented.

Value of Financial Instruments

assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are

recorded at fair value on a nonrecurring basis.

Fair value is determined based on the exchange price that would be received for

an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability

in an orderly transaction between market participants.

The three-tier value hierarchy, which prioritizes the inputs used in the

valuation methodologies, is:

assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are recorded

at fair value on a nonrecurring basis.

Fair value is determined based on the exchange price that would be received for an asset or paid

to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction

between market participants.

The three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for

similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that

are not active, or other inputs that are observable or can be corroborated by observable market data.

Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably

2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar

assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active,

or other inputs that are observable or can be corroborated by observable market data.

3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably

available assumptions made by other market participants.

instruments include cash (Level 1), accounts receivable, accounts payable, and debt obligations (Level 3).

is extended to customers based on an evaluation of a customer’s financial condition and, generally, collateral is not required.

At December 31, 2020 and December 31, 2019, the fair value of the Company’s financial instruments approximated their

carrying values.

The fair value of the Company’s revolving credit and term loan approximate its carrying value due to the

variable interest rate.

is extended to customers based on an evaluation of a customer’s financial condition and, generally, collateral is not required.

At December 31, 2021 and December 31, 2020, the fair value of the Company’s financial instruments approximated their carrying

The fair value of the Company’s revolving credit and term loan approximate its carrying value due to the variable interest

Adopted Accounting Standards

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 –

Not Yet Adopted

June 2016, the FASB issued ASU No.

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

the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting

period in which the guidance is adopted.

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,”

2019-12, “Income Taxes (Topic 740):

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.

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.

adoption of ASU No.

2019-12 by the Company effective January 1, 2021 did not have a material impact on the Company’s financial

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.

The adoption of ASU No.

by the Company effective January 1, 2021 did not have a material impact on the Company’s financial statements.

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.

The adoption of ASU No.

2020-01 by the Company effective January 1, 2021 did not have a material

impact on the Company’s financial statements or disclosures.

Issued Accounting Standards – Not Yet Adopted

June 2016, the FASB issued ASU No.

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

and various subsequent amendments to the initial guidance (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.

are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the

first reporting period in which the guidance is adopted.

In November 2019, FASB issued ASU 2019-10, “Financial Instruments –

Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date of ASU

2016-13 for public companies that are considered smaller reporting companies (“SRC”) as defined by the Commission to fiscal

years beginning after December 15, 2022, including interim periods within those fiscal years.

These ASUs are effective January 1, 2023

for the Company as an SRC.

Under new guidance issued by the Commission in March 2020, the Company continues to qualify as a smaller reporting

company but has become an accelerated filer for all filings with the Commission starting with this Form 10-K filing and all subsequent

The Company is currently evaluating the impact of these ASU on its consolidated 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.

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.

is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, for the Company as an

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.

May 2021, the FASB issued ASU No.

2021-04, “Earnings Per Share (Topic 206), Debt-Modifications and Extinguishments (Subtopic 470-50),

Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging

Issues Task Force).” ASU 2021-04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified

written call options.

This ASU is effective for all entities, for fiscal years beginning after December 15, 2021, including interim periods

within those fiscal years.

Early adoption is permitted.

This ASU is effective January 1, 2022 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.

The Company does not expect

the adoption of this ASU will have a material impact on its financial statements.

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:

by Contract Type

and materials

reimbursement

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

The Company’s contract liabilities consist of deferred revenues which represents advance payment from customers

in advance of the completion of our performance obligation.

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:

SCHEDULE OF DISAGGREGATION OF REVENUE

Revenue by Contract Type

(In thousands)

Time and materials

Revenue by generator

(In thousands)

Domestic government

Domestic commercial

Foreign government

Foreign commercial

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

The Company’s contract liabilities consist of deferred revenues which represents advance payment from customers in advance of the

completion of our performance obligation.

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

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,

related to untreated waste that was in the Company’s control as of the beginning of each respective year.

Revenue recognized

in each period related to performance obligations satisfied within the respective period.

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

Months Ended December 31,

of ROU assets

SCHEDULE OF CONTRACT ASSETS AND LIABILITIES

(In thousands)

Contract assets

Account receivables, net of allowance

Unbilled receivables - current

Contract liabilities

Deferred revenue

decrease in unbilled receivables was primarily within our Services Segment due to invoicing and collection of accounts receivable on

certain large projects which have been completed or are near completion.

the twelve months ended December 31, 2021 and 2020, the Company recognized revenue of $ 7,196,000 and $ 8,094,000 , respectively, related

to untreated waste that was in the Company’s control as of the beginning of each respective year.

Revenue recognized in each period

related to performance obligations satisfied within the respective period.

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

SCHEDULE OF COMPONENTS OF LEASE COST

Twelve Months Ended

Operating Leases:

Finance Leases:

Amortization 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,

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):

Short-term lease rent

Total lease cost

weighted average remaining lease term and the weighted average discount rate for operating and finance leases at December 31, 2021 were:

SCHEDULE OF WEIGHTED AVERAGE LEASE

Weighted 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, 2020 was:

Operating Leases

Finance Leases

Weighted 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, 2021 to the operating and

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

SCHEDULE OF OPERATING AND FINANCE LEASE LIABILITY MATURITY

2027 and thereafter

undiscounted lease payments

Total undiscounted lease payments

Imputed interest

value of lease payments

portion of operating lease obligations

operating lease obligations, less current portion

portion of finance lease obligations

finance lease obligations, less current portion

Present value of lease

Current portion of operating lease obligations

Long-term operating lease obligations, less

current portion

Current portion of finance lease obligations

Long-term finance lease obligations, less current

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

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:

SCHEDULE OF SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION RELATED TO LEASES

Twelve Months Ended December

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

Operating cash

flow from operating leases

Operating cash flow from

finance leases

Financing cash flow from

finance leases

ROU assets obtained in exchange for lease obligations

Finance liabilities

Operating liabilities

Reduction to ROU assets resulitng from reassessment

Finance liabilities

AND OTHER INTANGIBLE ASSETS

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No permit exists at our Services and Medical Segments.

OF INTANGIBLE ASSETS

Permit (amount in thousands)

Balance as of December 31, 2019

Permit in progress

Balance as of December 31, 2020

Permit renewal

Permit in progress

Balance as of December 31, 2021

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

OF DEFINITE LIVED INTANGIBLE ASSETS

Weighted Average

Other Intangibles

(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:

relationships

Customer relationships

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

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

OF FINITE LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

expense recorded for definite-lived intangible assets was approximately $ 211,000 and $ 239,000 , for the years ended December 31, 2021

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STOCK, STOCK PLANS, WARRANTS AND STOCK BASED COMPENSATION

Company adopted the 2003 Outside Directors Stock Plan (the “2003 Plan”), which was approved by our stockholders at

the Company’s July 29, 2003 Annual Meeting of Stockholders.

Non-Qualified Stock Options (“NQSOs”) granted under

the 2003 Plan generally have a vesting period of six months from the date of grant and a term of 10 years, with an exercise price

equal to the closing trade price on the date prior to grant date.

The 2003 Plan also provides for the issuance to each outside

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.

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

the Company, including any employee who is also a member of the Board, as well as to consultants of the Company.

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.

Company’s 2003 Outside Directors Stock Plan (the “2003 Plan”) provides for the grant of Non-Qualified Stock Options

(“NQSOs”) to member of the Company’s Board who is not an employee of the Company or its subsidiaries (“Eligible

On July 20, 2021, the Company’s stockholders approved an amendment (the “Amendment”) to the 2003

Plan which provided the following, among other things:

i) authorizes an additional 500,000 shares of the Company’s common stock,

par value $ 0.001 per share (the “Common Stock”) for issuance under the 2003 Plan, (ii) increases (a) the number of shares

of Common Stock subject to the automatic option grant made to each Eligible Director upon initial election, from 6,000 to 20,000 shares,

and (b) the number of shares of Common Stock subject to the automatic option grant made to each Eligible Director upon reelection, from

2,400 to 10,000 shares, (iii) amends the vesting period of options granted under the 2003 Plan, from a six -month vesting period to 25 %

per year, beginning on the first anniversary date of the grant, and (iv) provides for acceleration of vesting under certain conditions.

The exercise price of options to be granted under the 2003 Plan continues to equal to the closing trade price on the date prior to the

The 2003 Plan continues to provide for the issuance to each Eligible 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.

The number of shares issued is determined at 75% of the market value as defined in the 2003 Plan (the Company

recognizes 100% of the market value of the shares issued).

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

the 2003 Plan is 1,600,000 .

At December 31, 2021, the 2003 Plan had available for issuance 599,854 shares.

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

including any employee who is also a member of the Board, as well as to consultants of the Company.

The 2017 Plan, as amended, authorizes

an aggregate grant of 1,140,000 NQSOs and Incentive Stock Options (“ISOs”).

Consultants of the Company can only be granted

The term of each stock option granted under the 2017 Plan shall be fixed by the Compensation Committee, but no stock options will

be exercisable more than ten years after the grant date, or in the case of an ISO granted to a 10% stockholder, five years after

the grant date.

The exercise price of any ISO granted under the 2017 Plan to an individual who is not a 10% stockholder at the

time of the grant shall not be less than the fair market value of the shares at the time of the grant, and the exercise price

of any ISO granted to a 10% stockholder shall not be less than 110% of the fair market value at the time of grant.

price of any NQSOs granted under the plan shall not be less than the fair market value of the shares at the time of grant.

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.

be exercisable more than ten years after the grant date, or in the case of an ISO granted to a 10% stockholder, five years after the

The exercise price of any ISO granted under the 2017 Plan to an individual who is not a 10% stockholder at the time of the

grant shall not be less than the fair market value of the shares at the time of the grant, and the exercise price of any ISO granted

to a 10% stockholder shall not be less than 110% of the fair market value at the time of grant.

The exercise price of any NQSOs granted

under the plan shall not be less than the fair market value of the shares at the time of grant.

At December 31, 2021, the 2017 Plan had

available for issuance 344,000 shares.

Company’s 2010 Stock Option Plan (“2010 Plan”) expired on September 29, 2020;

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

remains 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

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

were for a contractual term of six years with one-fifth vesting annually over a five-year period.

The exercise price of the ISO

was $3.15 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.

July 25, 2019, 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 Annual Meeting of Stockholders held on July 25, 2019.

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 $3.31 per share,

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

August 29, 2019 the Company granted an aggregate of 12,500 ISOs from the 2017 Plan to certain employees.

The ISOs granted were

for a contractual term of six years with one-fifth vesting annually over a five-year period.

The exercise price of the ISO was

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

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.

October 14, 2021, the Company granted ISOs to certain employees for the purchase, under the Company’s 2017 Plan, of up to an aggregate

305,000 shares of the Company’s Common Stock.

The total ISOs granted included an ISO for each of the Company’s executive

officers for the purchase set forth in his respective ISO Agreement, as follows:

50,000 shares for the CEO;

25,000 shares for the CFO;

20,000 shares for the EVP of Strategic Initiatives;

25,000 shares for the EVP of Waste Treatment Operations;

and 25,000 shares for the

EVP of Nuclear and Technical Services.

Each of the ISOs granted has a contractual term of six years with one-fifth yearly vesting over

a five-year period .

The exercise price of the ISO is $ 7.005 per share, which was equal to the fair market value of the Company’s

Common Stock on the date of grant.

July 20, 2021, the Company issued a NQSO to each of the Company’s seven reelected outside directors for the purchase, under the

Company’s 2003 Plan, of up to 10,000 shares of the Company’s Common Stock.

Each NQSO granted has for a contractual term of

ten years with one-fourth vesting annually over a four-year period .

The exercise price of the NQSO is $ 5.93 per share, which was equal

to the fair market value of the Company’s Common Stock the day preceding the grant date, pursuant to the 2003 Plan.

May 4, 2021, the Company issued a NQSO to a new director elected by the Company’s Board, for the purchase, under the Company’s

2003 Plan, of up to 6,000 shares of the Company’s Common Stock.

The NQSO granted has a contractual term of ten years with a vesting

period of six months .

The exercise price of the NQSO is $ 7.50 per share, which was equal to the fair market value of the Company’s

Common Stock the day preceding the grant date, pursuant to the 2003 Plan.

August 10, 2020, the Company issued a NQSO from the Company’s 2003 Plan to a new director elected by the Company’s Board

to fill a vacancy on the Board, for the purchase of up to 6,000 shares of the Company’s Common Stock.

The NQSO granted has for

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

The exercise price of the NQSO is $ 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.

July 22, 2020, the Company issued a NQSO to each of the Company’s five reelected outside directors for the purchase, under the

Company’s 2003 Plan, of up to 2,400 shares of the Company’s Common Stock.

Each NQSO granted has a contractual term of ten

years with a vesting period of six months .

The exercise price of the NQSO is $ 6.70 per share, which was equal to our closing stock price

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

February 4, 2020, the Company issued a NQSO from the Company’s 2003 Plan to a new director elected by the Company’s Board

to fill a vacancy on the Board, for the purchase of up to 6,000 shares of the Company’s Common Stock.

The NQSO granted has a contractual

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

The exercise price of the options is $ 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.

2021, the Company issued 290 shares of its Common Stock from a cashless exercise of an option for the purchase of 500 shares of the Company’s

Common Stock at $ 3.15 per share.

During 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.

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

Assumptions used to estimate the fair value

of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s

stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected

annual dividend yield.

The fair value of the options granted during 2020 and 2019 and the related assumptions used in the Black-Scholes

option model used to value the options granted were as follows.

Assumptions used to estimate the fair value of

stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock

over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend

The fair value of the options granted during 2020 and 2019 and the related assumptions used in the Black-Scholes option model

used to value the options granted were as follows.

No options were granted to employees in 2020:

Weighted-average

fair value per share

-free interest rate (1)

volatility of stock (2)

48.67%-51.38 %

option life (3)

SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS

Employee Stock

Weighted-average fair value per share

Risk -free interest rate (1)

Expected volatility of stock

Dividend yield

Expected option life (3)

Director Stock Options Granted

Weighted-average

fair value per share

-free interest rate (1)

volatility of stock (2)

Weighted-average fair value per share

Risk -free interest rate (1)

1.23 % - 1.61 %

option life (3)

0.59 % - 1.61 %

Expected volatility of stock

55.84 % - 55.91 %

55.83 % - 56.68 %

Dividend yield

Expected option life (3)

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

Treasury yield in effect at the grant date over the expected term of the

The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.

The expected option life is based on historical exercises and post-vesting data.

Treasury yield

in effect at the grant date over the expected term of the option.

The expected volatility is based on historical volatility from

our traded Common Stock over the expected term of the option.

The expected option life is based on historical exercises and

post-vesting data.

following table summarizes stock-based compensation recognized for fiscal years 2021 and 2020.

Stock Options

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

for employee and directors.

The weighted average period over which the unrecognized compensation costs are expected to be recognized

is approximately 2.1 years.

SCHEDULE OF SHARE-BASED COMPENSATION, ALLOCATION OF RECOGNIZED PERIOD COSTS

Employee Stock Options

Director Stock Options

December 31, 2021, the Company has approximately $ 1,389,000 of total unrecognized compensation costs related to unvested options for

employee and directors.

The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately

Options to Consultant

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.

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.

vesting of the Ferguson Stock Option is subject to the achievement of three separate milestones by certain dates.

The first milestone

was met and the shares under the first milestone were issued to Robert Ferguson in May 2018.

The Company had previously entered into

amendments whereby the vesting dates for the second and third milestones for the purchase of up to 30,000 and 60,000 shares of the Company’s

Common Stock were extended to December 31, 2021 and December 31, 2022, respectively.

On January 20, 2022, the Company’s Compensation

Committee and the Board further amended the vesting dates of the second and third milestones to December 31, 2022 and December 31, 2023,

respectively.

This amendment was approved by the Compensation Committee and the Board to take effect December 31, 2021.

The Company has

not recognized compensation costs (fair value of approximately $ 289,000 at December 31, 2021) 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, 2021.

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

summary of the Company’s total plans as of December 31, 2021 and 2020, and changes during the period then ended are presented as

SCHEDULE OF STOCK OPTIONS ROLL FORWARD

Average Exercise Price

Average Remaining Contractual Term (years)

outstanding January 1, 2020

Options outstanding January 1, 2021

Forfeited/expired

outstanding end of period (1)

exercisable at December 31, 2020 (2)

Options outstanding end

of period (1)

Options exercisable at

December 31, 2021 (1)

Average Exercise Price

Average Remaining Contractual Term (years)

outstanding January 1, 2019

Options outstanding January

Forfeited/expired

outstanding end of period (2)

exercisable as of December 31, 2019 (3)

exercisable at December 31, 2020 (3)

Options with exercise prices ranging from $ 2.79 to $ 7.50

1 unchanged sentence

Options with exercise prices ranging from $ 2.79 to $ 7.05

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

options January 1, 2020

options at December 31, 2020

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

the market value of the underlying stock exceeds the exercise price

summary of the Company’s nonvested options as of December 31, 2021 and changes during the period then ended are presented as follows:

SCHEDULE OF NON VESTED OPTIONS

Weighted Average

Non-vested options January 1, 2021

Non-vested options at December 31, 2021

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

Robert Ferguson, the Company issued a Warrant

Robert Ferguson, the Company issued a Warrant to Mr.

Ferguson for the purchase of up to 60,000 shares of our Common Stock at an exercise price of $ 3.51 per share.

is exercisable six months from April 1, 2019 and expires on April 1, 2024 and remains outstanding at December 31, 2020 (see “Note

Long Term Debt”

for further information of this Warrant).

The Warrant is exercisable

six months from April 1, 2019 and expires on April 1, 2024 and remains outstanding at December 31, 2021.

The loan was paid-in-full by

the Company in December 2020.

Stock Issued for Services

Company issued a total of 34,135 and 71,905 shares of our Common Stock in 2020 and 2019, respectively, under our 2003 Plan to

our outside directors as compensation for serving on our Board.

As a member of the Board, each director elects to receive either

65% or 100% of the director’s fee in shares of our Common Stock.

The number of shares received is calculated based on 75%

of the fair market value of our Common Stock determined on the business day immediately preceding the date that the quarterly

The balance of each director’s fee, if any, is payable in cash.

The Company recorded approximately $250,000

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

the option arrangements.

Company issued a total of 60,723 and 34,135 shares of our Common Stock in 2021 and 2020, respectively, under our 2003 Plan to our outside

directors as compensation for serving on our Board.

As a member of the Board, each director elects to receive either 65% or 100% of the

director’s fee in shares of our Common Stock.

The number of shares received is calculated based on 75% of the fair market value

of our Common Stock determined on the business day immediately preceding the date that the quarterly fee is due.

The balance of each

director’s fee, if any, is payable in cash.

The Company recorded approximately $ 467,000 and $ 250,000 in compensation expense (included

in SG&A expenses) for the twelve months ended December 31, 2021 and 2020, respectively, for the portion of director fees earned in

the Company’s Common Stock.

of Common Stock

September 30, 2021, the Company entered into subscription agreements with certain institutional and retail investors in a registered

direct offering, for the sale and issuance of 1,000,000 shares of the Company’s Common Stock (See “Note 7 – Common

Stock Subscription Agreement” for a discussion of the issuance of the shares from this direct offering).

December 31, 2021, the Company has reserved approximately 1,019,400 shares of our Common Stock for future issuance under all of the option

arrangements.

STOCK SUBSCRIPTION AGREEMENT

September 30, 2021, the Company entered into subscription agreements (the “Subscription Agreements”) with certain institutional

and retail investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue, in a registered direct offering,

an aggregate of 1,000,000 shares (the “Shares”) of our Common Stock, at a negotiated purchase price per share of $ 6.20 (the

“Shares”), for aggregate gross proceeds to us of approximately $ 6,200,000 .

The offering price per share was negotiated based

on the average closing price of our Common Stock as quoted on Nasdaq over the three-week period immediately preceding the date of the

Subscription Agreements, less a five percent discount.

Shares were offered and sold by the Company through a prospectus supplement pursuant to the Company’s “shelf” registration

statement on Form S-3, which was previously filed with the Commission on May 13, 2019 and subsequently declared effective on May 22,

2019 (the “Registration Statement”).

Shields & Co., LLC (“Wellington”) served as the exclusive placement agent in connection with the Offering, pursuant to

a placement agency agreement dated as of September 23, 2021 (the “Placement Agency Agreement”), between the Company and Wellington.

The Company paid Wellington a cash fee of 6.00 % of the aggregate gross proceeds in the Offering which totaled $ 372,000 .

The Company also

reimbursed Wellington for certain expenses in connection with the Offering in an aggregate amount not to exceed $ 50,000 .

After deducting

costs incurred directly in connection with the offering which were recorded as deduction to equity, net proceeds to the Company totaled

approximately $ 5,704,000 .

As of December 31, 2021, approximately $ 435,000 of the $ 496,000 in incurred offering costs were paid.

Company plans to use the aggregate net proceeds from the offering primarily for working capital and general corporate purposes, including

for certain facility expansion and upgrades, with the use of such proceeds subject to changes, based on the judgment of management.

(LOSS) PER SHARE

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

in Thousands, Except for Per Share Amounts)

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

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

SCHEDULE OF EARNINGS PER SHARE, BASIC AND DILUTED

(Amounts in Thousands, Except

for Per Share Amounts)

Net 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.

Income from continuing

operations attributable to Perma-Fix Environmental

Services, Inc.

common stockholders

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

Loss from discontinuing

operations attributable to Perma-Fix

Environmental Services, Inc.

common stockholders

1 unchanged sentence

common stockholders

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

Basic income per share

attributable to Perma-Fix Environmental Services, Inc.

common stockholders

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

Diluted income per share

attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Weighted average

shares outstanding:

Basic weighted

average shares outstanding

dilutive effect of stock options

dilutive effect of warrants

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

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

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

of taxes of $0 for each period), respectively.

Company incurred losses from discontinued operations of $ 421,000 (net of tax benefit of $ 139,000 ) and $ 412,000 (net of taxes of $ 0 ) for

the years ended December 31, 2021 and 2020, respectively.

The loss for the year ended 2021 included an increase of approximately $ 100,000

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.

in remediation reserve for our PFSG 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, 2021 and December 31, 2020.

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

in Thousands)

No assets and

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

SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATION BALANCE SHEET

(Amounts in Thousands)

Current assets

plant and equipment, net (1)

Total current assets

Long-term assets

expenses and other liabilities

Environmental

Property, plant and equipment,

long-term assets

Current liabilities

Environmental

Accounts payable

Accrued expenses and other liabilities

Environmental liabilities

Total current liabilities

Long-term liabilities

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

Company’s discontinued operations included a note receivable in the original amount of approximately $375,000 recorded in

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

(“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.

Closure liabilities

Environmental liabilities

long-term liabilities

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

Environmental

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

all within our discontinued operations.

The Company divested PFD in 2008;

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

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, 2021, the Company had total accrued environmental remediation liabilities of $ 876,000 , an increase of $ 22,000 from the December

31, 2020 balance of $ 854,000 .

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.

The net increase represents an increase of $ 100,000 made to the reserve at our PFSG subsidiary as discussed

above and payments of approximately $ 78,000 for remediation projects for the three subsidiaries.

At December 31, 2021, $ 349,000 of the

total accrued environmental liabilities was recorded as current.

current and long-term accrued environmental liabilities at December 31, 2021 are summarized as follows (in thousands).

SCHEDULE OF CURRENT AND LONG TERM ACCRUED ENVIRONMENTAL LIABILITY

Total liability

debt consists of the following at December 31, 2021 and December 31, 2020:

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.

SCHEDULE OF LONG TERM DEBT

(Amounts 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 .

Effective interest rate for 2021 and 2020 was 5.3 % and 6.1 % .

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

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,

plant, and equipment.

Effective July 1, 2019, monthly installment principal payment on the Term Loan was amended to approximately

$35,500 from approximately $101,600.

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 ($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).

Effective interest rate

for 2021 and 2020 was 4.5 % and 5.2 % .

Note dated April 14, 2020, balance of loan forgiven.

Interest accrued at annual rate of 1.0 % .

Payable to 2023 and 2025, annual interest rate of 5.6 % and 9.1 % .

Less current portion of

long-term debt

Long-term debt

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

and equipment.

of debt issuance/debt discount costs of ($ 112,000 ) and ($ 105,000 ) at December 31, 2021 and December 31, 2020, respectively.

Uncollateralized

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

regarding forgiveness on the entire loan balance, along with accrued interest, effective June 15, 2021).

Credit and Term Loan Agreement

Company 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 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.

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

April 1, 2019, the Company completed a lending transaction with Robert Ferguson (the “Lender”), whereby the Company

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 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 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.

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

Agreement”), with PNC National Association (“PNC”), acting as agent and lender.

The Loan Agreement provides the Company

with the following credit facility with a maturity date of March 15, 2024 :

(a) up to $ 18,000,000 revolving credit (“revolving credit”)

and (b) a term loan (“term loan”) of approximately $ 1,742,000 , requiring monthly installments of $ 35,547 .

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 to time.

May 4, 2021, the Company entered into an amendment to the Loan Agreement with its lender which provided the following, among other things:

the Company’s FCCR calculation requirement which allows for the add-back of approximately $ 5,318,000 in eligible expenses that

were incurred and covered by the PPP Loan that the Company received in 2020.

The add-back is to be applied retroactively to the second

and third quarters of 2020.

(see below for a discussion of the PPP Loan);

capital expenditure line of up to $ 1,000,000 with advances on the line, subject to certain limitations, permitted for up to twelve

months starting May 4, 2021 (the “Borrowing Period”).

Only interest is payable on advances during the Borrowing Period

(see annual rate of interest below on the capital expenditure line).

At the end of the Borrowing Period, the total amount advanced

under the line will amortize equally based on a five-year amortization schedule with principal payment due monthly plus interest.

At the maturity date of the Loan Agreement, any unpaid principal balance plus interest, if any, will become due.

No advance on the

capital line has been made as of December 31, 2021.

connection with the amendment, the Company paid its lender a fee of $ 15,000 which is being amortized over the remaining term of the Loan

Agreement, as amended, as interest expense-financing fees.

August 10, 2021, the Company entered into another amendment to the Loan Agreement with its lender which provided, among other things,

the following:

the Company’s failure to meet the minimum quarterly FCCR requirement for the second quarter of 2021;

the quarterly FCCR testing requirement for the third quarter of 2021;

the quarterly FCCR testing requirement starting for the fourth quarter of 2021 and revises the methodology to be used in calculating

the FCCR for the quarters ending December 31, 2021, March 31, 2022, and June 30, 2022 (with no change to the minimum 1.15:1 ratio

requirement for each quarter) ;

maintenance of a minimum of $ 3,000,000 in borrowing availability under the revolving credit until the minimum FCCR requirement for

the quarter ended December 31, 2021 has been met and certified to the lender.

connection with the amendment, the Company paid its lender a fee of $ 15,000 which is being amortized over the remaining term of the Loan

Agreement, as amended, as interest expense-financing fees.

to the Loan Agreement, as amended, payment of annual rate of interest due on the revolving credit is at prime ( 3.25 % at December 31,

2021) plus 2 % or London InterBank Offer Rate (“LIBOR”) plus 3.00 % and the term loan and the capital expenditure line at prime

plus 2.50 % or LIBOR plus 3.50 % .

Under the LIBOR option of interest payment, a LIBOR floor of 0.75 % applies in the event that LIBOR falls

below 0.75 % at any point in time.

Company may terminate its Loan Agreement, as amended upon 90 days’ prior written notice upon payment in full of our obligations

under the Loan Agreement.

The Company agreed to pay PNC 1.0% of the total financing had the Company paid off its obligations on or before

May 7, 2021 and 0.5% of the total financing if the Company pays off its obligations after May 7, 2021 but prior to or on May 7, 2022.

No early termination fee will apply if the Company pays off its obligations under the Loan Agreement after May 7, 2022.

December 31, 2021, the borrowing availability under the Company’s revolving credit was approximately $ 8,692,000 based on our eligible

receivables and includes a reduction in borrowing availability of approximately $ 3,020,000 from outstanding standby letters of credit.

Company’s credit facility under its Loan Agreement, as amended, 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 the

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’s Loan Agreement prohibits us from paying cash dividends on our Common Stock

without prior approval from our lender.

The Company met its financial covenant requirements in the first quarter of 2021.

The Company’s

FCCR calculation in the first quarter of 2021 included the add-back of approximately $ 5,318,000

in eligible expenses that were incurred and covered

by the PPP Loan that the Company received in 2020 as permitted by the amendment dated May 4, 2021 to the Company’s Loan Agreement

as discussed above.

The Company did not meet its FCCR requirement in the second quarter of 2021.

However, this FCCR non-compliance was

waived by the Company’s lender pursuant to the amendment dated August 10, 2021 to the Company’s Loan Agreement as discussed

The Company was not required to test its FCCR for the third quarter 2021 pursuant to the August 10, 2021 amendment to the Loan

The Company met its financial covenant requirements for the fourth quarter of 2021, with the exception of the FCCR requirement;

however, this non-compliance was waived by the Company’s lender pursuant to an amendment to our Loan Agreement dated March 29,

2022 (see “Note 21 - Subsequent Events – Credit Facility” for a discussion of this waiver and additional provisions

of this amendment).

April 14, 2020, the Company entered into a promissory note under the PPP with PNC, our credit facility lender, which had a balance of

approximately $ 5,318,000 (the “PPP Loan”).

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 costs of $105,000).

CARES Act was subsequently amended by the Flexibility Act.

Proceeds from the promissory note was used by the Company for eligible payroll

costs, mortgage interest, rent and utility costs as permitted under the Flexibility Act.

The annual interest rate on the PPP Loan is

October 5, 2020, the Company applied for forgiveness on repayment of the PPP Loan as permitted under the Flexibility Act.

2021, the Company was notified by PNC that the entire balance of the PPP Loan of approximately $ 5,318,000 , along with accrued interest

of approximately $ 63,000 was forgiven by the SBA, effective June 15, 2021.

Accordingly, the Company recorded the entire forgiven PPP

Loan balance, along with accrued interest, totaling approximately $ 5,381,000 as “Gain on extinguishment of debt” on its Consolidated

Statement of Operations for the year ended 2021.

following table details the amount of the maturities of long-term debt maturing in future years at December 31, 2021 (excludes debt issuance

costs of $112,000).

SCHEDULE OF MATURITIES OF LONG-TERM DEBT

Year ending December 31:

(In thousands)

expenses include the following (in thousands) at December 31:

and employee benefits

sales, property and other tax

OF ACCRUED EXPENSES

Salaries and employee benefits

Accrued sales, property and other tax

Interest payable

Insurance payable

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 –

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.

expenses for 2020 included an aggregate of approximately $ 419,000 in compensation expenses accrued under 2020 MIPs for our executive

officers which was paid in July 2021.

CLOSURE COSTS AND ARO

closure costs represent our estimated environmental liability to clean up our fixed-based regulated facilities as required by

our permits, in the event of closure.

Changes to reported closure liabilities (current and long-term) for the years ended December

31, 2020 and 2019, were as follows:

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

requirements for the Company’s M&EC facility.

In 2019, the Company completed the closure and decommissioning activities

of its M&EC facility in accordance with M&EC’s license and permit requirements.

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”

in the Consolidated Balance

Sheets at December 31, 2020 and 2019 with the following activity for the years ended December 31, 2020 and 2019:

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):

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).

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”)

closure costs represent our estimated environmental liability to clean up our fixed-based regulated facilities as required by our permits,

in the event of closure.

Changes to reported closure liabilities (current and long-term) for the years ended December 31, 2021 and 2020,

were as follows:

OF CHANGE IN ASSET RETIREMENT OBLIGATION

Amounts in thousands

Balance as of December 31, 2019

Accretion expense

Balance as of December 31, 2020

Accretion expense

Addition to closure liability

Balance as of December 31, 2021

addition to closure liabilities for 2021 reflects primarily estimated costs for decommissioning activities required to restore the leased

property at our EWOC facility back to its original condition at the end of its lease term.

As of December 31, 2021, current portion of

the closure liabilities totaled approximately $ 578,000 which consists primarily of the closure liabilities for our EWOC facility.

reported closure asset or ARO, is reported as a component of “Net Property and equipment” in the Consolidated Balance Sheets

at December 31, 2021 and 2020 with the following activity for the years ended December 31, 2021 and 2020:

OF ASSET RETIREMENT OBLIGATIONS

Amounts in thousands

Balance as of December 31, 2019

Amortization of closure

and post-closure asset

Balance as of December 31, 2020

Addition to closure and post-closure asset

Amortization of closure

and post-closure asset

Balance as of December 31, 2021

addition to ARO reflects closure obligations related to our EWOC facility as discussed above.

components of (loss) income before income tax benefits by jurisdiction for continuing operations for the years ended December 31, consisted

of the following (in thousands):

OF INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE

United States

United Kingdom

(loss) income before tax benefit

components of current and deferred federal and state income tax (benefits) expense for continuing operations for the years ended December

31, consisted of the following (in thousands):

OF COMPONENTS OF INCOME TAX (BENEFIT) EXPENSE

Federal income tax (benefit) expense

State income tax benefit - current

Foreign income tax expense - current

State income tax benefit

income tax benefit

overall reconciliation between the expected tax benefit using the federal statutory rate of 21% for each of the years ended 2021 and

2020 and the benefit for income taxes from continuing operations as reported in the accompanying Consolidated Statement of Operations

is provided below (in thousands).

OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Federal tax (benefit) expense at

statutory rate

State tax benefit, net of federal benefit

Change in deferred tax rates

Permanent items

PPP Loan forgiveness

Debt forgiveness (PFM Poland)

Difference in foreign rate

True-up of deferred tax items

Decrease in valuation

Income tax benefit

the fourth quarter of 2021, the Company sold PFM Poland resulting from its decision to cease all R&D activities under its Medical

Prior to the sale, the Company purchased Perma-Fix Medical LLC which was converted from PFMC, a wholly-owned subsidiary of PFM

Perma-Fix Medical LLC was treated as a disregarded entity for tax purposes, resulting in a realized tax loss of $ 2,466,000 from

uncollected payables.

As a condition of the sale of PFM Poland, the Company forgave its receivables from PFM Poland resulting in a $ 3,089,000

capital loss on the sale of 100 % interest of PFM Poland stock (see “Note 14 – PF Medical for a discussion on the sale of

Company regularly assesses the likelihood that the deferred tax asset will be recovered from future taxable income.

The Company considers

projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value

of the net deferred income taxes to an amount that is more likely than not to be realized.

For the year ended December 31, 2020, the

Company maintained a full valuation allowance against net deferred income tax assets because insufficient evidence existed to support

the realization of any future income tax benefits.

Since the end of the second quarter of 2021, however, the Company entered into a number

of new contracts awarded to the Company’s Services Segment (including a contract award with a value of approximately $ 40,000,000

for the decommissioning of a navy ship).

result of these new contracts, the Company expected future profitability and improved overall prospects of future business.

As such, as of September 30, 2021, the Company determined that it was more likely than not that it would be able to realize

a portion of the deferred income tax assets.

As a result, a deferred income tax benefit in the amount of approximately $ 2,351,000

attributable to the valuation allowance release

on beginning of year deferred tax assets primarily related to U.S.

Federal income taxes was realized in the three months ended September

The Company continues to maintain a valuation allowance against certain state and foreign tax attributes that may not be realizable

along with the capital loss carryover generated during 2021 that it does not expect to realize.

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.

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, 2021 and

As the Canada and United Kingdom foreign subsidiaries are in loss positions for 2021, no GILTI inclusion is expected for these

entities for the current year.

In addition, the aforementioned sale of PFM Poland is not expected to result in any GILTI inclusion.

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):

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

$14,264,000 and $71,316,000, respectively, as of December 31, 2020.

The estimated consolidated federal and state NOLs include

approximately $2,455,000 and $3,774,000, respectively, of our majority-owned subsidiary, PF Medical, which is not part of our

consolidated group for tax purposes.

These net operating losses can be carried forward and applied against future taxable income,

if any, and expire in various amounts starting in 2021.

Approximately $12,199,000 of our federal NOLs were generated after December

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 2020 remain open to examination by taxing authorities in the jurisdictions in which the Company

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.

On July 1, 2021, the Company received forgiveness of its PPP Loan which is included in its Consolidated Statement

of Operations as “Gain on extinguishment of debt” but is exempt from income taxes.

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, 2021 and 2020 as follows (in thousands):

OF DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets:

Net operating

Environmental and closure

Lease liability

Capital loss carryforward

Deferred tax liabilities:

Depreciation and amortization

Indefinite lived intangible

Right-of-use lease asset

481(a) adjustment

tax assets, gross

Net deferred income

tax asset (liabilities)

Company has estimated net operating loss carryforwards (“NOLs”) for federal and state income tax purposes of approximately

and $ 72,767,000 ,

respectively, as of December 31, 2021.

These NOLs can be carried forward and applied against future taxable income, if any, and expire

in various amounts starting in 2021 .

Approximately

of our federal NOLs were generated after

December 31, 2017 and thus do not expire.

tax years 2018 through 2020 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.

Company had no federal income tax payable for the years ended December 31, 2021 and 2020.

previously disclosed, the Company made the strategic decision during the fourth quarter to

cease all R&D activities under its Medical Segment.

The Medical Segment conducted its

activities through the Company’s majority-owned Polish subsidiary, PFM Poland and PFM

Poland’s wholly-owned subsidiary PFMC, a Delaware corporation.

On December 30, 2021,

the Company entered into a Sales of Shares Agreement (the “sales agreement”)

for its entire stock ownership ( 60.54 % ) of PFM Poland for notes receivable of approximately

$ 47,000 (USD).

The notes receivable will be paid to the Company by the buyer on the earlier

of either twelve months from the closing date or within three days of a resale of the shares

by the buyer.

As condition precedent to the sales agreement, the Company released PFM Poland

from unsatisfied trade payables owed by PFM Poland to the Company totaling approximately

$ 2,537,000 (USD).

The Company will have no continuing involvement with PFM Poland other than

administrative requirements, as applicable, through the completion of PFM Poland’s

2021 Polish year-end financial audit, which is expected to be completed in late May 2022.

Immediately before the sales agreement was executed,

the Company converted PFMC from a S Corporation to a limited liability company (Perm-Fix Medical LLC or “PFM LLC”) and acquired

the entire ownership from the majority-owned Polish subsidiary for $ 10 .

The transaction was deemed to be a common control transaction

and all assets and liabilities were transferred using the historical carrying values in accordance with guidance in ASC 805-50-25, “Business

Combinations, Related Issues, Recognition.” The carrying amount of the non-controlling interest was adjusted to reflect the change

in the ownership of the subsidiary.

As a result, approximately $ 1,004,000 of the non-controlling interest related to the cumulative loss

of PFM LLC was recognized as additional paid-in capital on the Company’s Consolidated Statements of Stockholders’ Equity and

approximately $ 902,000 was recognized as a component within “Loss on deconsolidation of subsidiary” recorded on the Company’s

Consolidated Statement of Operations.

As a result, effective December 30, 2021, PFM Poland

was no longer a subsidiary of the Company and the Company deconsolidated the entity from its consolidated financial statements in accordance

with guidance in ASC 810-10-40, “Consolidation, Overall, Derecognition.

” Accordingly, the Company’s Consolidated

Balance Sheet at December 31, 2020, as reported, includes the consolidated assets and liabilities after intercompany eliminations for

However, the December 31, 2021 Consolidated Balance Sheet does not in include balances due to the sale and deconsolidation

of PFM Poland.

In addition, the Company’s Consolidated Statements of Operations include results of its majority-owned Polish subsidiary

for the period through December 30, 2021.

The Company recognized a non-cash “Loss on deconsolidation

of subsidiary” of approximately $ 1,062,000 on its Consolidated Statements of Operation from the above transaction.

The loss included

approximately $ 94,000 in legal and accounting costs incurred for the transaction.

OF LOSS ON DECONSOLIDATION

(In thousands)

Note receivable consideration received

Carrying amount of non-controlling interest

Carrying amount of accumulated other comprehensive

Net liabilities

Transaction costs

Loss on deconsolidation

of subsidiary

AND CONTINGENCIES

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.

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 could would have a material adverse

effect on our financial position, liquidity or results of future operations.

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.

Tech EC, Inc.

(“Tetra Tech”)

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, 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.

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.

(“Tetra Tech”) filed a complaint in the United States District Court for the Northern District

of California (the “Court”) against CH2M Hill, Inc.

(“CH2M”) and four subcontractors of CH2M, including the Company

(“Defendants”).

The complaint alleges various claims, including a claim for negligence, negligent misrepresentation, equitable

indemnification and related business claims against all defendants related to alleged damages suffered by Tetra Tech in respect of certain

draft reports prepared by defendants at the request of the U.S.

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.

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 policy.

January 7, 2021, Defendants’ motion to dismiss the complaint in its entirety was granted without prejudice, with leave to amend.

Tetra Tech subsequently filed a First Amended Complaint (“FAC”) and Defendants filed a motion to dismiss Tetra Tech’s

Tetra Tech filed an opposition to Defendant’s motion to dismiss Tetra Tech’s FAC.

Defendants, subsequently filed a joint

reply to Tetra Tech’s motion in opposition.

On January 27, 2022 a decision and Order on Defendants’ motion to dismiss was

issued by the Court, which dismissed some claims, allowed for the potential amendment of other claims and declined to dismiss other claims

at this time.

The Company continues to believe it does not have any liability to Tetra Tech.

the fourth quarter of 2021, PF Canada received a Notice of Termination (“NOT”) from Canadian Nuclear Laboratories, LTD.

on a Task Order Agreement (“TOA”) that PF Canada entered into with CNL in May 2019 for remediation work within Ontario, Canada

(“Agreement”).

The NOT was received after work under the TOA was substantially completed.

CNL may terminate the TOA at any

time for convenience.

As of December 31, 2021, PF Canada has approximately $ 2,640,000

in unpaid receivables and unbilled costs

due from CNL as a result of work performed under the TOA.

Additionally, CNL has approximately $ 871,000

in contractual holdback under the TOA that is

payable to PF Canada.

CNL also established a bond securing approximately $ 1,900,000

(CAD) to cover certain issue raised in connection

with the TOA.

Under the TOA, CNL may be entitled to set off certain costs and expenses incurred by CNL in connection with the termination

of the TOA, including the bond as discussed above, against amounts owed to PF Canada for work performed by PF Canada or its

subcontractors.

PF Canada continues to be in discussions with CNL to finalize the amounts due to PF Canada under the TOA and continues

to believes these amounts are due and payable.

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.

The 2003 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.

Total coverage under the 2003 Closure Policy, as amended, was $ 20,403,000 at December

At December 31, 2021 and December 31, 2020, 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 $ 11,471,000 and $ 11,446,000 ,

respectively, which included interest earned of $ 2,000,000 and $ 1,975,000 on the finite risk sinking funds as of December 31, 2021 and

December 31, 2020, respectively.

Interest income for the year ended 2021 and 2020 was approximately $ 25,000 and $ 139,000 , 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

time to time, the Company is 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 was approximately $3,026,000 and the total amount of bonds outstanding was approximately $46,388,000.

Company adopted a 401(k) Plan in 1992, which is intended to comply with Section 401 of the Internal Revenue Code and the provisions

of the Employee Retirement Income Security Act of 1974.

All full-time employees who have attained the age of 18 are eligible to

participate in the 401(k) Plan.

Eligibility is immediate upon employment but enrollment is only allowed during four quarterly

open periods of January 1, April 1, July 1, and October 1.

Participating employees may make annual pretax contributions to their

accounts up to 100% of their compensation, up to a maximum amount as limited by law.

The Company, at its discretion, may make

matching contributions of 25% based on the employee’s elective contributions.

Company contributions vest over a period of

In 2020 and 2019, the Company contributed approximately $594,000 and $395,000 in 401(k) matching funds, respectively.

time to time, the Company is 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, 2021, the total amount of standby letters of credit outstanding was

approximately $ 3,020,000 and the total amount of bonds outstanding was approximately $ 50,109,000 .

Company adopted a 401(k) Plan in 1992, which is intended to comply with Section 401 of the Internal Revenue Code and the provisions of

the Employee Retirement Income Security Act of 1974.

All full-time employees who have attained the age of 18 are eligible to participate

in the 401(k) Plan.

Eligibility is immediate upon employment but enrollment is only allowed during four quarterly open periods of January

1, April 1, July 1, and October 1.

Participating employees may make annual pretax contributions to their accounts up to 100 % of their

compensation, up to a maximum amount as limited by law.

The Company, at its discretion, may make matching contributions of 25 % based

on the employee’s elective contributions.

Company contributions vest over a period of five years .

In 2021 and 2020, the Company

contributed approximately $ 589,000 and $ 594,000 in 401(k) matching funds, respectively.

PARTY TRANSACTIONS

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.

For such position, he received annual compensation of $ 184,000 and $ 181,000

for 2021 and 2020, respectively.

David Centofanti is the son of our EVP of Strategic Initiatives and a Board member.

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

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

Company entered into an employment agreement dated July 22, 2020 with each of our executive officers (each employment agreement referred

to as “Employment Agreement”).

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 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, we or the executive officer

provides written notice not to extend the terms of the Employment Agreement.

Each 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 Employment Agreement, if the executive officer’s employment is terminated due to death/disability or for cause (as defined

in the agreement), 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 agreement) 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 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

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.

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:

there is a Change in Control (as defined in the agreement), 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.

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)).

January 21, 2021, the Compensation Committee and our Board approved individual MIP for the calendar year 2021 for each of our executive

Each MIP 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.

The performance compensation under each

of the MIPs is based upon meeting certain of the Company’s separate target objectives during 2021.

Assuming each target objective

is achieved under the same performance threshold range under each MIP, the total potential target performance compensation payable ranged

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

No performance compensation was earned under any of the 2021 MIPs.

January 21, 2021, the Company’s Compensation Committee and the Board approved, effective January 1, 2021, the following revisions

to the annual compensation of each non-employee Board member for service on the Board and the Board Committee(s) for which the Board

member serves:

director is to be paid a quarterly fee of $ 11,500 , compared to the previous quarterly fee of $ 8,000 ;

Chairman of the Board is to be paid an additional quarterly fee of $ 8,750 , compared to the Chairman’s previous additional quarterly

fee of $ 7,500 ;

Chairman of the Audit Committee is to be paid an additional quarterly fee of $ 6,250 , compared to the Audit Chair’s previous

additional quarterly fee of $ 5,500 ;

Chairman of each of the Compensation Committee, the Corporate Governance and Nominating Committee (“Nominating Committee”),

and the Strategic Advisory Committee (“Strategic Committee”) is to receive $ 3,125 in additional quarterly fees.

No additional

quarterly fees were previously paid to the chairs of such committees.

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 an additional quarterly fee of $ 1,250 ;

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 also serve as the Chairman of another standing committee or as the Chairman of the

non-employee Board member continues to receive $1,000 for each in-person board meeting attendance and a $ 500 fee for meeting attendance

via conference call .

Reimbursements of expenses for attending meetings of the Board are paid in cash at the time of the applicable Board

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 6 – Capital Stock, Stock Plans, Warrants, and Stock Based Compensation –

Stock Option Plans” for a discussion of the 2003 Plan) .

accordance with ASC 280, “Segment Reporting”, we define an operating segment as a business activity:

which we may earn revenue and incur expenses;

operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about

resources to be allocated to the segment and assess its performance;

operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segment and assess

its performance;

which discrete financial information is available.

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 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 –

Discontinued Operations”) which do not generate revenues.

table below shows certain financial information of our reporting segments as of and for the years ended December 31, 2020 and

2019 (in thousands).

Reporting as of and for the year ended December 31, 2020

Corporate (2)

have three reporting segments, which include Treatment and Services Segments, which are based on a service offering approach;

whose primary purpose was the R&D of a medical isotope production technology.

The Medical Segment had not generated any revenues.

During December 2021, the Company made the strategic decision to cease all R&D activities under the Medical Segment which resulted

in the sale of 100 % of its interest of PFM Poland (see “Note 14 – PF Medical” for a discussion of this transaction).

Our reporting segments exclude our corporate headquarter, business center and our discontinued operations (see “Note 9 –

Discontinued Operations”) which do not generate revenues.

table below shows certain financial information of our reporting segments as of and for the years ended December 31, 2021 and 2020 (in

SCHEDULE OF SEGMENT REPORTING INFORMATION

Segment Reporting as of and for the

year ended December 31, 2021

from external customers

4 unchanged sentences

income (loss) before income taxes

( 561 ) (9)(11)

tax (benefit) expense

( 3,890 ) (10)

income (loss)

for segment assets (net)

Reporting as of and for the year ended December 31, 2019

Segment Reporting as of and for the

year ended December 31, 2020

from external customers

$ 73,459 (3)(4)

and development

2 unchanged sentences

income (loss) before income taxes

tax (benefit) expense

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 96,582,000

or 91.6% of total revenue for 2020 and $59,985,000 or 81.7% of total revenue for 2019.

Segment assets have been adjusted for intercompany accounts

to reflect actual assets for each segment.

Amounts 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 60,812,000

of total revenue for 2021 and 96,582,000

of total revenue for 2020.

The following reflects such revenue generated by our two segments:

2 unchanged sentences

2021 and 2020, 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).

of debt discount/debt issuance costs of ($ 112,000 ) and ($ 105,000 ) for 2021 and 2020, respectively

(see “Note 10 – “Long-Term Debt” for additional information).

of financed amount of $ 585,000 and $ 883,000 for the year ended December 31, 2021 and 2020,

1 unchanged sentence

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.

subsidiary of $ 25,000 and $ 33,000 for the

year ended December 31, 2021 and 2020, respectively.

includes approximately $ 5,381,000 of “Gain on extinguishment of debt” recorded

in connection with the Company’s PPP Loan which was forgiven by the SBA effective June

15, 2021 (see “Note 10 – Long Term Debt – PPP Loan” for information

of this loan forgiveness).

(10) Includes

tax benefit recorded in amount of approximately $ 2,351,000 resulting from release of valuation

allowance on the Company’s deferred tax assets (see “Note 13 Income Taxes”

for a discussion of this tax benefit).

(11) Includes

elimination of gain/loss of $ 2,537,000 in debt forgiveness between PFM Poland and the Company

(see “Note 14 – PF Medical for a discussion of this debt forgiveness.

includes a “Loss on deconsolidation of subsidiary” recorded in the amount of

approximately $ 1,062,000 resulting from the sale of PFM Poland (see “Note 14 –

PF Medical for a discussion of this loss).

SCHEDULE OF REVENUE BY MAJOR CUSTOMERS BY REPORTING SEGMENTS

Domestic government

Foreign government

following table reflects revenue based on customer location:

OF REVENUE BASED ON CUSTOMER LOCATION

United States

United Kingdom

includes assets from our discontinued operations of $ 96,000 and $ 103,000 at December 31,

2021 and 2020, respectively.

of debt discount/debt issuance costs of ($ 112,000 ) and ($ 105,000 ) for 2021 and 2020, respectively

(see “Note 10 – “Long-Term Debt” for additional information).

of financed amount of $ 585,000 and $ 883,000 for the year ended December 31, 2021 and 2020,

respectively.

long-lived asset (net) for our PF Canada, Inc.

subsidiary of $ 25,000 and $ 33,000 for the

year ended December 31, 2021 and 2020, respectively.

includes approximately $ 5,381,000 of “Gain on extinguishment of debt” recorded

in connection with the Company’s PPP Loan which was forgiven by the SBA effective June

15, 2021 (see “Note 10 – Long Term Debt – PPP Loan” for information

of this loan forgiveness).

(10) Includes

tax benefit recorded in amount of approximately $ 2,351,000 resulting from release of valuation

allowance on the Company’s deferred tax assets (see “Note 13 Income Taxes”

for a discussion of this tax benefit).

(11) Includes

elimination of gain/loss of $ 2,537,000 in debt forgiveness between PFM Poland and the Company

(see “Note 14 – PF Medical for a discussion of this debt forgiveness.

includes a “Loss on deconsolidation of subsidiary” recorded in the amount of

approximately $ 1,062,000 resulting from the sale of PFM Poland (see “Note 14 –

PF Medical for a discussion of this loss).

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.

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, 2022.

The Company’s

deferment of such taxes totaled approximately $ 1,252,000 of which approximately $ 626,000 was paid in December 2021.

At December 31, 2021,

the remaining $ 626,000 in deferred social security taxes was included in “Accrued expenses” within current liabilities in

the Company’s Consolidated Balance Sheets.

INTEREST ENTITIES (“VIE”)

Company and Engineering/Remediation Resources Group, Inc.

(“ERRG”) previously entered into an unpopulated joint venture agreement

for project work bids within the Company’s Services Segment with the joint venture doing business as Perma-Fix ERRG, a general

The Company has a 51 % partnership interest in the joint venture and ERRG has a 49 % partnership interest in the joint venture.

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;

(a) 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).

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 continues to be a VIE in which the Company is the primary beneficiary.

At December 31, 2021, Perma-Fix ERRG had total assets of

$ 1,423,000 and total liabilities of $ 1,423,000 which are all recorded as current.

evaluated events occurring subsequent to December 31, 2021 through April 6, 2022, the date these consolidated financial statements

were available for issuance, and other than as noted below determined that no material recognizable subsequent events occurred.

Compensation Committee and the Board determined that no performance payment would be made to each executive officer under his 2021 MIP.

In lieu of any performance payment to each executive officer under his 2021 MIP and in an attempt to retain the executive officer, on

January 20, 2022, the Compensation Committee and the Board determined that the base annual compensation for each executive officer for

2022 is increased by approximately 6.4 % , effective January 1, 2022, to offset the cost of living increase.

January 20, 2022, the Board and the Compensation Committee also approved individual MIP for the calendar year 2022 for each of our executives

Each MIP is effective January 1, 2022 and applicable for year 2022.

Each MIP provides guidelines for the calculation of annual

cash incentive-based compensation, subject to Compensation Committee oversight and modification.

The performance compensation under each

of the MIPs is based upon meeting certain of the Company’s separate target objectives during 2022.

Assuming each target objective

is achieved under the same performance threshold range under each MIP, the total potential target performance compensation payable ranges

from 25 % to 150 % of the 2022 base salary for the CEO ($ 93,717 to $ 562,304 ), 25 % to 100 % of the 2022 base salary for the CFO ($ 76,193

to $ 304,772 ), 25 % to 100 % of the 2022 base salary for the EVP of Strategic Initiatives ($ 63,495 to $ 253,980 ), 25 % to 100 % of the 2022

base salary for the EVP of Nuclear and Technical Services ($ 76,193 to $ 304,772 ) and 25 % to 100 % ($ 65,308 to $ 261,233 ) of the 2022 base

salary for the EVP of Waste Treatment Operations.

March 29, 2022, the Company entered into an amendment to its Loan Agreement with its lender which provided, among other things,

the following:

the Company’s failure to meet the minimum quarterly FCCR requirement for the fourth quarter of 2021;

the quarterly FCCR testing requirement for the first quarter of 2022;

the quarterly FCCR testing requirement starting for the second quarter of 2022 and revises the methodology to be used in calculating

the FCCR for the quarters ending June 30, 2022, September 30, 2022, and December 31, 2022 (with no change to the minimum 1.15:1 ratio

requirement for each quarter) ;

maintenance of a minimum of $ 3,000,000 in borrowing availability under the revolving credit until the minimum FCCR requirement for

the quarter ended June 30, 2022 has been met and certified to the lender;

the annual rate used to calculate the Facility Fee (as defined in the Loan Agreement) on the revolving credit, with addition of the

capital expenditure line, from 0.375 % to 0.500 % .

Upon meeting the minimum FCCR requirement of 1;15:1 on a twelve month trailing basis,

the Facility Fee rate of 0.375 % will be reinstated.

connection with the amendment, we paid our lender a fee of $ 15,000 .

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