What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-23 compared with 2022-04-06 · 916 added, 970 removed, 911 unchanged (67% of the section changed)

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Financial Statements

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

Balance Sheets as of December 31, 2021 and 2020

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

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

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

to Consolidated Financial Statements

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

Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2022 and 2021

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

Notes to Consolidated Financial Statements

Statement Schedules

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subsidiaries (the “Company”) as of December 31, 2022 and 2021, 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.

comprehensive (loss) 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, 2022 and 2021, 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

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

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financial statements based on our audits.

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

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.

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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.

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

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.

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

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.

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:

with non-standard terms.

These terms and contract modifications impact revenue recognition and require significant effort and

judgement by management.

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

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

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

impact revenue recognition.

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

We obtained and inspected a selection of long-term, non-standard contracts and modifications and amendments to understand the terms and conditions and the related impact on revenue recognition, specifically the identification of:

obligations, and

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.

of the measure of progress.

We obtained the detail of underlying costs for each project and tested the underlying accuracy of the data by agreeing to supporting documentation.

We utilized the cost data to recalculate management’s measure of completion for selected projects under the input method.

We performed a retrospective review using contracts, which were tested through prior year procedures and completed during the current year, to evaluate management’s ability to accurately budget for input method contracts.

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

Realizability

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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.

December 31, 2022, management concluded that sufficient positive evidence exists to ensure the realizability of the US federal

deferred tax assets.

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

are 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 judgement and effort in performing procedures

and evaluating audit evidence related to management’s assessment of the realization of deferred tax assets.

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

We evaluated the positive and negative evidence available to support management’s assessment of the realizability of the assets

We tested the completeness and accuracy of the underlying data used in management’s assessment

We evaluated the prospective financial information related to future profitability including consideration of:

current and past performance of the Company

the consistency with external market and industry data

the consistency with evidence obtained in other areas.

have served as the Company’s auditor since 2014.

GRANT THORNTON LLP

April 6, 2022

ENVIRONMENTAL SERVICES, INC.

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of December 31,

(Amounts in Thousands, Except

for Share and Per Share Amounts)

(Amounts in Thousands, Except

for Share and Per Share Amounts)

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

Current assets:

Accounts receivable, net

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

Accounts receivable, net of allowance for credit losses of $ 57 and $ 85 ,

Unbilled receivables

Prepaid and other assets

assets related to discontinued operations

Current assets related to discontinued operations

Total current assets

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Net property and equipment

Property and equipment related to discontinued

Property and equipment related to discontinued operations

Operating lease right-of-use assets

Intangibles and other long term assets:

Other intangible assets

Finite risk sinking fund

(restricted cash)

Other intangible assets - net

Finite risk sinking fund (restricted cash)

Deferred tax assets

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of December 31,

(Amounts in Thousands, Except

for Share and per Share Amounts)

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

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accrued expenses

Disposal/transportation

Disposal/transportation accrual

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

Accrued closure costs - current

Current portion of long-term debt

Current portion of operating lease liabilities

Current portion of finance lease liabilities

Current liabilities related to discontinued operations

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

related to discontinued operations

long-term liabilities

Long-term operating lease liabilities, less current portion

Long-term finance lease liabilities, less current portion

Long-term liabilities related to discontinued operations

Total long-term liabilities

Total liabilities

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Stockholders’ Equity:

Preferred Stock, $ .001

Preferred Stock, $ .001 par value;

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

Common Stock, $ .001 par

Common Stock, $ .001 par value;

30,000,000 shares authorized;

13,332,398 and 13,222,552 shares issued, respectively;

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

13,324,756 and 13,214,910 shares outstanding, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive

Common Stock in treasury, at cost;

Total Perma-Fix Environmental

Services, Inc.

stockholders’ equity

Non-controlling

stockholders’ equity

Total liabilities and

stockholders’ equity

Accumulated other comprehensive loss

Less Common Stock in treasury, at cost;

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

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the years ended December 31,

(Amounts in Thousands, Except

for Per Share Amounts)

(Amounts in Thousands, Except

for Per Share Amounts)

(Amounts in Thousands, Except for Per Share Amounts)

Cost of goods sold

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Research and development

Loss on disposal of property

and equipment

income from operations

Loss on disposal of property and equipment

Loss from operations

Other income (expense):

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Interest expense-financing fees

Gain (loss) on extinguishment of debt

Loss on deconsolidation

of subsidiary (Note 14)

(Loss) income from continuing operations before

Other (Note 11)

Gain on extinguishment of debt (Note 11)

Loss on deconsolidation of subsidiary (Note 15)

Loss from continuing operations before taxes

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:

Continuing operations

Discontinued operations

Net income per common

Net income (loss) per common share attributable

to Perma-Fix Environmental Services, Inc.

stockholders - diluted:

(Loss) income from continuing operations, net of taxes

Loss from discontinued operations (Note 9)

Net (loss) income

Net loss attributable to non-controlling interest

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

common stockholders

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

stockholders - basic and diluted:

Continuing operations

Discontinued operations

Net income per common

Number of common shares used in computing net

income (loss) per share:

Net (loss) income per common share

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

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

ENVIRONMENTAL SERVICES, INC.

STATEMENTS OF COMPREHENSIVE INCOME

STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

the years ended December 31,

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(Amounts in Thousands)

Other comprehensive income:

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.

Net (loss) income

Other comprehensive (loss) income:

Foreign currency translation reclass to loss on deconsolidation of subsidiary (Note 15)

Foreign currency translation adjustments

Total other comprehensive (loss) income

Comprehensive (loss) income

Comprehensive loss attributable to non-controlling interest

Comprehensive (loss) income attributable to Perma-Fix Environmental Services, Inc.

common stockholders

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in Thousands, Except for Share Amounts)

Common Stock Held In

Comprehensive

Non-controlling

Stockholders’

at December 31, 2019

Net income (loss)

Balance at December 31, 2020

Net (loss) income

Foreign currency translation

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Stock-Based Compensation

of Common Stock upon exercise of options

Sale of Common Stock,

net of offering costs (Note 7)

Sale of Common Stock,

net of offering costs (Note 7)

Issuance of Common Stock upon exercise of options

Sale of Common Stock, net of offering costs (Note 7)

Balance at December 31, 2021

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

Sale of Common Stock,

net of offering costs (Note 7)

Issuance of Common Stock upon exercise of options

Balance at December 31, 2022

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Cash flows from operating activities:

Net (loss) income

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:

(Loss) income from continuing operations

Adjustments to reconcile net (loss) income from continuing operations to cash provided by (used in) 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

Interest on finance lease with purchase option

Loss on deconsolidation of subsidiary (Note 15)

Gain on extinguishment of debt (Note 11)

Amortization of debt issuance costs

Deferred tax benefit

Provision for (recovery

of) bad debt reserves

Loss on disposal of property

and equipment

Issuance of common stock

(Recovery of) provision for credit losses on accounts receivable

Loss on disposal of property and equipment

Issuance of common stock for services

Stock-based compensation

Changes in operating assets

and liabilities of continuing operations:

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

Cash (used in) provided

by continuing operations

used in discontinued operations

Cash (used in) provided

by operating activities

Prepaid expenses, inventories and other assets

Accounts payable, accrued expenses and unearned revenue

Cash provided by (used in) provided by continuing operations

Cash used in discontinued operations

Cash used in 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

Cash used in investing

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

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

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)

Borrowing on revolving credit

Repayments of revolving credit borrowings

Proceeds from capital line

Principal repayment of finance lease liabilities

Principal repayments of long term debt

Payment of debt issuance costs

(Offering costs paid)/ proceeds from sale of Common Stock, net of offering costs

paid (Note 7)

Proceeds from issuance of Common Stock upon exercise of options

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

Effect of exchange rate changes on cash

Decrease 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:

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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 D&D field, technical,

and management personnel and services to commercial and government customers;

waste management services to commercial and governmental customers.

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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:

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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.

(“PF Canada”) and Oak Ridge Environmental Waste Operations Center (“EWOC”).

Company’s continuing operations also consisted of Perma-Fix ERRG, a variable interest entity (“VIE”) for which we were

the primary beneficiary.

The VIE was an unpopulated joint venture (“JV”) entered between the Company and Engineering/Remediation

Resources Group, Inc.

(“ERRG”) for a specific project under the Services Segment in which the Company and ERRG had a 51 %

and 49 % partnership interest in the joint venture, respectively.

During the fourth quarter of 2022, project work under the JV was completed

As of December 31, 2022, total assets and liabilities under the VIE were each $ 0 .

Company’s discontinued operations (see “Note 9 – Discontinued Operations”) 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.

2021, the Company’s segment also included the Medical Segment.

The Medical Segment entailed the R&D of the Company’s

medical isotope production technology by the Company’s majority-owned 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 the fourth quarter of 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 15 –

PF Medical” for a discussion of this sale).

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

Company’s 2022 financial results continued to be impacted by COVID-19, among other things.

The Company’s Treatment Segment

began to see steady improvements in waste receipts starting in the second quarter of 2022 from certain customers who had previously delayed

waste shipments due, in part, from the impact of COVID-19.

This positive trend was negatively impacted by occurrences of severe weather

conditions which resulted in temporary delays in waste shipments from certain customers and a temporary shortage in skilled production

personnel which peaked through the fourth quarter of 2022 at one of the Company’s facilities.

In early part of 2022, the Company’s Services Segment continued to experience delays/curtailments in

project work by certain customers since the award of projects to us late in the second quarter of 2021 due to COVID-19 impact and/or

administrative delays.

However, starting in the second quarter of 2022, work under these projects had resumed/increased as the pandemic

impacts began to subside and has since reached full operational status.

2022, the Company continued to realize delays in procurement and planning on behalf of our government clients that saw easing through

the second half of the year.

Heading into 2023, the Company expects to see continued improvements in waste receipts and continued increases

in project work from contracts recently won and bids submitted in both segments that are awaiting awards, subject to potential

impact of COVID-19 and economic impacts.

Company’s cash flow requirements during the twelve months ended December 31, 2022 were primarily financed by its operations, cash

on hand and credit facility availability.

The Company’s cash flow requirements for the next twelve months will consist primarily

of general working capital needs, scheduled principal payments on its debt obligations, remediation projects, and planned capital expenditures.

The Company plans to fund these requirements from its operations, credit facility availability, cash on hand and a refund that it expects

to receive under the Employee Retention Credit program under the CARES Act (see a discussion of this expected refund in “Note 11

– The Coronavirus Aid, Relief, and Economic Security Act (“CARES ACT) – Employee Retention Credit (“ERC”)”).

The Company continues to explore all sources of increasing its capital and/or liquidity and to improve its revenue and working capital,

including either amending our existing lines of credit, obtaining new term loans or entering into equity transactions.

There are no assurances

that we will be successful in increasing our liquidity though these efforts.

The Company is 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, the Company believes that its cash flows from operations, available liquidity from its credit facility,

cash on hand and the expected refund from the ERC program should be sufficient to fund its operations for the next twelve months.

Company continues to closely monitor any potential impact from the countries’ economic conditions and COVID-19 pandemic on all

aspects of our business.

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of Consolidation

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’s consolidated financial statements include our accounts, those of our wholly-owned subsidiaries, and Perma-Fix ERRG, a

VIE for which we were the primary beneficiary as discussed above, after elimination of all significant intercompany accounts and transactions.

The consolidated financial statements for 2021 also included the accounts of the Company’s Medical Segment which was divested in

December 2021 as discussed above.

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.

which may require estimates of future cash flows and assumptions that affect the reported amounts of assets and liabilities and disclosures

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

during the reporting period.

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

and Finite Risk Sinking Fund (Restricted Cash)

December 31, 2021, the Company had cash on hand of approximately $ 4,444,000 , which included account balances of our foreign subsidiaries

totaling approximately $ 26,000 .

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):

December 31, 2022, the Company had cash on hand of approximately $ 1,866,000 .

At December 31, 2021, the Company had cash on hand of approximately

$ 4,440,000 .

At December 31, 2022 and 2021, the Company had finite risk sinking funds of approximately $ 11,570,000 and $ 11,471,000 , respectively,

which represented cash held as collateral under the Company’s financial assurance policy (see “Note 16 – Commitment

and Contingencies – Insurance” for a discussion of this finite risk sinking fund).

the fourth quarter of 2022, the Company adopted ASU 2016-13, “Credit Losses (Topic 326) Measurement of Credit Losses on Financial

Instruments.” This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial

instruments, including accounts receivable.

Accounts 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 new standard requires

entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivbles

that are current or not yet due, which were not considered under the previous accounting guidance.

In accordance with ASU 2016-13, the

Company’s expected loss allowance methodology for receivables is developed using historical collection experience, current and

future economic and market conditions that may affect customers’ ability to pay, and a review of the current status of customers’

accounts receivables.

The Company does not apply a credit loss allowance to government related receivables due to our past successful

experience in their collectability.

The Company’s monitoring activities include routine follow-up on past due accounts and consideration

of customers’ financial conditions.

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 credit losses for the years ended December 31, 2022 and 2021 (in thousands):

SCHEDULE OF CREDIT LOSSES FOR FINANCING RECEIVABLES, CURRENT

Ended December 31,

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

Year Ended December 31,

Allowance for credit losses - beginning of year

(Recovery of) provision charges

Allowance for credit losses - end of year

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

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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.

contract claims and pending change orders, including requests for equitable adjustments (“REA”) when work has been performed

and collection of revenue is reasonably assured.

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

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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.

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

and disposal accruals.

Company accrues for waste disposal based on 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

and Equipment

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accumulated depreciation of $ 549,000 , resulting in net fixed assets under finance leases of $ 652,000 .

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 .

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 .

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

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office and warehouse spaces used to conduct our business.

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

These leases have remaining terms of approximately one to seven years which

include additional options to renew.

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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.

The Company’s finance leases have remaining terms of approximately one to three years.

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.

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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.

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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’ equity.

Assets and liabilities are translated

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

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

comprehensive income (loss) in stockholders’ equity.

Gains and losses resulting from foreign currency transactions are recognized

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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.

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.

for others as a subcontractor to government entities or directly as a prime contractor, representing approximately $ 60,030,000 , or 85.0 % ,

of our total revenue during 2022, as compared to $ 60,812,000 , or 84.2 % , of our total revenue during 2021.

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.

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

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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 %,

Company had two government related customers whose total unbilled and net outstanding receivable balances represented 12.5 % and 23.0 %

of the Company’s total consolidated unbilled and net accounts receivable at December 31, 2022.

The Company had two government related

customers whose total unbilled and net outstanding receivable balances represented 18.2 % and 23.5 % of the Company’s total consolidated

unbilled and net accounts receivable at December 31, 2021.

Recognition and Related Policies

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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.

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

from 9.0 % to 33 % ), treatment/processing (ranging from 40 % to 79 % ) and shipment/final disposal (ranging from 9.0 % to 27 % ).

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 contract.

Company periodically enter into arrangements with customers for transportation of wastes to either our facility or to non-company owned

disposal sites.

Revenue from this arrangement is recognized at a point in time, upon the transfer of control.

Control transfers when

the wastes are picked up by the Company.

Segment Revenues:

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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

discussed above for the Treatment and Services Segments, the Company’ revenue is generally recognized using the input method.

method of measuring progress provides a faithful depiction of the transfer to goods and services because the costs incurred are expected

to be substantially proportionate to the Company’s satisfaction of the performance obligation.

with our customers within our Treatment Segment are generally short term with an original expected length of one year or less.

Services Segment, contracts with our customers generally have original terms ranging from one year or less to approximately twenty-four

The 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.

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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.

However, from time to time, the Company may submit requests

for equitable adjustments under certain of its government contracts for price or other modifications that are determined to be variable

consideration.

The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical

experience with government contracts, anticipated performance and management’s best judgment at the time and to the extent it is

probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable

consideration is resolved.

These estimates are re-assessed each reporting period as required.

Payment Terms

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Comprehensive

Income (Loss)

components of comprehensive income (loss) are net income (loss) and the effects of foreign currency translation adjustments.

(Loss) 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

(Loss) Income

components of comprehensive (loss) income are net (loss) income and the effects of foreign currency translation adjustments.

Income Per Share

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

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

of potential outstanding common shares.

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earnings per share.

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

(Loss) income per share is computed separately for each period presented.

Value of Financial Instruments

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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, 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

Credit is extended to customers

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

At December 31, 2022 and

December 31, 2021, 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.

Adopted Accounting Standards

December 2019, the FASB issued ASU No.

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 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.

May 2021, the FASB issued Accounting Standards Update (“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):

Issuer’s 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.

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

of this ASU by the Company effective January 1, 2022 did not have a material impact on its financial statements.

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

Facilitation of the Effects of Reference Rate Reform

on Financial Reporting,” which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships

and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference

rate expected to be discontinued because of reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied

prospectively through December 31, 2022.

In January 2021, the FASB issued ASU No.

2021-01, “Reference Rate Reform (Topic 848):

Scope,” which clarified the scope and application of the original guidance.

The Company determined that only its obligations under

its credit facility were impacted by these ASUs.

During the third quarter of 2022, the Company entered into an amendment dated August

29, 2022 to its loan agreement which replaced the LIBOR option with the Secured Overnight Finance Rate (“SOFR”) option under

its credit facility.

The adoption of these aforementioned ASUs by the Company during the third quarter of 2022 did not have a material

impact to its financial statements (see “Note 10 – Long Term Debt” for a discuss of the Company’s credit facility

and the amendment dated August 29, 2022).

On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

of the Sunset Date of Topic 848,” which extends the period of time entities can utilize the reference rate reform relief guidance

under ASU 2020-04 from December 31, 2022 to December 31, 2024.

June 2016, the FASB issued ASU No.

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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.

The adoption of these ASUs by the Company

during the fourth quarter of 2022 did not have a material impact to its financial statements.

Issued Accounting Standards – Not Yet Adopted

August 2020, the FASB issued ASU No.

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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 its financial statements.

Disaggregation

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(In thousands)

Twelve Months Ended

December 31, 2022

December 31, 2021

Time and materials

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(In thousands)

Twelve Months Ended

December 31, 2022

December 31, 2021

Domestic government

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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:

SCHEDULE OF CONTRACT ASSETS AND LIABILITIES

timing of revenue recognition and billings results in unbilled receivables (contract assets).

The Company’s contract liabilities

consist of deferred revenues which represent advance payment from customers in advance of the completion of our performance obligation.

The following table represents changes in our contract asset and contract liabilities balances:

SCHEDULE OF CONTRACT LIABILITIES

(In thousands)

December 31, 2022

December 31, 2021

Contract assets

Account receivables, net of allowance

Unbilled receivables - current

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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.

decrease in unbilled receivables was primarily due to invoicing in connection with the Company’s Canadian projects within the Services

decrease in deferred revenue was attributed primarily to revenue recognized in connection with a Services Segment contract.

the twelve months ended December 31, 2022 and 2021, the Company recognized revenue of $ 6,576,000 and $ 7,196,000 , respectively, related

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Amortization of ROU assets

on lease liability

Short-term lease rent

Interest on lease liability

Finance leases

Short-term lease rent expense

Total lease cost

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SCHEDULE OF WEIGHTED AVERAGE LEASE

Weighted average remaining lease

terms (years)

Operating Leases

Finance Leases

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:

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

Operating Leases

Finance Leases

Weighted average remaining lease

terms (years)

Weighted average remaining lease terms (years)

Weighted average discount rate

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and thereafter

Total undiscounted lease payments

Total undiscounted lease

Imputed interest

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

value of lease payments

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 portion

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

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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

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 for:

Finance liabilities

Operating liabilities

Reduction to ROU assets resulitng from reassessment

Reduction to ROU assets resulitng from reassessment for

Finance liabilities

AND OTHER INTANGIBLE ASSETS

following table summarizes changes in the carrying value of permits.

No permit exists at our Services and Medical Segments.

5 PERMIT AND OTHER INTANGIBLE ASSETS

following table summarizes changes in the carrying value of permits, which exist only in our Treatment Segment.

OF INTANGIBLE ASSETS

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Balance as of December 31, 2020

Permit renewal

Permit in progress

Balance as of December 31, 2021

Permit renewal

Permit in progress

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Weighted Average

December 31, 2022

December 31, 2021

Other Intangibles

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OF FINITE LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

(In thousands)

expense recorded for definite-lived intangible assets was approximately $ 237,000 and $ 211,000 , for the years ended December 31, 2022

and 2021, respectively.

STOCK, STOCK PLANS, WARRANTS AND STOCK BASED COMPENSATION

6 CAPITAL STOCK, STOCK PLANS, WARRANTS AND STOCK BASED COMPENSATION

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 .

(“NQSOs”) to member of the Company’s Board of Directors (the “Board”) who is not an employee of the Company

or its subsidiaries (“Eligible Director”).

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) authorized an additional 500,000 shares

of the Company’s Common Stock for issuance under the 2003 Plan, (ii) increased (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) amended 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) provided for acceleration of vesting under certain conditions.

The exercise price of

options to be granted under the 2003 Plan continued to equal to the closing trade price on the date prior to the grant date.

Plan continued 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, 2022, the 2003 Plan had available for issuance 448,534 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

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 .

Company’s 2017 Stock Option 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 Stock Option Plan, as amended (the “2017

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

Consultants of the Company

can only be granted NQSOs.

The term of each stock option granted under the 2017 Plan shall be fixed by the Compensation and Stock Option

Committee (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.

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, 2022, the 2017 Plan had available for issuance 353,000 shares.

Options to Employees and Outside Director

July 21, 2022, 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.

The Company’s Executive Vice President (“EVP”)

of Strategic Initiatives and also a member of the Company’s Board, was not eligible to receive an option under the 2003 Plan as

an employee of the Company.

Each NQSO granted is for a contractual term of ten years with one-fourth vesting annually over a four-year

The exercise price of the NQSO is $ 5.15 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.

July 21, 2022, the Company granted ISOs to certain employees for purchase under the Company’s 2017 Plan, of up to an aggregate

of 24,000 shares of the Company’s Common Stock.

Each ISO granted is for a contractual term of six years with one-fifth vesting

annually over a five-year period.

The exercise price of the ISO is $ 5.34 per share, which was equal to the fair market value of the Company’s

Common Stock on the date of grant.

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

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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.

2022, the Company issued 16,526 shares of its Common Stock from a cashless exercise of an option for the purchase of 50,000 shares of

the Company’s Common Stock at $ 3.97 per share.

Additionally, the Company issued 2,400 shares of its Common Stock from the exercise

of an option for the purchase of 2,400 shares of the Company’s Common Stock at $ 5.50 per share resulting in proceeds of approximately

During 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.

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

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used to value the options granted were as follows:

No options were granted to employees in 2020:

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

SCHEDULE OF STOCK OPTIONS VALUATION ASSUMPTIONS

Employee Stock

Options Granted

Weighted-average fair value per share

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Expected option life (3)

Director Stock Options Granted

Outside Director Stock

Options Granted

Weighted-average fair value per share

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1.23 % - 1.61 %

0.59 % - 1.61 %

Expected volatility of stock (2)

55.84 % - 55.91 %

55.83 % - 56.68 %

Dividend yield

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was met and the 10,000 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.

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, 2022 and December 31, 2023, respectively.

The 30,000 shares under the second

milestone failed to vest by December 31, 2022 and therefore were forfeited.

The Company has not recognized compensation costs (fair value

of approximately $ 39,000 at December 31, 2022) for the remaining 60,000 Ferguson Stock Option under the remaining final milestone since

achievement of the performance obligation under the remaining final milestone is uncertain at December 31, 2022.

death, the remaining Ferguson Stock Option is now held by Mr.

Ferguson’s estate.

of Stock Option Plans

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SCHEDULE OF STOCK OPTIONS ROLL FORWARD

Average Exercise Price

Average Remaining Contractual Term (years)

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (years)

Aggregate Intrinsic Value (2)

Options outstanding January 1, 2022

Forfeited/expired

Options outstanding end

of period (1)

Options exercisable at

December 31, 2021 (1)

Average Exercise Price

Average Remaining Contractual Term (years)

Options outstanding end of period (1)

Options exercisable at December 31, 2022 (1)

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term (years)

Aggregate Intrinsic Value (2)

Options outstanding January 1, 2021

Forfeited/expired

outstanding end of period (2)

exercisable at December 31, 2020 (3)

Options with exercise prices ranging from $ 2.79 to $ 7.50

Options with exercise prices ranging from $ 2.79 to $ 7.29

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 exercise price

Options outstanding end of period (1)

Options exercisable at December 31, 2021 (1)

with exercise prices ranging from $ 2.79 to $ 7.50

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, 2022 and changes during the period then ended are presented as follows:

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Non-vested options at December 31, 2022

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

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.

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.

connection with a $ 2,500,000 loan that the Company entered into with Mr.

Robert Ferguson (the “Ferguson Loan”) on April 1,

2019, 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.

The warrant expires on April 1, 2024 and remains outstanding at December 31, 2022.

Ferguson’s death,

the warrant is now held by Mr.

Ferguson’s estate.

The Ferguson Loan was paid-in-full in December 2020.

Stock Issued for Services

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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).

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

December 31, 2022, the Company has reserved approximately 1,018,400 shares of our Common Stock for future issuance under all of the option

arrangements.

STOCK SUBSCRIPTION AGREEMENT

7 COMMON STOCK SUBSCRIPTION AGREEMENTS

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

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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 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

Income from continuing

operations attributable to Perma-Fix Environmental

Services, Inc.

costs incurred directly in connection with the offering of approximately $ 496,000 which were recorded as deduction to equity, net proceeds

to the Company totaled approximately $ 5,704,000 .

Approximately $ 61,000 of the offering costs were paid in 2022.

aggregate net proceeds from the offering were primarily used for working capital and general corporate purposes, including for certain

facility expansion and upgrades.

8 INCOME (LOSS) PER SHARE

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

SCHEDULE OF EARNINGS PER SHARE

(Amounts in Thousands, Except for Per Share Amounts)

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

(Loss) income from continuing operations, net of taxes

Net loss attributable to non-controlling interest

(Loss) income from continuing operations attributable to Perma-Fix Environmental Services, Inc.

common stockholders

Loss from discontinuing

operations attributable to Perma-Fix

Environmental Services, Inc.

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

common stockholders

income attributable to Perma-Fix Environmental Services, Inc.

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

common stockholders

Basic income per share

attributable to Perma-Fix Environmental Services, Inc.

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

common stockholders

Diluted income per share

attributable to Perma-Fix Environmental Services, Inc.

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

common stockholders

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Basic weighted average shares outstanding

dilutive effect of

stock options

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:

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

Stock options

9 DISCONTINUED OPERATIONS

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 $ 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 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.

Company incurred losses from discontinued operations of $ 605,000 (net of tax benefit of $ 199,000 ) and $ 421,000 (net of tax benefit of

$ 139,000 ) for the years ended December 31, 2022 and 2021, respectively.

The increase in net losses in 2022 as compared to 2021 was primarily

due to costs incurred in connection with management of administrative and regulatory matters for the Company’s remediation projects

as discussed below.

following table presents the major class of assets of discontinued operations at December 31, 2022 and December 31, 2021.

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Long-term assets

Property, plant and equipment,

long-term assets

Property, plant and equipment, net (1)

Total long-term assets

Current liabilities

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Environmental liabilities

long-term liabilities

Total long-term liabilities

Total liabilities

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

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The Company divested PFD in 2008;

however, the environmental liability of PFD was retained

by the Company upon the divestiture of PFD.

These remediation projects principally entail the removal/remediation of contaminated soil

and, in most cases, the remediation of surrounding ground water.

The remediation activities are closely reviewed and monitored by the

applicable state regulators.

December 31, 2021, the Company had total accrued environmental remediation liabilities of $ 876,000 , an increase of $ 22,000 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, 2022, the Company had total accrued environmental remediation liabilities of $ 861,000 , a decrease of $ 15,000 from the December

31, 2021 balance of $ 876,000 .

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.

The decrease represents payments for remediation projects.

At December 31, 2022, $ 112,000 of the total

accrued environmental liabilities was recorded as current.

current and long-term accrued environmental liabilities at December 31, 2022 are summarized as follows (in thousands).

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Total liability

10 LONG-TERM DEBT

debt consists of the following at December 31, 2022 and December 31, 2021:

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 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 % .

Revolving 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 2022 and 2021 was 0% and 5.3%, respectively (1)

Revolving 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 2022 and 2021 was 8.9 % and 5.3 % , respectively (1)

Term Loan dated

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

Effective interest rate for 2022

and 2021 was 5.6 % and was 4.5 % , respectively (1)

Capital Line dated

May 4, 2021, payable in equal monthly installments of principal, balance due on May 15, 2024 .

Effective interest rate for 2022 was

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

current portion of long-term debt

Our revolving credit facility is collateralized by our accounts

receivable and our term loan and capital line are collateralized by our property, plant, and equipment.

Net of debt issuance costs of ($ 88,000 ) and ($ 112,000 ) at December

31, 2022 and December 31, 2021, respectively.

Credit, Term Loan and Capital Line Agreement

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

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(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

see “Note 20 – Subsequent Events – Credit Facility” for a discussion of an amendment that the Company entered

into with its lender on March 21, 2023 which reduced the maximum revolving credit to $ 12,500,000 ) 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 the Company’s lender may impose from time to time.

The Loan Agreement, as amended (the “Amended Loan Agreement”),

also provides a 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

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 Amended Loan Agreement, any unpaid principal balance

plus interest, if any, will become due.

Amount advanced under the capital line totaled approximately $ 524,000 which requires monthly

installments in principal of approximately $ 8,700 plus interest, starting June 1, 2022.

The advance was used to purchase the underlying

asset under a previous finance lease.

2022, the Company entered into further amendments to the Amended Loan Agreement with its lender, which provided the following, among

other things (with the amended terms set forth in a Revised Loan Agreement):

the Company’s failure to meet the minimum quarterly FCCR requirement for the fourth

quarter of 2021 and second quarter of 2022;

the quarterly FCCR testing requirement for the first and third quarters of 2022;

the quarterly FCCR testing requirement starting for the fourth quarter of 2022 and revised

the methodology in calculating the FCCR for the quarter ended December 31, 2022 and the methodology

to be used in calculating the FCCR for the quarter ending March 31, 2023 (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, 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;

certain additional anti-terrorism provisions to the covenants;

the LIBOR based interest rate benchmark with the SOFR.

As a result of this new provision,

payment of annual rate of interest due on the revolving credit is at prime (7.50% at December

31, 2022) plus 2% or Term SOFR Rate (as defined in the Revised Loan Agreement) plus 3.00%

plus an SOFR Adjustment applicable for an interest period selected by us and payment of annual

rate of interest due on the term loan and the capital expenditure line is at prime plus 2.50%

or Term SOFR Rate plus 3.50% plus an SOFR Adjustment applicable for an interest period selected

A SOFR Adjustment rates of 0.10% and 0.15% are applicable for a one-month interest

period and three-month period, respectively, that may be selected by us

connection with the amendments, the Company paid its lender fees totaling $ 30,000 which is being amortized over the remaining term of

the Revised Loan Agreement as interest expense-financing fees.

Company’s credit facility under its Revised 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 the

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’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.

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.

The Company’s Revised Loan Agreement prohibits us from paying cash dividends on our Common

Stock without prior approval from our lender.

The Company was not required to perform testing of the FCCR requirement in the first and

third quarters of 2022 pursuant to amendments as discussed above.

Based on an amendment that the Company entered into with its lender

on March 21, 2023, the Company was not required to perform testing of the FCCR requirement in the fourth quarter of 2022 (see “Note

20 – Subsequent Events – Credit Facility” for a discussion of this amendment which provided for this provision, among

other things).

The Company failed to meet its FCCR requirement in the second quarter of 2022;

however, this non-compliance was waived

by our lender pursuant to an amendment that we entered into with our lender in 2022 as discussed above.

Other than the above discussion

pertaining to the Company’s FCCR requirements, the Company met all of its other financial covenant requirements in each of the

quarters of 2022.

May 7, 2022, the Company may terminate its Revised Loan Agreement upon 90 days’ prior written notice upon payment in full of our

obligations under the Revised Loan Agreement with no early termination fees.

December 31, 2022, the borrowing availability under the Company’s revolving credit was approximately $ 4,290,000 based on our eligible

receivables and is net of approximately $ 3,016,000 in outstanding standby letters of credit.

The Company’s borrowing availability

of $ 4,290,000 at December 31, 2022 included a requirement from our lender that we maintain a minimum of $ 3,000,000 in borrowing availability.

following table details the amount of the maturities of long-term debt maturing in future years at December 31, 2022 (excludes debt issuance

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(In thousands) 2023

11 CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT (“CARES ACT”)

Retention Credit (“ERC”)

CARES Act, which was enacted on March 27, 2020, provides an Employee Retention Credit (“ERC”) for qualifying businesses keeping

employees on their payroll during the COVID-19 pandemic.

The ERC was subsequently amended by the Taxpayer Certainty and Disaster Tax

Relief Act of 2020, the Consolidated Appropriation Act of 2021, and the American Rescue Plan Act of 2021, all of which amended and extended

the ERC availability and guidelines under the CARES Act.

Following these amendments, the Company determined that it was eligible for

the ERC, and as a result of the foregoing legislations, is eligible to claim a refundable tax credit against the Company’s share

of certain payroll taxes equal to 70 % of the qualified wages paid to employees between July 1, 2021 and September 30, 2021.

wages are limited to $ 10,000 per employee per calendar quarter in 2021 for a maximum allowable ERC per employee of $ 7,000 per calendar

quarter in 2021.

For purposes of the amended ERC, an eligible employer is defined as having experienced a significant (20% or more) decline

in gross receipts during one or more of the first three 2021 calendar quarters when compared to 2019.

the third quarter of 2022, the Company determined it was eligible for the ERC and amended its third quarter 2021 employer payroll tax

filings claiming a refund from the U.S.

Treasury in the amount of approximately $ 1,975,000 .

As there is no authoritative guidance under

GAAP on accounting for government assistance to for-profit business entities, we account for the ERC by analogy to International

Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.

In accordance with

IAS 20, management determined it has reasonable assurance for receipt of the ERC and recorded the expected refund as other income (within

“Other income (expense)”) on the Company’s Consolidated Statements of Operations and other receivables (within “Prepaid

and other assets”) on the Company’s Consolidated Balance Sheets.

For federal income tax purposes, this item was treated as

a reduction in payroll costs for 2021, the year in which the costs originated.

This resulted in a timing difference for the benefit between

financial statement inclusion and tax inclusion between 2021 and 2022.

This timing difference does not impact the Company’s effective

Protection Program (“PPP”) Loan

April 2020, the Company received a PPP Loan in the amount of approximately $ 5,318,000 under the CARES Act, as amended.

The PPP Loan was

administered by the SBA.

Proceeds from the promissory note was used by the Company for eligible payroll costs, mortgage interest, rent

and utility costs as permitted by the CARES Act, as amended.

The annual interest rate on the PPP Loan was 1.0 % .

In late 2020, the Company

applied for forgiveness on repayment of the PPP Loan and effective June 15, 2021, 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.

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.

of Employment Tax Deposits

CARES Act, as amended, provided 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 with the remaining paid in December 2022 (previously included in “Accrued expenses”

within current liabilities in our Consolidated Balance Sheets).

12 ACCRUED EXPENSES

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

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Insurance payable

accrued expenses

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

Total accrued expenses

13 ACCRUED CLOSURE COSTS AND ARO

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

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Accretion expense

Addition to closure liability

Balance as of December 31, 2021

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Balance as of December 31, 2022

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

2022, the Company recorded a total of approximately $ 1,339,000 in additional estimated closure liabilities of which approximately $ 465,000

(within long-term) was recorded in connection with the footprint expansion at one of our facilities and an update to a processing enclosure

area at another facility.

The remaining additional closure liabilities was recorded for our EWOC facility for decommissioning activities

due to changes in estimated closure costs.

At December 31, 2022, current portion of the closure liabilities totaled approximately $ 682,000

which reflects primarily closure liabilities for our EWOC facility.

The spending made in 2022 was primarily for our EWOC facility.

addition to closure liabilities for 2021 reflected 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.

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Balance as of December 31, 2020

Amortization of closure

and post-closure asset

Addition to closure and post-closure asset

Amortization of closure and post-closure asset

Balance as of December 31, 2021

Addition to closure and post-closure asset

Amortization of closure

and post-closure asset

Amortization of closure and post-closure asset

Balance as of December 31, 2022

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

addition to ARO reflects closure obligations as discussed above.

14 INCOME TAXES

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

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United Kingdom

(loss) income before tax benefit

loss before tax benefit

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

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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

Federal income

tax benefit - deferred

State income tax expense (benefit)

Foreign income tax expense

income tax benefit - deferred

income tax benefit

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OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Federal tax (benefit) expense at

statutory rate

State tax benefit, net of federal benefit

Federal tax benefit at statutory rate

State tax expense (benefit), net of federal benefit

Change in deferred tax rates

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True-up of deferred tax items

Decrease in valuation

Increase (decrease) in valuation allowance

Income tax benefit

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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.

In conducting this

assessment, 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.

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

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 30, 2021.

The Company had previously maintained a full valuation allowance against its net deferred income tax assets.

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.

As of December 31, 2022, the Company assessed whether its deferred tax asset will more likely than not to be realized.

This assessment

included both positive and negative available evidences, which included the Company’s current contracts, cumulative loss, future

reversal of existing taxable differences, and overall prospect of future business and earnings.

Based on the weight of these available

evidences, the Company concluded that it will more likely than not utilize its Federal and certain state net operating losses.

global intangible low-taxed income (“GILTI”) provisions under the Tax Cuts and Jobs Act of 2017 (the “TCJA”)

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entities for the current year.

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

In addition, the aforementioned sale of PFM Poland in 2021 did not result in any GILTI inclusion.

March 27, 2020, the CARES Act was enacted and signed into law.

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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.

The Company received forgiveness of its PPP Loan effective June 15, 2021 which was included in its Consolidated

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

Company had temporary differences and net operating loss carry forwards from both our continuing and discontinued operations, which gave

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Deferred tax assets:

Net operating

Environmental and closure

Net operating losses

Environmental and closure reserves

Lease liability

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Depreciation and amortization

Indefinite lived intangible

Indefinite lived intangible assets

Right-of-use lease asset

481(a) adjustment

Prepaid expenses

tax assets, gross

Net deferred income

tax asset (liabilities)

Valuation allowance

Net deferred income tax asset

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.

$ 25,413,000 and $ 78,400,000 , respectively, as of December 31, 2022.

These NOLs can be carried forward and applied against future taxable

income, if any, and expire in various amounts starting in 2022 .

Approximately $ 25,296,000 of our federal NOLs were generated after December

31, 2017 and thus do not expire.

tax years 2019 through 2021 remain open to examination by taxing authorities in the jurisdictions in which the Company operates.

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Company had no federal income tax payable for the years ended December 31, 2022 and 2021.

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

in 2022, the TCJA amended Section 174 to eliminate current-year deductibility of research and experimentation (“R&E”)

expenditures and software development costs (collectively, “R&E expenditures”) and instead require taxpayers to charge

their R&E expenditures to a capital account amortized over five years (15 years for expenditures attributable to R&E activity

performed outside the United States).

For the 2022 tax year, the Company has capitalized $ 303,000 of research and development expenses.

While Management believes this estimate to be materially accurate, the Company plans to complete a formal IRC Section 174 analysis in

advance of filing the tax return for the year ended December 31, 2022.

15 PF MEDICAL

Company made the strategic decision during the fourth quarter of 2021 to cease all R&D activities under its Medical Segment.

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)

which was paid by the buyer in 2022.

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 ceased to have any continuing involvement

with PFM Poland.

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.

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 December 31, 2021 Consolidated Balance Sheet did not in include balances for PFM 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.

The Company’s Consolidated Statements of Operations included results of its majority-owned Polish subsidiary for

the period through December 30, 2021.

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

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Carrying amount of non-controlling interest

Carrying amount of accumulated other comprehensive

Carrying amount of accumulated other comprehensive loss

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.

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.

Loss on deconsolidation of subsidiary

16 COMMITMENTS AND CONTINGENCIES

connection with our waste management services, the Company processes hazardous, non-hazardous, low-level radioactive and mixed (containing

both hazardous and low-level radioactive) waste, which we transport to our own, or other, facilities for destruction or disposal.

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, the Company may be involved in various litigation.

The Company is not a party to any litigation

or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material

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

Tech EC, Inc.

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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.

majority of Tetra Tech’s claims have been dismissed by the Court.

Remaining claims include:

(1) Intentional Interference with

Contractual Relations;

and (2) Inducing a Breach of Contract.

The Company continues to believe it has no liability exposure to

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

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(“Agreement”).

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

CNL may terminate the TOA at any

time for convenience.

The NOT was received after work under the TOA was substantially completed and work under the TOA has since

been completed.

CNL may terminate the TOA at any time for convenience.

As of December 31, 2022, PF Canada has approximately $ 1,853,000

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.

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

Additionally, CNL has approximately $ 1,060,000 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

issues 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 believe these amounts are due and payable to PF Canada.

Company has a 25 -year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG which provides

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approximately $ 3,016,000 and the total amount of bonds outstanding was approximately $ 35,432,000 .

17 PROFIT SHARING PLAN

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

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contributed approximately $ 575,000 and $ 589,000 in 401(k) matching funds, respectively.

PARTY TRANSACTIONS

18 RELATED PARTY TRANSACTIONS

Centofanti serves as our Vice President of Information Systems.

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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.

performance bonuses (as provided in the Management Incentive Plan (“MIP”) as approved by the Company’s 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

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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 agreement) or is terminated by the Company

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

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.

there is a Change in Control (as defined in the agreement), all outstanding stock options to purchase common stock held by the executive

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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

January 20, 2022, the Board and the Compensation Committee also approved individual MIP for the calendar year 2022 for each of our executive

Each MIP was effective January 1, 2022 and applicable for year 2022.

Each MIP provided 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.

of the MIPs was 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 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) .

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

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.

No compensation was earned under each of the MIPs.

19 SEGMENT REPORTING

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 CODM to make decisions about resources to be allocated to the segment and assess

its performance;

which discrete financial information is available.

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.

from which we may earn revenue and incur expenses;

whose operating results are regularly reviewed by the

CODM to make decisions about resources to be allocated to the segment and assess its performance;

for which discrete financial information is available.

have two reporting segments, consisting of the Treatment and Services Segments, which are based on a service offering approach.

The Company’s

segment in 2021 also included the Medical Segment which primary purpose was the R&D of a medical isotope production technology.

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 15 – 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, 2022 and 2021 (in

SCHEDULE OF SEGMENT REPORTING INFORMATION

Segment Reporting as of and for the

year ended December 31, 2021

from external customers

Reporting as of and for the year ended December 31, 2022

Corporate (2)

Revenue from external customers

$ 70,599 (3)(4)

and development

expense-financing fees

and amortization

income (loss) before income taxes

Intercompany revenues

Research and development

Interest income

Interest expense

Interest expense-financing fees

Depreciation and amortization

Segment income (loss) before income taxes

( 3,589 ) (13)

tax (benefit) expense

Income tax benefit

Segment income (loss)

Segment assets (1)

Expenditures for segment assets (net)

Segment Reporting as of and for the year ended

December 31, 2021

Corporate (2)

Revenue from external customers

$ 72,191 (3)(4)

income (loss)

for segment assets (net)

Segment Reporting as of and for the

year ended December 31, 2020

from external customers

and development

expense-financing fees

and amortization

income (loss) before income taxes

tax (benefit) expense

income (loss)

for segment assets (net)

Intercompany revenues

Research and development

Interest income

Interest expense

Interest expense-financing fees

Depreciation and amortization

Segment income (loss) before income taxes

( 1,476 ) (11)(12)

( 561 ) (9)(11)

Income tax (benefit) expense

( 3,890 ) (10)

Segment income (loss)

Segment assets (1)

Expenditures for segment assets (net)

Segment assets have been adjusted for intercompany accounts

2 unchanged sentences

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

The 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 60,030,000 or 85.0 % of total revenue for 2022 and 60,812,000 or 84.2 %

of total revenue for 2021.

3 unchanged sentences

and 2021, 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 debt issuance costs of ($ 88,000 ) and ($ 112,000 ) for 2022 and 2021, respectively (see “Note

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

of financed amount of $ 114,000 and $ 585,000 for the year ended December 31, 2022 and 2021,

1 unchanged sentence

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.

subsidiary of $ 0 and $ 25,000 for the year

ended December 31, 2022 and 2021, 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).

15, 2021 (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act

(“CARES ACT”) – Paycheck Protection Program (“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).

allowance on the Company’s deferred tax assets.

(11) Includes

4 unchanged sentences

PF Medical” for a discussion of this loss).

(13) Includes

approximately $ 1,975,000 recorded as other income under the Employee Retention Credit program

under the CARES Act, as amended (see “Note 11 – Coronavirus Aid, Relief and Economic

Securities Act (“CARES ACT”) – Employee Retention Credit (“ERC”)”

for a discussion of this expected refund amount).

SCHEDULE OF REVENUE BY MAJOR CUSTOMERS BY REPORTING SEGMENTS

7 unchanged sentences

and 2021, 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 debt issuance costs of ($ 88,000 ) and ($ 112,000 ) for 2022 and 2021, respectively (see “Note

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

of financed amount of $ 114,000 and $ 585,000 for the year ended December 31, 2022 and 2021,

1 unchanged sentence

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.

subsidiary of $ 0 and $ 25,000 for the year

ended December 31, 2022 and 2021, 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).

15, 2021 (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act

(“CARES ACT”) – Paycheck Protection Program (“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).

allowance on the Company’s deferred tax assets.

(11) Includes

4 unchanged sentences

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, 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:

(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 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

(13) Includes

approximately $ 1,975,000 recorded as other income under the Employee Retention Credit program

under the CARES Act, as amended (see “Note 11 – Coronavirus Aid, Relief and Economic

Securities Act (“CARES ACT”) – Employee Retention Credit (“ERC”)”

for a discussion of this expected refund amount).

20 SUBSEQUENT EVENTS

evaluated events occurring subsequent to December 31, 2022 through March 23, 2023, the date these consolidated financial statements were

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

January 19, 2023, the Board and the Compensation Committee approved individual MIP for the calendar year 2023 for each of our executive

Each MIP is effective January 1, 2023 and applicable for year 2023.

9 unchanged sentences

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,

January 19, 2023, the Company granted ISOs to certain employees for the purchase, under the Company’s 2017 Plan, of up to an aggregate

295,000 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:

70,000 shares for the CEO;

40,000 shares for the CFO;

30,000 shares for the EVP of Strategic Initiatives;

30,000 shares for the EVP of Waste Treatment Operations;

and 30,000 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 $ 3.95 per share, which was equal to the fair market value of the Company’s

Common Stock on the date of grant.

March 21, 2023, the Company entered into an amendment to its Revised Loan Agreement with its lender which provides, 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 .

the quarterly FCCR testing requirement for the fourth quarter of 2022 and removes the FCCR

testing requirement the first quarter of 2023;

the maximum revolving credit line under the credit facility from $ 18,000,000 to $ 12,500,000 ;

the quarterly FCCR testing requirement starting in the second quarter of 2023 using a trailing

twelve months period (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, 2023 has been met and certified

to the lender.

connection with the amendment, the Company paid its lender a fee of $ 25,000 .

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