What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-03-13 compared with 2023-03-23 · 412 added, 468 removed, 153 unchanged (85% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

statements contained within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

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See “Special Note regarding Forward-Looking Statements” contained in this report.

discussion and analysis is based, among other things, our audited consolidated financial statements and includes our accounts, the accounts

of our wholly-owned subsidiaries and the account of a variable interest entity for which we were the primary beneficiary.

discussion and analysis is based, among other things, our audited consolidated financial statements and includes our accounts and the

accounts of our wholly-owned subsidiaries.

Our 2022 consolidated financial statements also included the accounts of a variable interest

entity (“VIE”) for which we were the primary beneficiary.

During the fourth quarter of 2022, project work under this VIE

was completed.

following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto included

in Item 8 of this report.

and Other Impacts

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

Our 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 which is reflective of our Treatment Segment’s backlog of approximately $9,156,000 at December 31,

2022, an increase of approximately $2,027,000 from the balance of $7,129,000 at December 31, 2021.

This positive trend was negatively

impacted by occurrences of severe weather conditions which contributed to 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 our facilities.

early part of 2022, our 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, we 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, we expect 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.

Liquidity Overview

experienced significant improvement in our 2023 financial results as the lingering effects of COVID-19 began to subside starting in the

early part of 2022.

Our Treatment Segment continued to see steady improvements in waste receipts from certain customers who had previously

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

Within our Services Segment, certain projects which were delayed/curtailed

in first part of 2022 due, in part, from the lingering effects of the COVID-19, achieved full operational status and improved productivity

in 2023 which positively impacted revenue.

Revenue from both of our Segments were also positively impacted from contracts won in 2023

as procurement and planning on behalf of our government clients continued to progress as the lingering effects of COVID-19 pandemic subsided.

increased by $19,136,000 or 27.1% to $89,735,000 for the twelve-months ended December 31, 2023, from $70,599,000 for the corresponding

period of 2022.

We saw increases in both Segments where Treatment Segment revenue increased by $10,119,000 or 30.3% to $43,477,000 from

$33,358,000 and Services Segment revenue increased by $9,017,000 or 24.2% to $46,258,000 from $37,241,000.

The increase in revenue in

the Treatment Segment was primarily due to overall higher waste volume which was offset by lower averaged price from waste mix.

The increase in revenue in the Services Segment was primarily due to achievement of full operational status and improved productivity

on certain projects which had been delayed/curtailed in 2022 due, in part, from the lingering effects of the COVID-19 pandemic.

gross profit for 2023 increased $6,760,000 or 70.4% due to increased revenue.

Selling, General, and Administrative (“SG&A”)

expenses increased $323,000 or 2.2% for the twelve-months ended December 31, 2023, as compared to the corresponding period of 2022.

March 2023, we received the Employee Retention Credit (“ERC”) of $1,975,000 that we applied for during the third quarter

of 2022 as permitted under the Coronavirus Aid, Relief and Economic Securities Act, as amended (the “CARES Act”).

to the $1,975,000, we also received approximately $60,000 in interest (recorded within “Interest Income” on our Consolidated

Statements of Operations).

believe we have sufficient liquidity on hand to continue business operations during the next twelve months.

At December 31, 2022, we

had borrowing availability under our revolving credit facility of approximately $4,290,000 which was based on a percentage of eligible

receivables and subject to certain reserves.

Our 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.

As a result of an amendment to our Loan Agreement that

we entered into with our lender in March 2023, we are required to continue to maintain a minimum of $3,000,000 in borrowing availability

under our revolving credit until the minimum FCCR requirement for the quarter ended June 30, 2023 has been met and certified to our lender

(see “Financing Activities” within this MD&A for a discussion of this amendment).

We continue to assess ways to improve

our liquidity and the need in reducing operating costs during this volatile time.

Reducing operating costs may include curtailing certain

capital expenditures and eliminating non-essential expenditures.

We continue to closely monitor any potential impact from the countries’

economic conditions and COVID-19 pandemic on all aspects of our business.

we believe we have sufficient liquidity to support our operations over the next twelve months, due to losses incurred in 2022 and our

lender requiring us to maintain a minimum borrowing availability of $3,000,000 as discussed above, we are working toward improving our

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

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

decreased by $1,592,000 or 2.2% to $70,599,000 for the twelve-month ended December 31, 2022 from $72,191,000 for the corresponding period

The decrease was entirely within our Services Segment where revenue decreased by $1,958,000 or 5.0% to $37,241,000 from $39,199,000.

As previously disclosed, work under certain of the new projects awarded to our Services Segment at the end of the second quarter of 2021

continued to be delayed/curtailed into most of the first quarter of 2022 due to COVID-19 impact and/or administrative delays experienced

by certain customers.

However, work under these projects resumed/increased starting in the second quarter of 2022 and has since reached

full operational status.

The lower revenue in 2022 was further exacerbated by the completion of a large project in the second quarter

of 2021 which was not replaced with a similar size contract because of delays in contract awards and procurement from COVID-19 impact

which continued into the first half of 2022 and eased through the second half of 2022.

Our Treatment Segment revenue increased by $366,000

or 1.1% primarily due to overall higher waste volume which was offset by lower averaged price waste due to revenue mix.

above, our 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 our facilities.

gross profit for 2022 increased $2,785,000 or 40.8%.

The increase was entirely from our Services Segment due to higher margin projects.

The decrease in Treatment Segment gross profit was impacted by overall lower averaged price waste from revenue mix and the impact of

the increase in fixed costs.

SG&A expenses increased by approximately $1,807,000 or 14.1% for the year ended December 31, 2022 as

compared to the corresponding period of 2021.

the third quarter of 2022, we recorded approximately $1,975,000 in other income and other receivables (within current assets in our Consolidated

Balance Sheets), which represent an employee retention credit that we are eligible for under the Coronavirus Aid, Relief, and Economic

Security Act, as amended (the “CARES Act”) as result of the COVID-19 pandemic (see “Employee Retention Credit (“ERC”)”

within this MD&A for a discussion of this refund that we are expecting resulting from this tax credit).

Treatment and Services Segments’ business continues to be heavily dependent on services that we provide to governmental clients,

primarily as subcontractors for others who are prime contractors to government entities or directly as the prime contractor.

demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including, without

limitation, the economic conditions, the manner in which the applicable government will be required to spend funding to remediate various

sites, and/or potential further impact from COVID-19.

In addition, our governmental contracts and subcontracts relating to activities

at governmental sites in the United States are generally subject to termination for convenience at any time at the government’s

option, and our governmental contracts/TOAs with the Canadian government authorities also allow the authorities to terminate the contract/task

orders at any time for convenience.

Work under all of our contracts/TOAs with Canadian government authorities has substantially been

A significant account receivable due to PF Canada is subject to continuing negotiations.

See “Known Trends and Uncertainties

– Perma-Fix Canada, Inc.

(“PF Canada”)” within this MD&A for additional discussion as to a terminated Canadian

Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important

to our business could have a material adverse impact on our business, financial position, results of operations and cash flows.

See a discussion of our liquidity

overview within this MD&A – “Liquidity and Capital Resources.”

into 2024, we expect to see overall continue steady improvements in waste receipts and increases in project work from certain

existing contracts, contracts won in 2023, and bids submitted in both segments that are awaiting awards.

However, due to our

operations which is subject to seasonal factor, we generally experience lower revenue in the first quarter due to overall reduced

activities by our customers from the usual slowdown in operations due, in part, from returning from the holiday periods and poorer

weather conditions.

Additionally, due to Congress’s inability to timely approve FY 2024 budget and the extension of the

continuing resolution, certain of our government related customers have informed us that waste shipments will likely be delayed.

Although we expect to see overall improvements in revenue in 2024 as disclosed above, if Congress is unable to enact the full FY

2024 appropriation bills or further extend the continuing resolutions to fund government spending by the late March deadline, the

government will enter into a partial shutdown.

The full impact of any additional continued resolution beyond March or a partial

government shutdown is uncertain.

If a partial government shutdown were to occur and were to continue an extended period,

our financial results of operations could be negatively impacted by delays in procurement actions, waste shipments and project

delays on newly awarded projects.

Treatment and Services Segments’ business continues to be heavily dependent on services that we provide to governmental

clients, primarily as subcontractors for others who are prime contractors to government entities or directly as the prime

We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our

control, including, without limitation, the economic conditions and the manner in which the applicable government will be required

to spend funding to remediate various sites and a potential partial government shutdown.

In addition, our governmental

contracts and subcontracts relating to activities at governmental sites in the United States are generally subject to termination

for convenience at any time at the government’s option.

Significant reductions in the level of governmental funding or

specifically mandated levels for different programs that are important to our business could have a material adverse impact on our

business, financial position, results of operations, and cash flows.

are continually reviewing methods to raise additional capital to supplement our liquidity requirements, when needed, and reducing our

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We continue to aggressively bid on various contracts, including potential contracts within the international markets.

On December 18, 2023, the JV where we and Campoverde Srl (“JV partner”) each owns 50% of the partnership, was awarded a multi-year

contract valued up to approximately EUR 50 million by the European Commission (the “Contracting Authority”) for the treatment

of radioactive waste from the Joint Research Center in Ispra, Italy.

Work under this JV has not started as of December 31, 2023.

scope of work to be performed in the initial phases of this contract will be performed predominately by our JV partner.

Revenue generated

by us under the initial phases will be limited to project management support through 2025.

We expect to generate an increase in revenue

under this contract starting in 2026 when the waste treatment phases begin.

The Contracting Authority may terminate the contract under

certain conditions as set forth in the contract.

Once activities commence under this JV, we will consolidate the operations of this JV

into our financial statements.

of Operations

reporting of financial results and pertinent discussions are tailored to our two reportable segments:

The Treatment Segment (“Treatment”)

and the Services Segment (“Services”).

Our financial results for 2021 also included our Medical Segments.

As previously disclosed,

we made the strategic decision to cease all R&D activities under the Medical Segment and sold 100% of our interest in Perma-Fix Medical

(“PFM Poland” - which comprised the Medical Segment) in December 2021.

Our Medical Segment had not generated any revenue

and was involved in our medical isotope production technology.

All costs previously incurred by the Medical Segment were included within

The Treatment Segment and Services

- Years Ended December 31, 2023 and 2022

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Research and development

Loss on disposal of property and equipment

Loss from operations

Loss on disposal of

property and equipment

Income (loss) from operations

Interest income

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Interest expense – financing fees

Other income (expense)

Gain on extinguishment of debt

Loss on deconsolidation of subsidiary

Loss from continuing operations before taxes

Income tax benefit

(Loss) income from continuing operations

revenues decreased $1,592,000 for the year ended December 31, 2022 compared to the year ended December 31, 2021, as follows:

Other (expense) income

Income (loss) from continuing operations before

Income tax expense (benefit)

Income (loss) from continuing

revenues increased $19,136,000 for the year ended December 31, 2023, compared to the year ended December 31, 2022, as follows:

(In thousands)

Government waste

Hazardous/non-hazardous

Other nuclear waste

nuclear waste

Includes wastes generated by government clients of $2,943,000 and $2,380,000 for the twelve months ended December 31, 2023, and

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Segment revenue increased by $10,119,000 or 30.3% for the twelve-months ended December 31, 2023 over the same period in 2022.

increase was primarily due to higher waste volume as certain customers who had previously delayed waste shipments due to COVID-19 resumed

steady waste shipments starting in the latter part of the second quarter.

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 our facilities.

The higher revenue from higher

waste volume was offset by lower averaged price waste from revenue mix.

Services Segment revenue decreased by approximately $1,958,000

As previously disclosed, work under certain of the new projects awarded to our Services Segment at the end of the second quarter

of 2021 continued to be delayed/curtailed into most of the first quarter of 2022 due to COVID-19 impact and/or administrative delays

experienced by certain customers.

However, since the second quarter of 2022, work under these projects had resumed/increased and has

since reached full operational status.

The lower revenue in 2022 was further exacerbated by the completion of a large project in the

second quarter of 2021 which was not replaced with a similar size contract because of delays in contract awards and procurement from

Our Services Segment revenues are project based;

increase was primarily due to higher waste volume offset by lower averaged price from waste mix.

As previously disclosed, starting

in the latter part of the second quarter of 2022, our Treatment Segment began to see steady improvements in waste receipts from certain

customers who had previously delayed waste shipments due, in part, from the lingering effects of COVID-19.

Services Segment revenue increased

by approximately $9,017,000 or 24.2%.

primarily due to achievement of full operational status and improved productivity on certain projects

which had been delayed/curtailed in the early part of 2022 due, in part, from the lingering effects of the COVID-19 pandemic.

Segment revenues are project-based;

as such, the scope, duration, and completion of each project vary.

our Services Segment revenues are subject to differences relating to timing and project value.

In 2022, our Segments continued to realize

delays in procurement and planning on behalf of our government clients which did not ease until the second half of 2022.

As a result, our Services Segment

revenues are subject to differences relating to timing and project value.

Revenues from both of our segments were also positively impacted

from contracts won in 2023.

of Goods Sold

of goods sold decreased $4,377,000 for the year ended December 31, 2022, as compared to the year ended December 31, 2021, as follows:

of goods sold increased $12,376,000 for the year ended December 31, 2023, as compared to the year ended December 31, 2022, as follows:

(In thousands)

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Treatment Segment’s variable costs increased

by approximately $607,000 primarily due to higher material and supplies, transportation, and outside services costs.

Treatment Segment’s

overall fixed costs were higher by approximately $1,234,000 resulting from the following:

general expenses were higher by $483,000 primarily

due to higher utility costs;

depreciation expenses were higher by approximately $392,000 due to depreciation for asset retirement obligations

in connection with our EWOC facility;

regulatory expenses were higher by approximately $232,000 primarily due to additional closure costs

recorded for our EWOC facility due to change in estimated costs;

by approximately $6,189,000 primarily due to higher material and supplies, disposal, lab, outside services costs and higher employee

Treatment Segment’s overall fixed costs were higher by approximately $2,297,000 resulting from the following:

and payroll related expenses were higher by approximately $1,483,000 due to higher headcount;

depreciation expenses were higher by approximately

$393,000 due to depreciation for asset retirement obligations in connection with our EWOC facility;

general expenses were higher by approximately

$279,000 primarily due to higher utility costs;

maintenance costs were higher by approximately $235,000;

payroll related expenses were higher by $61,000;

and travel expenses were lower by approximately $43,000.

Services Segment cost of goods

sold decreased $6,218,000 or 15.9% primarily due to lower revenue.

The decrease in cost of goods sold was primarily due to lower salaries/payroll

related, outside services, material and supplies and travel costs totaling approximately $6,863,000 which was offset by higher disposal,

transportation and general expenses totaling approximately $645,000.

Included within cost of goods sold is depreciation and amortization

expense of $2,027,000 and $1,654,000 for the twelve months ended December 31, 2022, and 2021, respectively.

travel expenses were higher

by approximately $90,000;

and regulatory expenses were lower by approximately $183,000.

Services Segment cost of goods sold increased

$3,890,000 or 11.8% due to higher revenue.

The overall increase in cost of goods sold was primarily due to the following:

higher salaries/payroll related, outside services, and travel costs totaling approximately $4,356,000;

higher depreciation expenses of

lower material and supplies, lab, regulatory and disposal expenses totaling approximately $444,000;

and lower general expenses

by approximately $85,000 in various categories.

Included within cost of goods sold is depreciation and amortization expense of $2,484,000

and $2,027,000 for the twelve months ended December 31, 2022, and 2021, respectively.

profit for the year ended December 31, 2023, was $6,760,000 higher than 2022 as follows:

(In thousands)

Segment gross profit decreased by $1,475,000 or approximately 22.0% and gross margin decreased to 15.7% from 20.4% primarily due to lower

averaged price waste from revenue mix and the impact of the increase in fixed costs.

Services Segment gross profit increased by $4,260,000

or 4,018.9% and gross margin increased to 11.7% from 0.3% primarily due to higher margin projects.

Our overall Services Segment gross

margin is impacted by our current projects which are competitively bid on and will therefore, have varying margin structures.

Segment gross profit increased by $1,633,000 or 31.1% primarily due to higher revenue as discussed previously.

Despite the slight increase

in gross margin, Treatment Segment gross margin was negatively impacted by higher variable costs from waste mix and the impact of overall

increase in fixed costs.

Services Segment gross profit increased by $5,127,000 or 117.4% and gross margin increased from 11.7% to 20.5%

primarily due to higher revenue and improved margin projects.

Our overall Services Segment gross margin is impacted by our current projects

which are competitively bid and therefore have varying margin structures.

expenses increased $323,000 for the year ended December 31, 2023, as compared to the corresponding period for 2022 as follows:

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SG&A expenses were higher primarily due to the following:

overall outside services expenses were higher by approximately $654,000

resulting from higher consulting/outside services/audit fees;

payroll-related expenses were higher by approximately $660,000 primarily

due to higher accrued employee incentives (including our management incentive plans (“MIPs”)) and higher 401(k) matching

expenses as payroll expenses in 2022 included more forfeitures of 401(k) plan matching funds contributed by us for former employees who

failed to meet the 401(k) plan vesting requirements;

outside services expenses were lower by approximately $256,000 as a result of fewer

audit/consulting matters;

and general expenses were lower by approximately $56,000 in various categories.

Treatment Segment SG&A

expenses were lower primarily due to the following:

outside services expenses were lower by approximately $110,000 due to fewer consulting

salaries and payroll related expenses were lower by approximately $212,000;

travel expenses were lower by approximately $24,000;

and general expenses were higher by approximately $176,000 in various categories.

The increase in SG&A expenses within our Services

Segment was primarily due to the following:

salaries/payroll-related expenses were higher by approximately $92,000 due to more administrative

support functions required as the result of higher revenue;

travel expenses were higher by approximately $43,000;

general expenses

were higher by approximately $13,000 in various categories;

and salaries and payroll related expenses were higher by approximately $445,000

primarily due to higher stock-based compensation expenses from options granted to certain employees in October 2021 and higher 401(k)

plan matching expenses as our payroll expenses in 2021 included more forfeitures of 401(k) plan matching funds contributed by us for

former employees who failed to meet the 401(k) plan vesting requirements.

Additionally, Administrative salaries and payroll related expenses

were higher as in 2021, resources were allocated in supporting Medical Segment’s R&D/administrative functions.

Treatment Segment

SG&A expenses were higher primarily due to the following:

outside services expense were higher by $120,000 due to more consulting/business

matters (including our ESG initiatives);

salaries and payroll related expenses were higher by $46,000;

travel expenses were higher by

approximately $59,000;

and general expenses were higher by $164,000 which included higher tradeshow expenses and various other categories.

The increase in SG&A expenses within our Services Segment was primarily due to the following:

travel expenses were higher by $32,000;

general expenses were higher by approximately $107,000 which included higher tradeshow expenses and various other categories;

salaries/payroll

related and consulting expenses were higher by approximately $202,000, and credit loss expense on accounts receivable was lower by approximately

Included in SG&A expenses is depreciation and amortization expense of $82,000 and $33,000 for the twelve months ended December

credit losses on accounts

receivable were higher by approximately $59,000, as in the first quarter of 2022 our Services Segment collected on certain accounts that

were previously deemed to be uncollectible;

outside services expenses were lower by approximately $41,000 due to fewer consulting matters;

and general expenses were lower slightly by $8,000.

Included in SG&A expenses is depreciation and amortization expense of $84,000

and $82,000 for the twelve months ended December 31, 2023 and 2022, respectively.

income increased by approximately $507,000 for the twelve-months ended December 31, 2023, respectively, as compared to the corresponding

period of 2022 primarily due to higher interest earned from the finite risk sinking fund.

Interest income for 2023 also included approximately

$60,000 received in March 2023 under the ERC program under the CARES Act.

expense increased by approximately $148,000 for the twelve-months ended December 31, 2023, as compared to the corresponding period of

2022 due to interest incurred on the new $2,500,000 term loan dated July 31, 2023, under our credit facility.

Interest expense was also

higher in 2023 from higher interest rate on our term loan dated May 8, 2020, which was offset by the declining term loan balance.

Additionally,

the increase in interest expense in 2023 was also the result of interest incurred from advances made in May of 2022 from the capital

line under our credit facility.

had income tax expense of $17,000 and income tax benefit of $378,000 for continuing operations for the twelve-months ended December 31,

2023 and 2022, respectively.

expenses decreased $410,000 for the year ended December 31, 2022 as compared to the corresponding period of 2021 as follows:

(In thousands)

Administrative

costs consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with

the development of new technologies and technological enhancement of new potential waste treatment processes.

The decrease was primarily

the result of the sale of PFM Poland in December 2021 which comprised of our Medical Segment and which previously was involved in the

R&D of our medical isotope technology.

income increased by approximately $73,000 for the twelve months ended December 31 2022 as compared to the corresponding period of 2021

primarily due to higher interest earned from our finite risk sinking fund.

expense decreased by approximately $72,000 for the twelve months ended December 31, 2022 as compared to the corresponding period of 2021

primarily due to lower interest expense from our declining term loan balance outstanding.

Also, interest expense for the first six months

of 2021 included interest accrued for our Paycheck Protection Program (“PPP”) Loan which was forgiven by the U.S.

Small Business

Administration (“SBA”) effective June 15, 2021.

The overall lower interest expense was offset by monthly interest incurred

starting in June of 2022 from the capital line under our credit facility.

had income tax benefits of $378,000 and $3,890,000 for continuing operations for the twelve months ended December 31, 2022 and 2021,

respectively.

Our effective tax rates were approximately 10.5% and 139.0% for the twelve months ended December 31, 2022 and 2021, respectively.

Our effective tax rates for the twelve months ended December 31, 2022 were impacted by non-deductible expenses and state taxes.

Our effective

tax rate for the twelve months ended December 31, 2021 was substantially impacted by the release of our valuation allowance on deferred

tax assets primarily related to U.S.

Federal income taxes during the third quarter of 2021 of approximately $2,351,000.

For the twelve

months ended December 31, 2021, the primary reasons for the differences between our effective tax rate and statutory tax rate were due

to the release of valuation allowance and the forgiveness of our PPP Loan which was included in our Consolidated Statement of Operations

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

Our effective tax rates were approximately 1.8% and 10.5% for the twelve- month ended December 31, 2023

and 2022, respectively.

Our effective tax rates for the twelve-months ended December 31, 2023, and 2022 were impacted by non-deductible

expenses and state taxes.

Treatment Segment maintains a backlog of stored waste, which represents waste that has not been processed.

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a result of the timing and complexity of the waste being brought into the facilities and the selling price per container.

31, 2022, our Treatment Segment had a backlog of approximately $9,156,000, as compared to approximately $7,129,000 at December 31, 2021.

Additionally, the time it takes to process waste from the time it arrives may increase due to the types and complexities of the waste

we are currently receiving.

We typically process our backlog during periods of low waste receipts, which historically has been in the

first or fourth quarters.

As of December

31, 2023, our Treatment Segment had a backlog of approximately $8,702,000, as compared to approximately $9,156,000 as of December 31,

Additionally, the time it takes to process waste from the time it arrives may increase due to the types and complexities of the

waste we are currently receiving.

We typically process our backlog during periods of low waste receipts, which historically has been

in the first or fourth quarters.

Operations and Environmental Contingencies

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.

2011 and earlier, as well as three previously closed locations.

discontinued operations had no revenue for the twelve-months ended December 31, 2023 and 2022.

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December 31, 2023, and 2022, 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 within our discontinued operations.

We have three environmental

remediation projects, all within our discontinued operations, which principally entail the removal/remediation of contaminated soil,

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

In 2022, we incurred additional costs in connection with management of administrative and

regulatory matters related to our remediation projects.

We have three environmental remediation projects, all within our discontinued

operations, which principally entail the removal/remediation of contaminated soil, and, in most cases, the remediation of surrounding

ground water.

and Capital Resources

cash flow requirements during the twelve months ended December 31, 2022 were primarily financed by our operations, cash on hand and

credit facility availability.

Subject to COVID-19 and other impacts as discussed above, our cash flow requirements for the next

twelve months will consist primarily of general working capital needs, scheduled principal payments on our debt obligations,

cash flow requirements during the twelve-months ended December 31, 2023, were primarily financed by our operations, cash on hand (which

included the ERC, along with interest, that we received in March 2023 and proceeds from a new term loan dated July 31, 2023, in the amount

of $2,500,000 provided to us under an amendment to our existing credit facility), and credit facility availability.

Our cash flow requirements

for the next twelve months will consist primarily of general working capital needs, scheduled principal payments on our debt obligations,

remediation projects, and planned capital expenditures.

We plan to fund these requirements from our operations, credit facility

availability, cash on hand and a refund that we expect to receive under the ERC program under the CARES Act (see a discussion of

this expected refund below – “Employee Retention Credit (“ERC”)”).

We continue to explore all sources

of increasing our capital and/or liquidity and to improve our revenue and working capital (see our discussion contained in this

“MD&A – Liquidity Overview” above for further discussion as to liquidity.

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 cash on hand and the expected refund from the ERC program should be sufficient to fund our operations for the next

twelve months.

However, due to the uncertainty of the countries’ current economic environment and the COVID-19 as disclosed in

“COVID-19 and Other Impacts” within this MD&A, there are no assurances such will be the case.

We plan to fund these requirements from our operations, credit facility availability,

cash on hand and collections of unpaid receivables (See “Known Trends and Uncertainties – Perma-Fix Canada,

(“PF Canada”)” for a discussion of unpaid receivables due to our Perma-Fix Canada, Inc.

subsidiary from a certain

customer in which a settlement agreement has been reached, subject to meeting certain conditions/terms precedent and a partial payment

received in January 2024).

Our ability to utilize our credit facility from our lender is subject to meeting our quarterly financial covenant

requirements, among other things.

We continue to explore all sources of increasing our capital and/or liquidity and

to improve our revenue and working capital, including, but not limited to entering into equity transactions.

There are no assurances that

we will be successful in increasing our liquidity through our efforts.

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.

As of December 31, 2023, our borrowing availability under our revolving part of our credit facility was approximately $10,622,000, which

included our cash (deposited with our lender) and was based on our eligible receivables and was net of approximately $3,950,000 in outstanding

standby letters of credit and a $750,000 indefinite reduction in borrowing availability that our lender imposed pursuant to the July

31, 2023 amendment of our Loan Agreement.

W e believe that our cash flows from operations, our available

liquidity from our credit facility, and our cash on hand should be sufficient to fund our operations for the next twelve months.

following table reflects the cash flow activity for the year ended December 31, 2023, and the corresponding period of 2022:

(In thousands)

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

Cash used in operating activities of discontinued operations

Cash used in investing activities of continuing operations

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)

December 31, 2022, we were in a positive cash position with no revolving credit balance.

At December 31, 2022, we had cash on hand of

approximately $1,866,000.

receivable, net of credit losses, totaled $9,364,000 at December 31, 2022, a decrease of $2,008,000 from the December

31, 2021 balance of $11,372,000.

The decrease was attributed to timing of invoicing and accounts receivable collection.

Our contracts with our customers are subject to various payment terms and conditions.

Additionally, our contracts with our customers

may sometimes result in modifications which can cause delays in collections.

Our accounts receivable at December 31, 2022 include invoices

for work performed which previously was in our unbilled account for a certain Canadian project that remain outstanding and subject to

negotiations (see unbilled receivables discussion below).

See discussion under “Known Trends and Uncertainties – Perma-Fix

(“PF Canada”)” for a discussion as to this certain account receivable.

receivables totaled $6,062,000 at December 31, 2022, a decrease of $2,933,000 from the December 31, 2021 balance of $8,995,000.

in unbilled receivables was primarily within our Services Segment due to invoicing in connection with our Canadian projects.

payable, totaled $10,325,000 at December 31, 2022, a decrease of $1,650,000 from the December 31, 2021 balance of $11,975,000.

Cash provided by operating activities

of continuing operations

Cash used in operating activities of discontinued

Cash used in investing activities of continuing

Cash provided by (used in) financing activities

of continuing operations

Effect of exchange rate

changes on cash

Increase (decrease)

in cash and finite risk sinking fund (restricted cash)

of December 31, 2023, we were in a positive cash position with no revolving credit balance.

As of December 31, 2023, we had cash on hand

of approximately $7,500,000.

receivable, net of credit losses, totaled $9,722,000 as of December 31, 2023, an increase of $358,000 from the December 31, 2022, balance

of $9,364,000.

The increase was attributed to increased revenue, timing of invoicing, and our accounts receivable collection.

Our contracts

with our customers are subject to various payment terms and conditions.

Our accounts receivable at December 31, 2023, included invoices

for work performed for a certain Canadian project that remained outstanding which a settlement agreement has been reached, subject to

meeting certain conditions/terms precedent (See discussion under “Known Trends and Uncertainties - Perma-Fix Canada Inc.

Canada”)” below for a discussion of the accounts receivable and a partial payment made by the customer on January 22, 2024).

and other assets totaled $3,738,000 as of December 31, 2023, a decrease of $1,667,000 from the December 31, 2022, balance of $5,405,000.

The decrease was primarily due to receipt of the ERC of $1,975,000 in March 2023 that we applied for during the third quarter of 2022.

payable totaled $9,582,000 as of December 31, 2023, a decrease of $743,000 from the December 31, 2022, balance of $10,325,000.

payable are impacted by the timing of payments as we are continually managing payment terms with our vendors to maximize our cash position

throughout all segments.

had working capital of $818,000 (which included working capital of our discontinued operations) at December 31, 2022, as compared to

working capital of $4,060,000 at December 31, 2021.

Our working capital was negatively impacted primarily by our results of operations

which were heavily impacted from COVID-19 and other delays as discussed previously, especially in the first quarter of 2022.

capital was positively impacted by the employee retention credit in the amount of approximately $1,975,000 recorded as current receivables

(within “Prepaid and other assets” on our Consolidated Balance Sheets.

See a discussion of this credit below “Employee

Retention Credit (“ERC”)”).

throughout our segments.

expenses totaled $6,560,000 as of December 31, 2023, an increase of $1,967,000 from the December 31, 2022, balance of $4,593,000.

increase was primarily due to higher employee incentive and commission accruals totaling approximately $1,346,000.

Our employee incentive

accruals included an aggregate of approximately $750,000 recorded under our 2023 Management Incentive Plans (“MIPs”) for

our executives.

had working capital of $4,613,000 (which included working capital of our discontinued operations) as of December 31, 2023, as compared

to working capital of $818,000 as of December 31, 2022.

The improvement in our working capital was primarily due to increases in our

cash and unbilled receivables from improved operations.

In 2023, our cash was also increased from the receipt of the ERC in March 2023

and the additional Term Loan 2 dated July 31, 2023, that we entered into with our lender under our Loan Agreement (see a discussion of

the Term Loan 2 below under “Financing Activities).

The overall improvement in our working capital was offset by the increases

in our accrued expenses and deferred revenues.

discussion of a multi-year contract valued up to approximately EUR 50 million awarded to us and our JV partner by the European Commission

on December 18, 2023, for the treatment of radioactive waste from the Joint Research Center in Ispra, Italy under “Business Environment”

within this MD&A.

2023, our purchases of capital equipment totaled approximately $2,498,000, of which $784,000 was subject to financing, with the remaining

4 unchanged sentences

We plan to fund our capital expenditures from

cash from operations and/or financing.

The initiation and timing of projects are also determined by financing alternatives or funds available

for such capital projects.

March 2022, we signed a joint venture term sheet addressing plans to partner with Springfields Fuels Limited (“SFL”), an

affiliate of Westinghouse Electric Company LLC, to develop and manage a nuclear waste-materials treatment facility (the “Facility”)

cash from operations, collections of unpaid receivables, borrowing availability under our credit facility and/or financing.

The initiation

and timing of projects are also determined by financing alternatives or funds available for such capital projects.

March 2022, we signed a non-binding joint venture term sheet addressing plans to partner with Springfields Fuels Limited (“SFL”),

an affiliate of Westinghouse Electric Company LLC, to develop and manage a nuclear waste-materials treatment facility (the “Facility”)

in the United Kingdom.

4 unchanged sentences

The finalization, form and capitalization of this unpopulated partnership is

subject to numerous conditions, including but not limited to, winning a certain contract, completion and execution of a definitive agreement

and facility design, granting of required regulatory, lender or permitting approvals and updated cost and profitability analysis based

on current and forecast future economic conditions.

Upon finalization of this venture, we will be required to make an investment in this

The amount of our investment, the period of which it is to be made and the method of funding are to be determined.

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

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

The Loan Agreement provides us with the following credit

facility with a maturity date of March 15, 2024:

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

below as to an amendment dated March 21, 2023 which reduced the 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 we 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.

Our 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 Period.

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.

At the end of the Borrowing Period, advance on the capital line totaled approximately $524,000.

We are required to make monthly principal installment payment of approximately $8,700 starting June 1, 2022 plus interest.

31, 2022, balance on the capital line was approximately $463,000.

The advance made on the capital line was used to purchase the underlying

asset under a previous finance lease.

2022, we entered into further amendments to our Amended Loan Agreement with our lender, which provided the following, among other things

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

our failure to meet the minimum quarterly fixed charge coverage ratio (“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

subject to numerous conditions, including but not limited to, completion and execution of a definitive agreement and facility design,

granting of required regulatory, lender or permitting approvals and updated cost and profitability analysis based on current and forecast

future economic conditions.

Upon finalization of this venture, we will be required to make an investment in this venture.

of our investment, the period of which it is to be made and the method of funding are to be determined.

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

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

The Loan Agreement, as amended

(including the two amendments that we entered into with our lender in 2023 described below), provides us with the following credit facility

with a maturity date of May 15, 2027:

(a) up to $12,500,000 revolving credit (“revolving credit”), with the maximum that

we can borrow under the revolving credit 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;

(b) a term loan (“Term Loan 1”)

dated May 8, 2020, of approximately $1,742,000, requiring monthly installments of $35,547;

of $2,500,000 dated July 31, 2023, requiring monthly installments of $41,667;

and (d) a capital expenditure line (“Capital 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”), with interest only payable on advances during the Borrowing Period.

Amounts advanced under the

Capital Line at the end of the Borrowing Period totaled approximately $524,000, requiring monthly installments of principal of approximately

$8,700 plus interest, commencing June 1, 2022.

March 21, 2023, we entered into an amendment to our Loan Agreement, as amended, with our lender which provided, among other things, the

the quarterly fixed charge coverage ratio (“FCCR”) testing requirement for the fourth quarter of 2022 and removed the

FCCR testing requirement for 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 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 London InterBank Offer Rate (“LIBOR”) based interest rate benchmark with

the Secured Overnight Finance Rate (“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, we paid our lender fees totaling $30,000 which is being amortized over the remaining term of the Revised

Loan Agreement as interest expense-financing fees.

credit facility under our 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 our credit facility

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 (we met our FCCR requirement in the second quarter of 2023

which was certified to our lender and therefore, this requirement is no longer applicable under our Loan Agreement, as amended).

connection with the March 2023 amendment, we paid our lender a fee of $25,000 which is being amortized over the remaining term of the

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

July 31, 2023, we entered into a further amendment of the Loan Agreement, as amended, with our lender which provided, among other things,

the following:

the maturity date of the Loan Agreement, as amended, to May 15, 2027, from May 15, 2024;

additional term loan (“Term Loan 2”) to us in the amount of $2,500,000, requiring monthly installments of approximately

The annual rate of interest due on Term Loan 2 is at prime (8.50% at December 31, 2023) plus 3.00% or Secured Overnight

Finance Rate (“SOFR”) (as defined in the Loan Agreement, as amended) plus 4.00% plus an SOFR Adjustment applicable for

an interest period selected by us.

A SOFR Adjustment rate of 0.10% and 0.15% is applicable for a one-month interest period and three-month

period, respectively, that may be selected by us;

the minimum Tangible Adjusted Net Worth (as defined in the Loan Agreement, as amended) covenant requirement;

an indefinite reduction in borrowing availability of $750,000;

for up to $2,500,000 in capital expenditure made in fiscal year 2023 and thereafter to be treated as financed capital expenditure

in the Company’s quarterly FCCR covenant calculation requirement.

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

to the amendment dated July 31, 2023, we have agreed to pay PNC 1.0% of the total financing under the Loan Agreement, as amended, in

the event we pay off our obligations on or before July 31, 2024, and 0.5% of the total financing if we pay off our obligations after

July 31, 2024, to and including July 31, 2025.

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

Agreement after July 31, 2025.

connection with amendment dated July 31, 2023, we paid our lender a fee of $100,000 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, the annual rate of interest due on the revolving credit is at prime plus 2% or SOFR plus 3.00% plus

an SOFR Adjustment applicable for an interest period selected by us.

The annual rate of interest due on Term Loan 1 and the Capital line

is at prime plus 2.50% or SOFR plus 3.50% plus an SOFR Adjustment applicable for an interest period selected by us.

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.

payment of annual rate of interest due on Term Loan 2 under the amendment dated July 31, 2023, as discussed above.

credit facility under our Loan Agreement, as amended, contains certain financial covenants, along with customary representations and

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

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

to extend further credit.

We were not required to perform testing of the FCCR requirement in the first and third quarters of 2022 pursuant

to the amendments that we entered with our lender in 2022 as discussed above.

Based on an amendment that we entered into with our lender

on March 21, 2023 as discussed below, we were not required to perform testing of the FCCR

requirement in the fourth quarter of 2022.

We failed to meet our 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 our FCCR requirements, we met all of our other financial covenant requirements in each of the quarters of 2022.

We expect to meet our quarterly financial covenant requirements for the next twelve months under our Amended Loan Agreement.

March 21, 2023, we entered into an amendment to our

Revised Loan Agreement with our lender which provides, among other things, the following:

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.

this point on, we may terminate our 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.

Retention Credit (“ERC”)

CARES Act, which was enacted on March 27, 2020, provides an 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

Following these amendments, we determined that we were eligible for the ERC, and as a result of the foregoing legislations,

are eligible to claim a refundable tax credit against our share of certain payroll taxes equal to 70% of the qualified wages paid to

employees between July 1, 2021 and September 30, 2021.

Qualified 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, we determined we were eligible for the ERC and amended our 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 U.S.

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 our Consolidated Statements of Operations and other receivables (within “Prepaid and other assets”)

on our Consolidated Balance Sheets.

of Deferred Employment Tax Deposits

CARES Act 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.

Our 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).

We were not required to perform testing of the FCCR requirement in the first quarter of 2023 pursuant to the

March 21, 2023, amendment as discussed above.

We otherwise met all of our other financial covenant requirements.

We met all of our covenant

requirements in each of the second to fourth quarters of 2023 and we expect to meet our covenant requirements in the next twelve months.

May 19, 2023, we filed a shelf registration statement on Form S-3 with the U.S Securities and Exchange Commission (the “Commission”),

which was declared effective by the Commission on June 1, 2023.

The shelf registration statement gives us

the ability to sell up to 2,500,000 shares of our Common Stock from time to time and through one or more methods of distribution, subject

to market conditions and our capital needs at that time.

The terms of any offering under the registration statement will be established

at the time of the offering and be set forth in an accompanying prospectus or prospectus supplement relating to the offering.

time, we do not have any immediate plans or current commitments to issue shares under the registration statement.

This is not an offer

to sell or a solicitation of an offer to buy, nor shall there be a sale of securities in any state or jurisdiction in which such offer,

solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

Balance Sheet Arrangements

13 unchanged sentences

policies are described in the accompanying notes to our consolidated financial statements of this Form 10-K (see “Item 8 –

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Note 2 – Summary

of Significant Accounting Policies”):

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 2 – Summary of Significant

Accounting Policies”):

Our revenues are

generated from our two segments, Treatment and Services.

Certain contracts within our Services Segment are generated from long-term fixed

price contracts.

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

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

Transaction price

is estimated based upon the estimated cost to complete the overall project.

Revenue from fixed price contracts is recognized over time

primarily using the input method.

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

estimated costs of the project.

Our contracts generally do not give rise to variable consideration.

However, from time to time, we may submit requests

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

consideration.

We estimate 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

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

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

9 unchanged sentences

asset over its fair value.

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

revenue, gross margin, growth rate, operating income, timing of expected future cash flows, and the determination of appropriate long-term

discount rates.

Significant judgments are inherent in these analyses and include assumptions

for, among other factors, forecasted revenue, gross margin, growth rate, operating income, timing

of expected future cash flows, and the determination of appropriate long-term discount rates.

testing of our permits related to our Treatment reporting unit as of October 1, 2023, and 2022 resulted in no impairment charges.

10 unchanged sentences

on our financial condition and results of operations.

We believe that the assumptions and estimates

utilized for the reporting periods are appropriate based on the information available to management.

We believe that the assumptions and estimates utilized

for the reporting periods are appropriate based on the information available to management.

Closure Costs and Asset Retirement Obligations (“ARO”).

26 unchanged sentences

to the ARO liability calculated and are capitalized and charged as depreciation expense, in accordance with our depreciation policy.

Income Taxes.

The provision for income tax

is determined in accordance with ASC 740, “Income Taxes.” As part of the process of preparing our consolidated financial statements,

we are required to estimate our income taxes in each of the jurisdictions in which we operate.

We record this amount as a provision or

benefit for taxes .

This process involves estimating our actual current tax exposure, including assessing the risks associated with

tax audits, and assessing temporary differences resulting from different treatment of items for tax and accounting purposes.

These differences

result in deferred tax assets and liabilities.

We regularly review deferred tax assets by jurisdiction to assess their potential realization and establish

a valuation allowance for portions of such assets that we believe will not be realized.

In performing this review, we make estimates and

assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the

implementation of tax planning strategies.

A change in these assumptions could cause an increase or decrease to the valuation allowance

which could materially impact our results of operations.

The provision for income tax is determined in accordance with ASC 740, “Income Taxes.” As part of the process

of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which

We record this amount as a provision or benefit for taxes .

This process involves estimating our actual current tax

exposure, including assessing the risks associated with tax audits, and assessing temporary differences resulting from different treatment

of items for tax and accounting purposes.

These differences result in deferred tax assets and liabilities.

regularly review deferred tax assets by jurisdiction to assess their potential realization and establish a valuation allowance for portions

of such assets that we believe will not be realized.

In performing this review, we make estimates and assumptions regarding projected

future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning

A change in these assumptions could cause an increase or decrease to the valuation allowance which could materially impact

our results of operations.

Accounting Pronouncements

“Item 8 – Financial Statements and Supplementary Data” – Notes to Consolidated Financial Statements” –

Note 2 – Summary of Significant Accounting Policies” for the recent accounting pronouncements that have been adopted during

the year ended December 31, 2022, or will be adopted in future periods.

Note 2 – Summary of Significant Accounting Policies” for the recent accounting pronouncements that will be adopted in future

Trends and Uncertainties

Our business continues to be heavily dependent on services that we provide to governmental clients, primarily as subcontractors

for others who are prime contractors to government authorities (particularly the DOE and DOD) or directly as the prime contractor.

believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including

without limitation, the economic conditions, the manner in which the government entity will be required to spend funding to remediate

various sites, and potential COVID-19 impact.

Our business continues to be heavily dependent on services that we provide to governmental clients (domestic), primarily

as subcontractors for others who are prime contractors to government authorities (particularly the DOE and DOD) or directly as the prime

We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control,

including without limitation, the economic conditions and the manner in which the government entity will be required to spend funding

to remediate various sites.

In addition, our U.S.

governmental contracts and subcontracts relating to activities at

governmental sites are generally subject to termination for convenience at any time at the option of the government.

Our TOAs with the

Canadian government also provided that the government may terminate a TOA at any time for convenience.

Significant reductions in the

level of governmental funding or specifically mandated levels for different programs that are important to our business could have a

material adverse impact on our business, financial position, results of operations and cash flows.

governmental contracts and subcontracts relating to activities at governmental sites

are generally subject to termination for convenience at any time at the option of the government.

Significant reductions in the level

of governmental funding or specifically mandated levels for different programs that are important to our business could have a material

adverse impact on our business, financial position, results of operations and cash flows.

Our Treatment and Services Segments have significant relationships with the U.S governmental authorities through contracts

entered into indirectly as subcontractors for others who are prime contractors or directly as the prime contractor to government authorities.

We also had significant relationships with Canadian government authorities primarily through TOAs entered into with Canadian government

Project work under TOAs with Canadian government authorities has substantially been completed.

Our inability to continue

under existing contracts that we have with the U.S government (directly or indirectly as a subcontractor) or significant reductions in

the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition.

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

Our inability to continue under existing contracts that we have with the U.S government (directly or indirectly as a subcontractor) or

significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations

and financial condition.

performed services relating to waste generated by government clients (domestic), either directly as a prime contractor or indirectly

for others as a subcontractor to government entities, representing approximately $70,642,000, or 78.7%, of our total revenue during 2023,

as compared to $59,658,000, or 84.5%, of our total revenue during 2022.

discussion of a multi-year contract valued up to approximately EUR 50 million awarded to us and our JV partner by the European Commission

on December 18, 2023, for the treatment of radioactive waste from the Joint Research Center in Ispra, Italy under “Business Environment”

within this MD&A.

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

1 unchanged sentence

(“PF Canada”).

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

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

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

5 unchanged sentences

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.

We use various commercially available materials and supplies which include among other things chemicals, containers/drums

and PPE in our operations.

We generally source these items from various suppliers in order to take advantage of competitive pricing.

also utilize various types of equipment, which include among other things trucks, flatbeds, lab equipment, heavy machineries, in carrying

out our business operations.

Our equipment may be obtained through direct purchase, rental option or leases.

Due to some of our specialized

waste treatment processes, certain equipment that we utilize are designed and built to our specifications.

We rely on various commercial

equipment suppliers for the construction of these equipment.

Due to supply chain challenges, we previously experienced a delay in the

delivery of a new waste processing unit to us by our supplier due to shortage of parts required for the construction of the unit, among

other things, This supply chain interruption delayed deployment of our new technology which negatively impacted our revenue for 2021

and the first quarter of 2022 as associated revenue was not able to be generated.

Deployment of this unit commenced in mid-May of 2022.

Continued increases in pricing and/or potential delays in procurements of material and supplies and equipment required for our operations

resulting from further tightening supply chain could further adversely affect our operations and profitability.

and Cost Increases.

Continued increases in any of our operating costs, including further changes in fuel prices, wage rates, supplies,

and utility costs, may further increase our overall cost of goods sold or operating expenses.

Some of these cost increases have been

the result of inflationary pressures that could further reduce profitability.

We may attempt to increase our sales prices in order to

maintain satisfactory margin;

however, competitive pressures in our industry may have the effect of inhibiting our ability to reflect

these increased costs in the prices of our services that we provide to our customers and therefore reduce our profitability.

See above discussion contained herein as to issues relating to “Liqudity” and efforts to improve our liquidity

CNL and PF Canada have reached a settlement agreement

on payment of the receivables to PF Canada by CNL, subject to certain conditions/terms precedents being met, including release of certain

On January 22, 2024, we received a partial payment of approximately $741,000 from CNL, with the remaining receivables to be paid

by CNL upon completion of the settlement conditions/terms, which we believe should occur during 2024.

Partnership with Springfields Fuels Limited.

As discussed above, we have signed a non-binding term sheet addressing plans to partner

with Springfields Fuels Limited, an affiliate of Westinghouse Electric Company LLC, to develop and manage a nuclear waste-materials treatment

facility in the United Kingdom.

See “Liquidity and Capital Resources – Investing Activities” of this MD&A for a

discussion of this transaction.

and Supply Chain.

Our financial results have been negatively impacted by various macroeconomic factors, including the effects of

inflation, supply chain issues, labor shortages, and higher interest rates, due, in part, to the impact of COVID-19 (which has mostly

Continued i ncreases in any of our operating costs, including utility, transportation, wage rates,

and supply costs, may further increase our overall cost of goods sold or operating expenses.

We may attempt to increase our service and

treatment prices in order to maintain satisfactory margin from the effect of these factors as discussed above;

however, competitive pressures

in our industry may have the effect of inhibiting our ability to reflect these increased costs in

the prices of our services that we provide to our customers and therefore reduce our profitability.

Party Transactions

a discussion of the Company’s related party transactions in “Item 8 – Financial Statements and Supplementary Data –

Notes to Consolidate Financial Statements – Note 18 – Related Party Transactions and Note 20 – Subsequent Events –

Executive Compensation - MIPs.”

a discussion of our related party transactions in “Item 8 – Financial Statements and Supplementary Data – Notes to

Consolidate Financial Statements – Note 16 – Related Party Transactions.”

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 7. Management’s Discussion and Analysis