PERMA FIX ENVIRONMENTAL SERVICES INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Consolidated Financial Statements Page No. Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 36 Consolidated Balance Sheets as of December 31, 2024, and 2023 37 Consolidated Statements of Operations for the years ended December 31, 2024, and 2023 39 Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2024, and 2023 40 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, and 2023 41 Consolidated Statements of Cash Flows for the years ended December 31, 2024, and 2023 42 Notes to Consolidated Financial Statements 43 Financial Statement Schedules In accordance with the rules of Regulation S-X, schedules are not submitted because they are not applicable to or required by the Company. 35 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Perma-Fix Environmental Services, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Perma-Fix Environmental Services, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, 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. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our 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. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. In-Process Fixed Price Service Revenue As described further in Note 2 to the financial statements, the Company recognizes revenue over time using an input measure of progress for certain fixed priced service arrangements. Under this method, revenue is recorded proportionally based on project costs incurred relative to the estimated total project costs. Auditing the Company’s in-process fixed price arrangements was complex given the judgment required in determining the estimated total project costs. We identified the estimated total project costs for in-process fixed price service arrangements as a critical audit matter. The principal consideration for our determination that the estimated total project costs for in-process fixed price service arrangements at year-end is a critical audit matter is due to management’s significant judgments when determining such estimated total project costs. Auditing the estimate of total project costs requires a high degree of auditor judgment and increased audit effort due to the judgement involved in management’s estimation of total project costs, which impacts revenue recognition. Our audit procedures related to the estimated total project costs for in-process fixed price service arrangements included the following, among others. ● We obtained an understanding of how management ensures the estimated total project costs of in-process fixed price service arrangements are complete and accurate at year-end. ● For a sample of in-process fixed fee arrangements, we obtained and tested the underlying assumptions used by the Company to develop the estimate of total project costs at year-end. ● When evaluating management’s estimation process, we performed a retrospective review by assessing prior estimates against actual outcomes. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2014. Atlanta, Georgia March 13, 2025 36 PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS As of December 31, (Amounts in Thousands, Except for Share and Per Share Amounts) 2024 2023 ASSETS Current assets: Cash $ 28,975 $ 7,500 Accounts receivable, net of allowance for credit losses of $ 202 and $ 30 , respectively 11,579 9,722 Unbilled receivables 4,990 8,432 Inventories 1,350 1,155 Prepaid and other assets 3,309 3,738 Current assets related to discontinued operations 20 13 Total current assets 50,223 30,560 Property and equipment: Buildings and land 24,717 24,311 Equipment 23,499 22,809 Vehicles 411 434 Leasehold improvements 8 8 Office furniture and equipment 1,082 1,130 Construction-in-progress 2,949 1,010 Total property and equipment 52,666 49,702 Less accumulated depreciation ( 31,533 ) ( 30,693 ) Net property and equipment 21,133 19,009 Property and equipment related to discontinued operations 130 81 Operating lease right-of-use assets 1,697 1,990 Intangibles and other long term assets: Permits 10,531 9,905 Other intangible assets - net 393 461 Finite risk sinking fund (restricted cash) 12,680 12,074 Deferred tax assets — 4,299 Other assets 461 370 Total assets $ 97,248 $ 78,749 The accompanying notes are an integral part of these consolidated financial statements. 37 PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS, CONTINUED As of December 31, (Amounts in Thousands, Except for Share and per Share Amounts) 2024 2023 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 6,373 $ 9,582 Accrued expenses 5,111 6,560 Disposal/transportation accrual 2,271 1,198 Deferred revenue 6,711 6,815 Accrued closure costs - current 50 79 Current portion of long-term debt 550 773 Current portion of operating lease liabilities 345 380 Current portion of finance lease liabilities 285 291 Current liabilities related to discontinued operations 244 269 Total current liabilities 21,940 25,947 Accrued closure costs 8,290 8,051 Long-term debt, less current portion 1,765 1,975 Long-term operating lease liabilities, less current portion 1,427 1,670 Long-term finance lease liabilities, less current portion 491 776 Long-term liabilities related to discontinued operations 945 953 Total long-term liabilities 12,918 13,425 Total liabilities 34,858 39,372 Commitments and Contingencies (Note 13) - - Stockholders’ Equity: Preferred Stock, $ .001 par value; 2,000,000 shares authorized, no shares issued and outstanding — — Common Stock, $ .001 par value; 30,000,000 shares authorized; 18,384,879 and 13,654,201 shares issued, respectively; 18,377,237 and 13,646,559 shares outstanding, respectively 18 14 Additional paid-in capital 159,590 116,502 Accumulated deficit ( 96,930 ) ( 76,951 ) Accumulated other comprehensive loss ( 200 ) ( 100 ) Less Common Stock in treasury, at cost; 7,642 shares ( 88 ) ( 88 ) Total stockholders’ equity 62,390 39,377 Total liabilities and stockholders’ equity $ 97,248 $ 78,749 The accompanying notes are an integral part of these consolidated financial statements. 38 PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, (Amounts in Thousands, Except for Per Share Amounts) 2024 2023 Net revenues $ 59,117 $ 89,735 Cost of goods sold 59,115 73,366 Gross profit 2 16,369 Selling, general and administrative expenses 14,491 14,975 Research and development 1,172 561 Loss on disposal of property and equipment 21 77 (Loss) income from operations ( 15,682 ) 756 Other income (expense): Interest income 921 606 Interest expense ( 473 ) ( 323 ) Interest expense-financing fees ( 66 ) ( 93 ) Other 166 ( 11 ) (Loss) income from continuing operations before taxes ( 15,134 ) 935 Income tax expense 4,435 17 (Loss) income from continuing operations, net of taxes ( 19,569 ) 918 Loss from discontinued operations (Note 8) ( 410 ) ( 433 ) Net (loss) income $ ( 19,979 ) $ 485 Net income (loss) per common share - basic and diluted: Continuing operations $ ( 1.30 ) $ .07 Discontinued operations ( .03 ) ( .03 ) Net income (loss) per common share $ ( 1.33 ) $ .04 Weighted average number of common shares used in computing net (loss) income per share: Basic 15,072 13,506 Diluted 15,072 13,739 The accompanying notes are an integral part of these consolidated financial statements. 39 PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME For the years ended December 31, (Amounts in Thousands) 2024 2023 Net (loss) income $ ( 19,979 ) $ 485 Other comprehensive (loss) income: Foreign currency translation adjustments ( 100 ) 65 Total other comprehensive (loss) income ( 100 ) 65 Comprehensive (loss) income $ ( 20,079 ) $ 550 The accompanying notes are an integral part of these consolidated financial statements. 40 PERMA-FIX ENVIRONMENTAL SERVICES, INC CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the years ended December 31, (Amounts in Thousands, Except for Share Amounts) Shares Amount Capital In Treasury Loss Deficit Equity Common Stock Additional Paid-In Common Stock Held Accumulated Other Comprehensive Accumulated Total Stockholders’ Shares Amount Capital In Treasury Loss Deficit Equity Balance at December 31, 2022 13,332,398 $ 13 $ 115,209 $ ( 88 ) $ ( 165 ) $ ( 77,436 ) $ 37,533 Net income — — — — — 485 485 Foreign currency translation — — — — 65 — 65 Issuance of Common Stock for services 65,854 — 477 — — — 477 Stock-Based Compensation — — 548 — — — 548 Issuance of Common Stock upon exercise of options 225,949 1 163 — — — 164 Issuance of Common Stock upon exercise of warrant 30,000 — 105 — — — 105 Balance at December 31, 2023 13,654,201 $ 14 $ 116,502 $ ( 88 ) $ ( 100 ) $ ( 76,951 ) $ 39,377 Balance 13,654,201 $ 14 $ 116,502 $ ( 88 ) $ ( 100 ) $ ( 76,951 ) $ 39,377 Net income — — — — — ( 19,979 ) ( 19,979 ) Foreign currency translation — — — — ( 100 ) — ( 100 ) Issuance of Common Stock for services 46,947 — 480 — — — 480 Stock-Based Compensation — — 656 — — — 656 Issuance of Common Stock upon exercise of options 72,449 — 187 — — — 187 Issuance of Common Stock upon exercise of warrant 30,000 — 105 — — — 105 Sale of Common Stock, net of offering costs (Note 17) 4,581,282 4 40,634 — — — 40,638 Issuance of warrants from sale of Common Stock (Note 17) — — 1,026 — — — 1,026 Balance at December 31, 2024 18,384,879 $ 18 $ 159,590 $ ( 88 ) $ ( 200 ) $ ( 96,930 ) $ 62,390 Balance 18,384,879 $ 18 $ 159,590 $ ( 88 ) $ ( 200 ) $ ( 96,930 ) $ 62,390 The accompanying notes are an integral part of these consolidated financial statements. 41 PERMA-FIX ENVIRONMENTAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, (Amounts in Thousands) 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 19,979 ) $ 485 Less: loss on discontinued operations (Note 8) ( 410 ) ( 433 ) (Loss) income from continuing operations ( 19,569 ) 918 Adjustments to reconcile net (loss) income from continuing operations to cash (used in) provided by operating activities: Depreciation and amortization 1,763 2,568 Amortization of debt issuance costs 65 93 Deferred tax expense (benefit) 4,448 ( 66 ) Provision for credit losses on accounts receivable 219 45 Loss on disposal of property and equipment 21 77 Issuance of common stock for services 480 477 Stock-based compensation 656 548 Changes in operating assets and liabilities of continuing operations: Accounts receivable ( 2,076 ) ( 403 ) Unbilled receivables 3,442 ( 2,370 ) Prepaid expenses, inventories and other assets 3,072 4,517 Accounts payable, accrued expenses and unearned revenue ( 6,667 ) 665 Cash (used in) provided by continuing operations ( 14,146 ) 7,069 Cash used in discontinued operations ( 597 ) ( 597 ) Cash (used in) provided by operating activities ( 14,743 ) 6,472 Cash flows from investing activities: Purchases of property and equipment (net of financed amount) ( 3,405 ) ( 1,714 ) Addition to permits and other intangible assets ( 675 ) ( 324 ) Proceeds from sale of property and equipment 1 — Cash used in investing activities of continuing operations ( 4,079 ) ( 2,038 ) Cash used in discontined operations ( 51 ) — Cash used in investing activities ( 4,130 ) ( 2,038 ) Cash flows from financing activities: Borrowing on revolving credit 98,655 90,256 Repayments of revolving credit borrowings ( 98,655 ) ( 90,256 ) Proceeds from long term debt (Term Loan 2) — 2,500 Proceeds from sale of Common Stock, net of offering costs paid (Note 17) 41,859 — Principal repayment of finance lease liabilities ( 291 ) ( 189 ) Principal repayments of long term debt ( 832 ) ( 709 ) Payment of debt issuance costs ( 73 ) ( 175 ) Proceeds from issuance of Common Stock upon exercise of options/warrant 292 269 Cash provided by financing activities of continuing operations 40,955 1,696 Effect of exchange rate changes on cash ( 1 ) 8 Increase in cash and finite risk sinking fund (restricted cash) (Note 2) 22,081 6,138 Cash and finite risk sinking fund (restricted cash) at beginning of period (Note 2) 19,574 13,436 Cash and finite risk sinking fund (restricted cash) at end of period (Note 2) $ 41,655 $ 19,574 Supplemental disclosure: Interest paid $ 478 $ 308 Income taxes paid 53 — Non-cash investing and financing activities: Equipment purchase subject to financing 406 784 The accompanying notes are an integral part of these consolidated financial statements. 42 PERMA-FIX ENVIRONMENTAL SERVICES, INC. Notes to Consolidated Financial Statements December 31, 2024, and 2023 NOTE 1 DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Perma-Fix Environmental Services, Inc. (the Company, which may be referred to as we, us, or our), an environmental and technology know-how company, is a Delaware corporation, engaged through its subsidiaries, in two reportable segments: TREATMENT SEGMENT, which includes: - nuclear, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through four uniquely licensed and permitted treatment and storage facilities; and - R&D activities to identify, develop and implement innovative waste processing techniques for problematic waste streams. SERVICES SEGMENT, which includes: - Technical services, which include: ○ professional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering; ○ integrated Occupational Safety and Health services including IH assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and OSHA citation assistance; ○ global 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; and ○ on-site waste management services to commercial and governmental customers. - Nuclear services, which include: ○ technology-based services including engineering, D&D, specialty services and construction, logistics, transportation, processing and disposal; ○ remediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; logistics; transportation; and emergency response; and - A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) health physics, IH and customized NEOSH instrumentation. The Company’s continuing operations consist of the operations of its subsidiaries/facilities as follow: Diversified Scientific Services, Inc. (“DSSI”), Perma-Fix of Florida, Inc. (“PFF”), Perma-Fix of Northwest Richland, Inc. (“PFNWR”), Safety & Ecology Corporation (“SEC”), Perma-Fix Environmental Services UK Limited (“PF UK Limited”), Perma-Fix Canada, Inc. (“PF Canada”) and Oak Ridge Environmental Waste Operations Center (“EWOC”). The Company’s discontinued operations (see “Note 8 – Discontinued Operations”) consist of operations of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and earlier, as well as three previously closed locations. Financial Positions and Liquidity The Company’s cash flow requirements during the twelve-months ended December 31, 2024, were primarily financed by its Liquidity (defined as borrowing availability under the revolving credit plus cash in its Money Market Deposit Account (“MMDA”) maintained with its lender) under its Credit Facility. The Company’s Liquidity included net proceeds of approximately $ 41,664,000 received from the sales of an aggregate 4,581,282 shares of its Common Stock pursuant to certain Securities Purchase and Underwriting Agreements executed in May 2024 and December 2024 (see “Note 17 – Sales of Common Stock” for a discussion of these offerings). 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, R&D on its PFAS technology and capital expenditures (which include its PFAS technology). The Company plans to fund these requirements from its operations and Liquidity under its Credit Facility. 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. As of December 31, 2024, the Company had no outstanding borrowing under its revolving credit and Liquidity under its Credit Facility was approximately $ 33,905,000 . The Company believes that its cash flows from operations and Liquidity should be sufficient to fund its operations for the next twelve months. If the Company continues to incur losses, this could cause a reduction in its Liquidity. Reclassification Certain amounts in “Note 12 – Income taxes” for the year ended December 31, 2023, have been reclassified to conform with current presentation. The reclassification had no effect on the consolidated statements of operations, balance sheets and stockholders’ equity. Immaterial Correction of an Error The Company reclassified $ 324,000 of cash outlay for permits and other intangible assets, which was included in “Prepaid expenses, inventories and other assets” within cash provided by operating activities to cash used in investing activities for the year ended December 31, 2023, in its consolidated statement of cash flows. This correction of an error was immaterial and had no effect on the consolidated statements of operations, balance sheets and stockholders’ equity. 43 NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting standards generally accepted in the United States (“U.S. GAAP”). The Company’s consolidated financial statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The Company prepares financial statements in conformity with 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. Accounts Receivable Accounts receivable are customer obligations due under normal trade terms generally requiring payment within 30 to 60 days from the invoice date based on the customer type (government, broker, or commercial). Credit is extended to customers based on an evaluation of a customer’s financial condition and, generally, collateral is not required. The carrying amount of accounts receivables is reduced by a credit loss determined in accordance with Accounting Standards Update (“ASU”) 2016-13 “Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” which requires the Company to consider forward-looking information in estimating the expected loss and 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 management based on required approval thresholds. The following table sets forth the activity in the allowance for credit losses for the years ended December 31, 2024, and 2023 (in thousands): SCHEDULE OF ALLOWANCE FOR CREDIT LOSSES 2024 2023 Year Ended December 31, 2024 2023 Allowance for credit losses - beginning of year $ 30 $ 57 Provision charges 219 44 Write-off ( 47 ) ( 71 ) Allowance for credit losses - end of year $ 202 $ 30 44 Unbilled Receivables Unbilled receivables are generated by differences between invoicing timing and our over-time revenue recognition methodology used for revenue recognition purposes. As major processing and contract completion phases are completed and the costs are incurred, the Company recognizes the corresponding percentage of revenue. Within our Treatment Segment, the facilities experience delays in processing invoices due to the complexity of the documentation that is required for invoicing, as well as the difference between completion of revenue recognition and agreed upon invoicing terms, which could result in unbilled receivables. The timing differences occur for several reasons which include, delays in the final processing of all wastes associated with certain work orders and delays for analytical testing that is required after the facilities have processed waste but prior to our release of waste for disposal. The tasks relating to these delays can take months to complete but are generally completed within twelve months. Unbilled receivables within our Services Segment can result from work performed under contracts but invoice milestones, based on the executed contract, have not yet been met and/or contract claims and pending change orders, including requests for equitable adjustments (“REA”) for which work has been performed and collection of revenue is reasonably assured. Inventories Inventories consist of treatment chemicals and certain supplies. Additionally, the Company has replacement parts in inventory, which are deemed critical to the operating equipment and may also have extended lead times should the part fail and need to be replaced. Inventories are valued at the lower of cost or net realizable value with cost determined by the first-in, first-out method. Disposal and Transportation Costs The 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 estimate the transportation and disposal accruals. Property and Equipment Property and equipment expenditures are capitalized and depreciated using the straight-line method over the estimated useful lives of the assets for financial statement purposes, while accelerated depreciation methods are principally used for income tax purposes. Generally, asset lives range from ten to forty years for buildings (including improvements and asset retirement costs) and three to seven years for office furniture and equipment, vehicles, and decontamination and processing equipment. Leasehold improvements are capitalized and amortized over the lesser of the term of the lease or the life of the asset. Maintenance and repairs are charged directly to expense as incurred. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any gain or loss from sale or retirement is recognized in the accompanying Consolidated Statements of Operations. Renewals and improvements, which extend the useful lives of the assets, are capitalized. Certain property and equipment expenditures are financed through leases. Amortization of financed leased assets is computed using the straight-line method over the estimated useful lives of the assets. As of December 31, 2024, assets recorded under finance leases were $ 1,601,000 less accumulated depreciation of $ 798,000 , resulting in net fixed assets under finance leases of $ 803,000 . As of December 31, 2023, assets recorded under finance leases were $ 1,608,000 less accumulated depreciation of $ 545,000 , resulting in net fixed assets under finance leases of $ 1,063,000 . These assets are recorded within net property and equipment on the Consolidated Balance Sheets. 45 Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell and are no longer depreciated. Depreciation expense totaled approximately $ 1,646,000 and $ 2,370,000 in 2024 and 2023, respectively. Leases The Company accounts for leases in accordance with FASB’s ASU 2016-02, “Leases (Topic 842).” At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are then determined at the lease commencement date. The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities include primarily leases for office and warehouse spaces used to conduct our business. As of December 31, 2024, the Company’s operating leases have remaining terms of approximately one to five years . The Company includes renewal options in valuing its ROU assets and liabilities when it determines that it is reasonably certain to exercise these renewal options. As most of our operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate when determining the present value of the lease payments. The incremental borrowing rate is determined based on the Company’s secured borrowing rate, lease terms and current economic environment. Some of our operating leases include both lease (rent payments) and non-lease components (maintenance costs such as cleaning and landscaping services). The Company has elected the practical expedient to account for lease component and non-lease component as a single component for all leases under ASU 2016-02. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Finance leases primarily consist of lab, processing and transport equipment used by our facilities’ operations. The Company’s finance leases have remaining terms of approximately one to five 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. The Company adopted the policy to not recognize ROU assets and liabilities for short term leases. Intangible Assets Intangible assets consist primarily of the recognized value of the permits required to operate our business. Indefinite-lived intangible assets are not amortized but are reviewed for impairment annually as of October 1, or when events or changes in the business environment indicate that the carrying value may be impaired. The Company performs a quantitative test to determine if the fair value of the assets is less than the carrying value. The impairment loss, if any, is measured as the excess of the carrying value of the asset over its fair value. Judgments and estimates are inherent in these analyses and include assumptions for, among other factors, forecasted revenue, gross margin, growth rate, operating income, timing of expected future cash flows, and the determination of appropriate long-term discount rates. Impairment testing of our indefinite-lived permits related to our Treatment reporting unit as of October 1, 2024, and 2023 resulted in no impairment charges. Intangible assets that have definite useful lives are amortized using the straight-line method over the estimated useful lives and are excluded from our annual intangible asset valuation review as of October 1. Definite-lived intangible assets are tested for impairment whenever events or changes in circumstances suggest impairment might exist. 46 Research and Development (“R&D”) Operational innovation and technical know-how are very important to the success of our business. Our goal is to discover, develop, and bring to market innovative ways to process waste that address unmet environmental needs and to develop new company service offerings. The Company conducts research internally and also through collaborations with other third parties. R&D costs consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development and enhancement of new potential waste treatment processes and new technology and are charged to expense when incurred in accordance with Accounting Standards Codification (“ASC”) Topic 730, “Research and Development.” Accrued Closure Costs and Asset Retirement Obligations (“ARO”) Accrued closure costs represent our estimated environmental liability to clean up our facilities, as required by our permits, in the event of closure. ASC 410, “Asset Retirement and Environmental Obligations” requires that the discounted fair value of a liability for an ARO be recognized in the period in which it is incurred with the associated ARO capitalized as part of the carrying cost of the asset. The recognition of an ARO requires that management make numerous estimates, assumptions and judgments regarding such factors as estimated probabilities, timing of settlements, material and service costs, current technology, laws and regulations, and credit adjusted risk-free rate to be used. This estimate is inflated, using an inflation rate, to the expected time at which the closure will occur, and then discounted back, using a credit adjusted risk free rate, to the present value. ARO’s are included within buildings as part of property and equipment and are depreciated over the estimated useful life of the property. In periods subsequent to initial measurement of the ARO, the Company must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. Increases in the ARO liability due to passage of time impact net income as accretion expense, which is included in cost of goods sold. Changes in costs resulting from changes or expansion at the facilities require adjustment to the ARO liability and are capitalized and charged as depreciation expense, in accordance with the Company’s depreciation policy. Income Taxes Income taxes are accounted for in accordance with ASC 740, “Income Taxes.” Under ASC 740, the provision for income taxes is comprised of taxes that are currently payable and deferred taxes that relate to the temporary differences between financial reporting carrying values and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. ASC 740 requires that deferred income tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The Company regularly assesses the likelihood that the deferred tax asset will be recovered from future taxable income. The Company considers projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred income taxes to an amount that is more likely than not to be realized. ASC 740 sets out a consistent framework for preparers to use to determine the appropriate recognition and measurement of uncertain tax positions. ASC 740 uses a two-step approach wherein a tax benefit is recognized if a position is more-likely-than-not to be sustained. The amount of the benefit is then measured to be the highest tax benefit which is greater than 50% likely to be realized. ASC 740 also sets out disclosure requirements to enhance transparency of an entity’s tax reserves. The Company recognizes accrued interest and income tax penalties related to unrecognized tax benefits as a component of income tax expense. The Company reassesses the validity of our conclusions regarding uncertain income tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position’s sustainability under audit. Foreign Currency The Company’s foreign subsidiaries include PF UK Limited and PF Canada. 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. Gains and losses resulting from foreign currency transactions, which are immaterial, are recognized in the Consolidated Statements of Operations. 47 Concentration Risk The Company performed services relating to waste generated by federal government clients, either indirectly for others as a subcontractor to federal government entities or directly as a prime contractor, representing approximately $ 40,550,000 , or 68.6 %, of our total revenue during 2024, as compared to 68,595,000 or 76.4 %, of our total revenue during 2023. 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. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains cash with high quality financial institutions, which may exceed Federal Deposit Insurance Corporation (“FDIC”) insured amounts from time to time. The Company has not experienced any losses due to such cash concentration. Concentration of credit risk with respect to accounts receivable is limited due to the Company’s large number of customers and their dispersion throughout the United States as well as with the significant amount of work that we perform for government entities. The Company had two government related customers whose total unbilled and net outstanding receivable balances represented 14.3 % and 11.5 % % of the Company’s total consolidated unbilled and net accounts receivable as of December 31, 2024. The Company had two government related customers whose total unbilled and net outstanding receivable balances each represented 13.2 % of the Company’s total consolidated unbilled and net accounts receivable as of December 31, 2023. Revenue Recognition and Related Policies The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers.” ASC 606 provides a single, comprehensive revenue recognition model for all contracts with customers. Under ASC 606, a five-step process is utilized in order to determine revenue recognition, depicting the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Under ASC 606, a performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract transaction price is allocated to each distinct performance obligation and recognized as revenues as the performance obligation is satisfied. Treatment Segment Revenues: Contracts in our Treatment Segment primarily have a single performance obligation as the promise to receive, treat and dispose of waste is not separately identifiable in the contract and, therefore, not distinct. Revenue for Treatment Segment performance obligations are generally satisfied over time using the input method. For the input method, revenue is recognized based on the costs incurred. Transaction price for Treatment Segment contracts are determined by the stated fixed rate per unit price as stipulated in the contract. Some of our contracts have multiple performance obligations, most commonly when we provide additional services to the customer under a waste treatment contract. For contract with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Generally, we use the observable selling prices from an observable price list, but when a price list is not available, the standalone selling price is determined by the cost plus margin approach. The Company periodically enters 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. 48 Services Segment Revenues: Revenues for our Services Segment are generated from time and materials or fixed price arrangements: The Company’s primary obligation to customers in time and materials contracts relate to the provision of services to the customer at the direction of the customer. This provision of services at the request of the customer is the performance obligation, which is satisfied over time. Revenue earned from time and materials contracts is determined using the input method and is based on contractually-defined billing rates applied to services performed and materials delivered. 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 determined based on fixed price outline within the contract. 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. As discussed above for the Treatment and Services Segments, the Company’ revenue is generally recognized using the input method. This 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. Contracts with our customers within our Treatment Segment are generally short term with an original expected length of one year or less. For the Services Segment, contracts with our customers generally have original terms ranging from one year or less to approximately twenty-four months. 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. Variable Consideration The Company’s contracts generally do not give rise to variable consideration. 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. Significant Payment Terms Invoicing is based on schedules established in customer contracts. Payment terms vary by customers but are generally established at 30 days from invoicing. Incremental Costs to Obtain a Contract Costs incurred to obtain contracts with our customers are immaterial and as a result, the Company expenses (within selling, general and administration expenses (“SG&A”)) incremental costs incurred in obtaining contracts with our customer as incurred. Remaining Performance Obligations The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Within our Services Segment, there are service contracts which provide that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date. For those contracts, the Company has utilized the practical expedient in ASC 606-10-55-18, which allows the Company to recognize revenue in the amount for which we have the right to invoice; accordingly, the Company does not disclose the value of remaining performance obligations for those contracts. 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. The Company does not disclose remaining performance obligations on these contracts. 49 Stock-Based Compensation Stock-based compensation granted to employees are accounted for in accordance with ASC 718, “Compensation – Stock Compensation.” Stock-based payment transactions for acquiring goods and services from nonemployees are also accounted for under ASC 718. ASC 718 requires stock-based payments to employees and nonemployees, including grant of options, to be recognized in the Statement of Operations based on their fair values. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards which requires subjective assumptions. Assumptions used to estimate the fair value of stock-based awards include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the stock-based award’s expected term, the risk-free interest rate over the award’s expected term, and the expected annual dividend yield. The Company accounts for forfeitures when they occur. Comprehensive Income (Loss) The components of comprehensive income (loss) are net income (loss) and the effects of foreign currency translation adjustments. Income (Loss) Per Share Basic income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted income (loss) per share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share. Income (loss) per share is computed separately for each period presented. Fair Value of Financial Instruments Certain assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are recorded at fair value on a nonrecurring basis. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies, is: Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. Financial instruments include cash (Level 1), accounts receivable, accounts payable, and debt obligations (Level 3). As of December 31, 2024, and December 31, 2023, the fair value of the Company’s financial instruments approximated their carrying values. The fair value of the Company’s revolving credit, term loans and capital loan approximate its carrying value due to the variable interest rate. 50 Recently Issued Accounting Standards –Adopted In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment’s profit or loss. The ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis. The Company adopted ASU 2023-07 during the fourth quarter of 2024. ASU 2023-07 only impacted the Company’s disclosures related to segment reporting and did not have impact on the Company’s consolidated financial condition or results of operations (see “Note 16 – Segment Reporting” for disclosure in connection with the adoption of ASU 2023-07). Recently Issued Accounting Standards – Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, “Income Statement— Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses,” which enhances the disclosures required for certain expense captions in the Company’s annual and interim consolidated financial statements. ASU 2024-03 is effective prospectively or retrospectively for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its disclosures. In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The adoption of this ASU will result in additional disclosures but will not impact the Company’s consolidated financial statements. In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025, on a prospective basis. The Company is currently evaluating the impact of this ASU on its consolidated financial statements; however, the Company does not expect it will have a material impact on its consolidated financial statements. 51 NOTE 3 REVENUE Disaggregation of Revenue In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of our services and provides meaningful disaggregation of each business segment’s results of operations. The following tables present further disaggregation of our revenues by different categories for our Services and Treatment Segments: Revenue by Contract Type (In thousands) SCHEDULE OF DISAGGREGATION OF REVENUE Treatment Services Total Treatment Services Total Twelve Months Ended Twelve Months Ended December 31, 2024 December 31, 2023 Treatment Services Total Treatment Services Total Fixed price $ 34,953 $ 19,392 $ 54,345 $ 43,477 $ 41,540 $ 85,017 Time and materials — 4,772 4,772 — 4,718 4,718 Total $ 34,953 $ 24,164 $ 59,117 $ 43,477 $ 46,258 $ 89,735 Revenue by generator (In thousands) Treatment Services Total Treatment Services Total Twelve Months Ended Twelve Months Ended December 31, 2024 December 31, 2023 Treatment Services Total Treatment Services Total Domestic government $ 24,487 $ 22,389 $ 46,876 $ 31,448 $ 39,194 $ 70,642 Domestic commercial 8,566 1,223 9,789 10,670 6,357 17,027 Foreign government 509 463 972 1,001 619 1,620 Foreign commercial 1,391 89 1,480 358 88 446 Total $ 34,953 $ 24,164 $ 59,117 $ 43,477 $ 46,258 $ 89,735 Contract Balances The timing of revenue recognition and billings can result 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 the Company’s performance obligation. The following table represents changes in our contract asset and contract liabilities balances for the periods noted: SCHEDULE OF CONTRACT BALANCES (In thousands) December 31, 2024 December 31, 2023 Year-to-date Change ($) Year-to-date Change (%) Contract assets Unbilled receivables - current $ 4,990 $ 8,432 $ ( 3,442 ) ( 40.8 )% Contract liabilities Deferred revenue $ 6,711 $ 6,815 $ ( 104 ) ( 1.5 )% The reduction in unbilled receivables from 2023 to 2024 was primarily due to invoicing in 2024 of two large Services Segment projects that were primarily completed by the end of 2023. (In thousands) December 31, 2023 December 31, 2022 Year-to-date Change ($) Year-to-date Change (%) Contract assets Unbilled receivables - current $ 8,432 $ 6,062 $ 2,370 39.1 % Contract liabilities Deferred revenue $ 6,815 $ 4,813 $ 2,002 41.6 % The increase in unbilled receivables from 2022 to 2023 resulted primarily from a large Services Segment project which was completed primarily by the end of 2023 and invoiced in 2024 as discussed above. Deferred revenue as of December 31, 2023, included a remaining prepayment of approximately $ 2,031,000 by a certain customer for a waste treatment project which was completed in 2024. During the twelve-months ended December 31, 2024, and 2023, the Company recognized revenue of $ 5,887,000 and $ 6,759,000 , respectively, related to untreated waste that was in the Company’s control as of the beginning of each respective year. Revenue recognized in each period relates to performance obligations satisfied within the respective period. Accounts Receivable The following table represents changes in accounts receivable, net of credit losses, for the periods noted: SCHEDULE OF CHANGES IN ACCOUNTS RECEIVABLE, NET OF CREDIT LOSSES (In thousands) December 31, 2024 December 31, 2023 Year-to-date Change ($) Year-to-date Change (%) Accounts Receivable (net) $ 11,579 $ 9,722 $ 1,857 19.1 % December 31, 2023 December 31, 2022 Year-to-date Change ($) Year-to-date Change (%) Accounts Receivable (net) $ 9,722 $ 9,364 $ 358 3.8 % 52 NOTE 4 LEASES The components of lease cost for the Company’s leases were as follows (in thousands): SCHEDULE OF COMPONENTS OF LEASE COST 2024 2023 Twelve Months Ended December 31, 2024 2023 Operating Leases: Lease cost $ 541 $ 612 Finance Leases: Amortization of ROU assets 261 163 Interest on lease liability 81 33 Finance lease 342 196 Short-term lease rent expense 6 2 Total lease cost $ 889 $ 810 The weighted average remaining lease term and the weighted average discount rate for operating and finance leases as of December 31, 2024, were: SCHEDULE OF WEIGHTED AVERAGE LEASE Operating Leases Finance Leases Weighted average remaining lease terms (years) 4.7 3.8 Weighted average discount rate 7.7 % 9.2 % The weighted average remaining lease term and the weighted average discount rate for operating and finance leases as of December 31, 2023, were: Operating Leases Finance Leases Weighted average remaining lease terms (years) 5.6 4.5 Weighted average discount rate 7.5 % 8.7 % The following table reconciles the undiscounted cash flows for the operating and finance leases as of December 31, 2024, to the operating and finance lease liabilities recorded on the balance sheet (in thousands): SCHEDULE OF OPERATING AND FINANCE LEASE LIABILITY MATURITY Operating Leases Finance Leases 2025 $ 486 $ 345 2026 479 191 2027 447 157 2028 343 134 2029 334 102 2030 and thereafter 73 — Total undiscounted lease payments 2,162 929 Less: Imputed interest ( 390 ) ( 153 ) Present value of lease payments $ 1,772 $ 776 Current portion of operating lease obligations $ 345 $ — Long-term operating lease obligations, less current portion $ 1,427 $ — Current portion of finance lease obligations $ — $ 285 Long-term finance lease obligations, less current portion $ — $ 491 Supplemental cash flow and other information related to our leases were as follows (in thousands): SCHEDULE OF SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION RELATED TO LEASES 2024 2023 Twelve Months Ended December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flow from operating leases $ 526 $ 582 Operating cash flow from finance leases $ 81 $ 33 Financing cash flow from finance leases $ 291 $ 189 ROU assets obtained in exchange for lease obligations for: Finance liabilities $ — $ 786 Operating liabilities $ 497 $ 466 Reduction to ROU assets resulting from purchase of underlying asset: Operating liabilities $ 404 $ — Reduction to ROU assets resulting from purchase of underlying asset, Operating liabilities $ 404 $ — The reduction in ROU asset resulted from the purchase by the Company in July 2024 of the property where its EWOC facility conducts its waste treatment operations. The Company previously leased this property which was included within its operating leases (see “Note 9 – Long Term Debt” for a discussion of the purchase of this property by the Company). 53 NOTE 5 PERMIT AND OTHER INTANGIBLE ASSETS The following table summarizes changes in the carrying value of permits which exist in our Treatment Segment. SCHEDULE OF INTANGIBLE ASSETS Permit (amount in thousands) Treatment Balance as of December 31, 2022 $ 9,610 Permit in progress 295 Balance as of December 31, 2023 $ 9,905 Permit in progress 626 Balance as of December 31, 2024 $ 10,531 The following table summarizes information relating to the Company’s definite-lived intangible assets: SCHEDULE OF DEFINITE LIVED INTANGIBLE ASSETS December 31, 2024 December 31, 2023 Weighted Average Amortization Gross Net Gross Net Period Carrying Accumulated Carrying Carrying Accumulated Carrying (Years) Amount Amortization Amount Amount Amortization Amount Other Intangibles (amount in thousands) Patents 5.8 $ 753 $ ( 435 ) $ 318 $ 710 $ ( 387 ) $ 323 Software 3 666 ( 591 ) 75 667 ( 529 ) 138 Total $ 1,419 $ ( 1,026 ) $ 393 $ 1,377 $ ( 916 ) $ 461 The intangible assets noted above were amortized on a straight-line basis over their useful lives. The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets: SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE Amount Year (In thousands) 2025 $ 56 2026 49 2027 30 2028 21 2029 18 Amortization expense recorded for definite-lived intangible assets was approximately $ 117,000 and $ 198,000 , for the years ended December 31, 2024, and 2023, respectively. 54 NOTE 6 CAPITAL STOCK, STOCK PLANS, WARRANTS AND STOCK BASED COMPENSATION Stock Option Plans The Company’s 2003 Outside Directors Stock Plan, as amended (the “2003 Plan”) provides for the grant of Non-Qualified Stock Options (“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”). The 2003 Plan also provides for the grant of an NQSO to purchase up to 10,000 shares of the Company’s Common Stock for each Eligible Director upon each re-election to the Board, and the grant of an NQSO to purchase up to 20,000 shares of the Company’s Common Stock upon initial election. NQSOs granted prior to July 20, 2021 have a vesting period of six months from the date of grant and a term of 10 years, with an exercise price equal to the closing trade price on the date prior to grant date. NQSOs granted on and after July 20, 2021 vest 25 % per year, beginning on the first anniversary date of the grant and also have a term of 10 years, with an exercise price equal to the closing trade price on the date prior to grant date. Additionally, the 2003 Plan provides 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 to each Eligible Director is determined based on 75% of the market value as defined in the plan (the Company recognizes 100% of the market value of the shares issued). As of December 31, 2024, the 2003 Plan had available for issuance 204,133 shares. The Company’s 2017 Stock Option Plan, as amended (the “2017 Plan”), authorizes the grant of options to officers and employees of the Company, including any employee who is also a member of the Board, as well as to consultants of the Company. The 2017 Plan authorizes an aggregate grant of 1,740,000 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. As of December 31, 2024, the 2017 Plan had available for issuance 684,000 shares. Stock Options to Employees and Outside Director On January 18, 2024, the Company granted ISOs to certain employees under the 2017 Plan, for the purchase of up to an aggregate of 45,000 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 $ 7.75 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant. On July 18, 2024, the Company granted ISOs to certain employees under the 2017 Plan, for the purchase of up to an aggregate of 35,500 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 $ 10.05 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant. On July 18, 2024, the Company issued a NQSO to each of the Company’s seven reelected outside (non-management) directors for the purchase, under the Company’s 2003 Outside Directors Stock Plan (the “2003 Plan”), of up to 10,000 shares of the Company’s Common Stock. Dr. Louis Centofanti and Mark Duff, each an executive officer of the Company as well as a director, were not eligible to receive an option under the 2003 Plan. Each NQSO granted is for a contractual term of ten years with one-fourth vesting annually over a four-year period . The exercise price of each NQSO is $ 10.20 per share, which was equal to the fair market value of the Company’s Common Stock on the day preceding the grant date, in accordance with the 2003 Plan. 55 On January 19, 2023, the Company granted ISOs to certain employees under the 2017 Plan, for the purchase 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 Chief Executive Officer (“CEO”); 40,000 shares for the Chief Financial Officer (“CFO”); 30,000 shares for the Executive Vice President (“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 each 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. On July 20, 2023, the Company issued a NQSO to each of the Company’s seven reelected outside (non-management) directors under the 2003 Plan, for the purchase of up to 10,000 shares of the Company’s Common Stock. The CEO and EVP of Strategic Initiatives, each an executive officer of the Company as well as a director, were not eligible to receive an option under the 2003 Plan. Each NQSO granted is for a contractual term of ten years with one-fourth vesting annually over a four-year period . The exercise price of each NQSO is $ 9.81 per share, which was equal to the fair market value of the Company’s Common Stock on the day preceding the grant date, in accordance with the 2003 Plan. On October 19, 2023, the Company granted an ISO to an employee under the 2017 Plan, for the purchase of up to 5,000 shares of the Company’s Common Stock. The 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 $ 9.62 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant. During 2024, the Company issued an aggregate 38,749 shares of its Common Stock from cashless exercises of options for the purchase of 64,000 shares of the Company’s Common Stock ranging from $ 3.15 per share to $ 7.005 per share. Additionally, the Company issued 33,700 shares of its Common Stock from the cash exercises of options for the purchase of 33,700 shares of the Company’s Common Stock, at exercise prices ranging from $ 3.70 per share to $ 7.005 per share, resulting in proceeds of approximately $ 187,000 . Income tax benefit associated with stock options exercised with cash during 2024 was approximately $ 17,000 . During 2023, the Company issued an aggregate 185,549 shares of its Common Stock from cashless exercises of options for the purchases of 280,000 shares of the Company’s Common Stock, at exercise prices ranging from $ 3.60 per share to $ 7.005 per share. Additionally, the Company issued 40,400 shares of its Common Stock from the cash exercise of options for the purchase of 40,400 shares of the Company’s Common Stock, at exercise prices ranging from at $ 2.785 per share to $ 7.005 per share resulting in proceeds of approximately $ 164,000 . Income tax benefit associated with stock options exercised with cash during 2023 was approximately $ 25,000 . 56 The Company estimates fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted during 2024 and 2023, and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows: SCHEDULE OF STOCK OPTIONS VALUATION ASSUMPTIONS 2024 2023 Employee Stock Options Granted 2024 2023 Weighted-average fair value per share $ 4.90 2.07 Risk -free interest rate (1) 4.04 %- 4.11 % 3.48 %- 4.98 % Expected volatility of stock (2) 59.07 %- 59.10 % 55.19 %- 58.78 % Dividend yield (3) None None Expected option life (years) (4) 5.2 - 5.5 5.0 - 5.6 2024 2023 Outside Director Stock Options Granted 2024 2023 Weighted-average fair value per share $ 6.87 $ 6.46 Risk -free interest rate (1) 4.20 % 3.85 % Expected volatility of stock (2) 56.00 % 54.31 % Dividend yield (3) None None Expected option life (years) (4) 9.5 10.0 (1) The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option. (2) The expected volatility is based on historical volatility from the Company’s traded Common Stock over the expected term of the option. (3) The Company has never paid any dividends on its Common Stock. Our Loan Agreement prohibits the Company from paying any cash dividends without prior approval from our lender. (4) The expected option life is based on historical exercises and post-vesting data. The following table summarizes stock-based compensation recognized (within SG&A expenses) for fiscal years 2024 and 2023. SCHEDULE OF SHARE-BASED COMPENSATION, ALLOCATION OF RECOGNIZED PERIOD COSTS 2024 2023 Year Ended 2024 2023 Employee Stock Options $ 358,000 $ 367,000 Director Stock Options 298,000 181,000 Total $ 656,000 $ 548,000 Income tax benefits associated with stock-based compensation expense were approximately $ 71,000 and $ 45,000 , respectively, for the years ended December 31, 2024, and 2023. As December 31, 2024, the Company had approximately $ 1,902,000 of total unrecognized compensation costs related to unvested options for employee and directors. The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately 3.0 years. 57 Summary of Stock Option Plans The summary of the Company’s total plans as of December 31, 2024, and 2023, and changes during the period then ended are presented as follows: SCHEDULE OF STOCK OPTIONS ROLL FORWARD Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (4) Options outstanding January 1, 2024 994,500 $ 5.57 Granted 150,500 $ 9.43 Exercised ( 97,700 ) $ 5.16 $ 662,524 Forfeited ( 46,400 ) $ 5.93 Options outstanding end of period (1) 1,000,900 $ 6.18 4.7 $ 4,894,634 Options exercisable at December 31, 2024 (2) 401,000 $ 5.62 3.9 $ 2,183,072 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (4) Options outstanding January 1, 2023 1,018,400 $ 5.02 - Granted 370,000 $ 3.15 Exercised ( 320,400 ) $ 3.72 $ 2,335,042 Forfeited/expired ( 73,500 ) $ 3.77 Options outstanding end of period (2) 994,500 $ 5.57 5.0 $ 2,417,081 Options exercisable at December 31, 2023 (3) 319,300 $ 5.46 4.1 $ 766,037 (1) Options with exercise prices ranging from $ 3.15 to $ 10.20 (2) Options with exercise prices ranging from $ 3.15 to $ 9.81 (3) Options with exercise prices ranging from $ 3.15 to $ 7.50 (4) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price The summary of the Company’s nonvested options as of December 31, 2024, and changes during the period then ended are presented as follows: SCHEDULE OF NON VESTED OPTIONS Weighted Average Grant-Date Shares Fair Value Non-vested options January 1, 2024 675,200 $ 3.12 Granted 150,500 5.81 Vested ( 181,800 ) 3.15 Forfeited ( 44,000 ) 2.06 Non-vested options at December 31, 2024 599,900 $ 3.79 Warrant In connection with a $ 2,500,000 loan that the Company received from Mr. Robert Ferguson (the “Ferguson Loan”) on April 1, 2019, the Company issued a warrant to Mr. Ferguson (the “Ferguson Warrant”) for the purchase of up to 60,000 shares of our Common Stock at an exercise price of $ 3.51 per share. The Ferguson Loan was paid in full in December 2020. Upon Mr. Ferguson’s death, the Ferguson Warrant was transferred equally to Mr. Ferguson’s two heirs with each holding a Warrant for the purchase of up to 30,000 shares of the Company’s Common Stock, as permitted under the Ferguson Warrant. One of the Warrant was exercised in the fourth quarter of 2023 and the remaining Warrant was exercised in the first quarter of 2024. Proceeds received by the Company was approximately $ 105,000 for each of the Warrants exercised. In connection with the Company’s sales of its Common Stock in May 2024 and December 2024, the Company issued warrants to purchase an aggregate 188,038 shares of its Common Stock at exercise prices of $ 11.50 and $ 12.19 per share (see “Note 17 – Sales of Common Stock” for a discussion of these warrants). These warrants remained outstanding as of December 31, 2024. Common Stock Issued for Services The Company issued a total of 46,947 and 65,854 shares of its Common Stock in 2024 and 2023, respectively, under the Company’s 2003 Plan to its outside directors as compensation for serving on its Board. As a member of the Board, each director elects to receive either 65% or 100% of the director’s fee in shares of the Company’s Common Stock. The number of shares received is calculated based on 75% of the fair market value of our Common Stock determined on the business day immediately preceding the date that the quarterly fee is due. The balance of each director’s fee, if any, is payable in cash. The Company recorded approximately $ 480,000 and $ 477,000 in years ended 2024 and 2023, respectively, in compensation expense (included in SG&A expenses) for the portion of director fees earned in the Company’s Common Stock. Shares Reserved As of December 31, 2024, the Company has reserved approximately 1,000,900 shares of its Common Stock for future issuance under all of the option arrangements. 58 NOTE 7 (LOSS) INCOME PER SHARE The 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 2024 2023 Years Ended (Amounts in Thousands, Except for Per Share Amounts) December 31, 2024 2023 (Loss) income per common share from continuing operations (Loss) income from continuing operations, net of taxes $ ( 19,569 ) $ 918 Basic (loss) income per share $ ( 1.30 ) $ .07 Diluted (loss) income per share $ ( 1.30 ) $ .07 Loss per common share from discontinued operations, Loss from discontinued operations, net of taxes $ ( 410 ) $ ( 433 ) Basic loss per share $ ( .03 ) $ ( .03 ) Diluted loss per share $ ( .03 ) $ ( .03 ) Net (loss) income per common share Net (loss) income $ ( 19,979 ) $ 485 Basic (loss) income per share $ ( 1.33 ) $ .04 Diluted (loss) income per share $ ( 1.33 ) $ .04 Weighted average shares outstanding: Basic weighted average shares outstanding 15,072 13,506 Add: dilutive effect of stock options — 215 Add: dilutive effect of warrants — 18 Diluted weighted average shares outstanding 15,072 13,739 For year ended December 31, 2024, 983,267 weighted average shares of common stock underlying options and warrants were excluded from the computation of diluted EPS because the effect would be anti-dilutive. For the year ended December 31, 2023, 32,658 weighted average shares of common stock underlying options were excluded from the computation of diluted EPS because the effect would be anti-dilutive. 59 NOTE 8 DISCONTINUED OPERATIONS The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and earlier, as well as three previously closed locations. The Company incurred losses from discontinued operations of $ 410,000 (net of tax benefit of $ 149,000 ) and $ 433,000 (net of tax benefit of $ 117,000 ) for the years ended December 31, 2024 and 2023, respectively. On June 1, 2024, the Company’s PFSG subsidiary entered into a lease agreement with a tenant leasing a portion of the PFSG property. The lease is for a two-years term and requires monthly payment by the lessee of approximately $ 8,500 for the first year and approximately $ 8,755 for the second year. The lessee is responsible for all expenses relating to the permitted usage of the property, including all utilities, a portion of the annual real estate taxes and is responsible for maintaining insurance coverage, among other things. The following table presents the major class of assets of discontinued operations as of December 31, 2024, and December 31, 2023. No assets and liabilities were held for sale at each of the periods noted. SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATION BALANCE SHEET December 31, December 31, (Amounts in Thousands) 2024 2023 Current assets Other assets $ 20 $ 13 Total current assets 20 13 Long-term assets Property, plant and equipment, net (1) 130 81 Total long-term assets 130 81 Total assets $ 150 $ 94 Current liabilities Accounts payable $ 90 $ 80 Accrued expenses and other liabilities 153 128 Environmental liabilities 1 61 Total current liabilities 244 269 Long-term liabilities Closure liabilities 179 169 Environmental liabilities 766 784 Total long-term liabilities 945 953 Total liabilities $ 1,189 $ 1,222 (1) net of accumulated depreciation of $ 10,000 for each period presented. Environmental Liabilities The Company has three remediation projects, which are currently in progress relating to our PFD, PFM and PFSG subsidiaries, all within our discontinued operations. The Company divested PFD in 2008; however, the environmental liability of PFD was retained by the Company upon the divestiture 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. As of December 31, 2024, the Company had total accrued environmental remediation liabilities of $ 767,000 , a decrease of $ 78,000 from the December 31, 2023 balance of $ 845,000 . The decrease represents payments for our PFSG remediation project. As of December 31, 2024, $ 1,000 of the total accrued environmental liabilities was recorded as current. The current and long-term accrued environmental liabilities as of December 31, 2024, are summarized as follows (in thousands). SCHEDULE OF CURRENT AND LONG TERM ACCRUED ENVIRONMENTAL LIABILITY Current Long-term Accrual Accrual Total PFD — $ 60 $ 60 PFM — 15 15 PFSG 1 691 692 Total liability $ 1 $ 766 $ 767 60 NOTE 9 LONG - TERM DEBT Long-term debt consists of the following as of December 31, 2024, and December 31, 2023: SCHEDULE OF LONG TERM DEBT (Amounts in Thousands) December 31, 2024 December 31, 2023 Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2027. Effective interest rates for 2024 and 2023 were 10.5% and 9.7%, 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, 2027 . Effective interest rates for 2024 and 2023 were 10.5 % and 9.7 %, respectively (1) $ — $ — Term Loan 1 dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2027 . Effective interest rates for 2024 and 2023 were 9.5 % and 9.2 %, respectively (1) — 213 Term Loan 2 dated July 31, 2023, payable in equal monthly installments of principal, balance due on May 15, 2027 . Effective interest rates for 2024 and 2023 were 9.3 % and 9.9 %, respectively (1) 1,834 2,333 Capital Loan dated May 4, 2021, payable in equal monthly installments of principal, balance due on May 15, 2027 . Effective interest rates for 2024 and 2023 were were 8.7 % and 8.6 %, respectively (1) 253 358 Debt Issuance Costs ( 178 ) (2) ( 170 ) (2) Notes Payable up to 2044, with annual interest rates ranging from 8.10 % to 10.7 % (3) 406 14 Total debt 2,315 2,748 Less current portion of long-term debt 550 773 Long-term debt $ 1,765 $ 1,975 (1) Our revolving credit facility is collateralized by our accounts receivable, and our term loans and capital line are collateralized by our property, plant, and equipment. (2) Aggregate unamortized debt issuance costs in connection with the Company’s Credit Facility, which consists of the revolving credit, Terms Loans and Capital Loan, as applicable. (3) Includes a promissory note entered into on July 24, 2024, in connection with the purchase of the Company’s EWOC property. See a discussion of this note below which include a variable interest rate provision. Revolving Credit and Term Loan Agreement The Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated May 8, 2020, which has since been amended from time to time, with PNC National Association (“PNC” and “lender”), acting as agent and lender (the “Loan Agreement”). The Loan Agreement provides the Company with a credit facility with a maturity date of May 15, 2027 (the “Credit Facility”) as follows: (a) up to $ 12,500,000 revolving credit (“revolving credit”), which borrowing capacity is subject to eligible receivables (as defined) and reduced by outstanding standby letters of credit ($ 3,200,000 as of December 31, 2024) and borrowing reductions that the Company’s lender may impose from time to time ($ 750,000 as of December 31, 2024); (b) a term loan (“Term Loan 1”) of approximately $ 1,742,000 , requiring monthly installments of $ 35,547 (Term Loan 1 was paid off by the Company in June 2024); (c) a term loan (“Term Loan 2”) of $ 2,500,000 , requiring monthly installments of $ 41,667 ; and (d) a capital expenditure loan (“Capital Loan”) of approximately $ 524,000 , requiring monthly installments of principal of approximately $ 8,700 plus interest that commenced on June 1, 2022. Pursuant to the Loan Agreement, payments of annual interest rates are as follows: (i) interest due on the revolving credit is at prime (7.50% at December 31, 2024) plus 2% or Secured Overnight Finance Rate (“SOFR”) (as defined in the Loan Agreement) plus 3.00% plus an SOFR Adjustment applicable for an interest period selected by the Company; (ii) interest due on each Term Loan 1 and the Capital Loan was/is at prime plus 2.50% or SOFR plus 3.50% plus an SOFR Adjustment applicable for an interest period selected by the Company; and (iii) interest due on Term Loan 2 is at prime plus 3% or SOFR plus 4.00% plus an SOFR Adjustment applicable for an interest period selected by the Company. 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 the Company. 61 The Company agreed to pay PNC 0.5% of the total financing under the Loan Agreement if the Company pays off its obligations to its lender after July 31, 2024, to and including July 31, 2025. No early termination fee shall apply if the Company pays off its obligations under Loan Agreement after July 31, 2025. On May 8, 2024, and November 12, 2024, the Company entered into amendments to its Loan Agreement with its lender which provided the following, among other things: ● removed the quarterly Fixed Charge Coverage Ratio (“FCCR”) testing requirement for the first, second and third quarters of 2024; ● reinstated the quarterly FCCR testing requirement starting in the fourth quarter of 2024, and revises the methodology to be used in calculating the FCCR as follows (with no change to the minimum 1.15:1 ratio requirement): FCCR for the fourth quarter is to be determined based on financial results for the three-months period ending December 31, 2024; FCCR for the first quarter of 2025 is to be determined based on financial results for the six-months period ending March 31, 2025; FCCR for the second quarter of 2025 is to be determined based on financial results for the nine-months period ending June 30, 2025; and FCCR for the third quarter of 2025 and each fiscal quarter thereafter is to be determined based on financial results for a trailing twelve-months period ending basis; ● requires maintenance of a minimum of $ 3,000,000 in daily Liquidity (defined as borrowing availability under the revolving credit plus cash in the MMDA maintained with the Company’s lender) starting June 30, 2024, through September 29, 2025 (which we have met to date); and ● in the event the Company is able to achieve its minimum quarterly FCCR requirement utilizing its financial results based on a trailing twelve-months period starting with the quarter ended September 30, 2024 (which the Company did not achieve as of December 31, 2024), the maintenance of a minimum of $ 3,000,000 in daily Liquidity requirement as discussed above will be removed. Any subsequent fiscal quarter testing of the FCCR will revert back to a trailing twelve-months period method. In connection with the amendments, the Company paid its lender fees totaling $ 37,500 which is being amortized over the remaining term of the Loan Agreement as interest expense-financing fees. The Company’s Credit Facility under its Loan Agreement, as amended, with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under 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, as amended, 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 its FCCR requirement for the first, second and third quarters of 2024 pursuant to the amendments dated May 8, 2024, and November 12, 2024, to its Loan Agreement as discussed above. The Company was also not required to perform testing of its FCCR requirement for the fourth quarter of 2024 pursuant to the amendment dated March 11, 2025, to its Loan Agreement, as amended (See “Note 18 – Subsequent Events – Credit Facility” for a discussion of this amendment which removed the testing requirement of the FCCR for the fourth quarter of 2024, among other things). Otherwise, the Company met all of its other financial covenant requirements in each of the quarters in 2024. As of December 31, 2024, the Company had no outstanding borrowing under its revolving credit and its Liquidity under the Credit Facility was approximately $ 33,905,000 . 62 EWOC Promissory Note On July 24, 2024, the Company purchased the property which its EWOC facility operates on pursuant to a Purchase and Sales Agreement dated April 30, 2024, for a purchase price of $ 425,000 . The Company paid $ 63,750 in cash and entered into a promissory note dated July 24, 2024, in an amount of $ 361,250 with a bank (the “lender”) for the remaining balance of the purchase price, with a maturity date in twenty years or July 24, 2044 (the “Note”). For the first five years starting August 24, 2024, monthly payments under the Note will consists of approximately $ 3,100 which include an annual fixed interest rate of 8.10 %. Monthly payments under the Note will then be adjusted at the end of years five, ten and fifteen, with interest calculated based on the weekly average five-year US Treasury Securities Rate plus 3.0 %. Under no circumstances will the variable interest rates on the Note be less than 4.0 % per annum or more than (except in the case of default) the lesser of 20.5 % per annum or the maximum rate allowed by applicable law. The Company agreed to pay the lender 3.0 % of the total outstanding principal balance under the Note in the event the Company pays off its obligations during the first year of the Note. The prepayment penalty rate will be reduced by 1.0 % at each subsequent annual anniversary of the Note. No prepayment penalty will apply in the event the Company pays off the Note on the fourth anniversary of the Note or thereafter. The property was previously accounted for under the Company’s operating leases. Maturities of Long-Term Debt The following table details the amount of the maturities of long-term debt maturing in future years as of December 31, 2024 (excludes unamortized debt issuance costs of $ 178,000 ). SCHEDULE OF MATURITIES OF LONG-TERM DEBT Year ending December 31: (In thousands) 2025 $ 626 2026 620 2027 894 2028 18 2029 20 2030 and beyond 315 Total $ 2,493 63 NOTE 10 ACCRUED EXPENSES Accrued expenses include the following (in thousands) at December 31: SCHEDULE OF ACCRUED EXPENSES 2024 2023 Salaries and employee benefits $ 2,985 $ 4,120 Accrued sales, property and other tax 270 477 Interest payable 18 23 Insurance payable 1,424 1,390 Other 414 550 Total accrued expenses $ 5,111 $ 6,560 NOTE 11 ACCRUED CLOSURE COSTS AND ARO Accrued closure costs represent our estimated environmental liability to clean up our fixed-based regulated facilities as required by our permits, in the event of closure. Changes to reported closure liabilities (current and long-term) for the years ended December 31, 2024, and 2023, were as follows: SCHEDULE OF CHANGE IN ASSET RETIREMENT OBLIGATION Amounts in thousands Balance as of December 31, 2022 $ 7,966 Accretion expense 462 Spending ( 298 ) Balance as of December 31, 2023 $ 8,130 Accretion expense 433 Spending ( 223 ) Balance as of December 31, 2024 $ 8,340 As of December 31, 2024, and 2023, the current portion of the closure liabilities totaled approximately $ 50,000 and $ 79,000 , respectively, which reflect closure liabilities for our EWOC facility. The spending made in each of the years 2024 and 2023 was primarily for our EWOC facility. The reported closure asset or ARO, is reported as a component of “Net Property and equipment” in the Consolidated Balance Sheets as of December 31, 2024, and 2023 with the following activity for the years ended December 31, 2024, and 2023: SCHEDULE OF ASSET RETIREMENT OBLIGATIONS Amounts in thousands Balance as of December 31, 2022 $ 4,101 Amortization of closure and post-closure asset ( 878 ) Balance as of December 31, 2023 $ 3,223 Amortization of closure and post-closure asset ( 202 ) Balance as of December 31, 2024 $ 3,021 64 NOTE 12 INCOME TAXES The components of (loss) income before income tax expense by jurisdiction for continuing operations for the years ended December 31, consisted of the following (in thousands): SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE 2024 2023 United States ( 15,119 ) 622 Canada ( 75 ) 521 United Kingdom 60 ( 208 ) Total (loss) income before tax expense $ ( 15,134 ) $ 935 The components of current and deferred federal and state income tax expense (benefit) for continuing operations for the years ended December 31, consisted of the following (in thousands): SCHEDULE OF COMPONENTS OF INCOME TAX (BENEFIT) EXPENSE 2024 2023 Federal income tax (benefit) expense - current ( 13 ) 76 Federal income tax expense (benefit) - deferred 3,897 ( 28 ) State income tax expense - current — 7 State income tax expense (benefit) - deferred 551 ( 38 ) Total income tax expense $ 4,435 $ 17 An overall reconciliation between the expected tax expense using the federal statutory rate of 21 % for each of the years ended 2024 and 2023 and the expense for income taxes from continuing operations as reported in the accompanying Consolidated Statement of Operations is provided below (in thousands). SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 2024 2023 Federal tax (benefit) expense at statutory rate $ ( 3,178 ) $ 196 State tax (benefit) expense, net of federal benefit ( 582 ) 50 Difference in foreign rate ( 2 ) 20 Permanent items 91 116 Change in deferred tax rates 23 51 Reserve for uncertain tax positions 30 81 Tax credits ( 148 ) ( 318 ) Stock-based compensation 66 100 Provision-to-return adjustments ( 36 ) 155 Other ( 23 ) — Increase (decrease) in valuation allowance 8,194 ( 434 ) Income tax expense $ 4,435 $ 17 The global intangible low-taxed income (“GILTI”) provisions under the Tax Cuts and Jobs Act of 2017 (the “TCJA”) require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company has elected to account for GILTI tax in the period in which it is incurred and therefore, has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended December 31, 2024 and 2023. As the Canada and United Kingdom foreign subsidiaries are in a combined loss position for 2024, no GILTI inclusion is expected for these entities for the current year. The Company had temporary differences and net operating loss carry forwards from both our continuing and discontinued operations, which gave rise to deferred tax assets as of December 31, 2023. No deferred tax assets remained as of December 31, 2024, as the Company provided a full valuation allowance against its U.S. federal and state deferred tax assets in 2024. Table below reflects deferred tax asset balances as of December 31, 2024, and 2023 (in thousands): SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2024 2023 Deferred tax assets: Net operating losses $ 13,502 $ 9,876 Environmental and closure reserves 2,306 2,332 Lease liability 422 525 Capital loss carryforward 753 780 Accrued expenses 1,189 1,186 R&D cost capitalization 1,115 905 Tax credits 318 200 Deferred tax liabilities: Depreciation and amortization ( 2,985 ) ( 2,995 ) Indefinite lived intangible assets ( 1,906 ) ( 1,823 ) Right-of-use lease asset ( 404 ) ( 510 ) Prepaid expenses ( 27 ) ( 46 ) Deferred tax assets, gross 14,283 10,430 Valuation allowance ( 14,283 ) ( 6,131 ) Net deferred income tax asset $ — $ 4,299 65 The Company records a valuation allowance against its net deferred tax asset to the extent it determines it is more likely than not that such asset will not be realized in the future. The Company regularly evaluates the probability that its deferred tax assets will be realized and determines whether valuation allowances or adjustments thereto are needed. This determination involves judgement and the use of estimates and assumptions, including expectations of future taxable income and tax planning strategies. The Company applies judgment to consider the relative impact of negative and positive evidence, and the weight given to negative and positive evidence is commensurate with the extent to which such evidence can be objectively verified. Based on the Company’s evaluation of all available positive and negative evidence, and with greater weight placed on the objectively verifiable evidence which primarily included the Company’s three-year cumulative losses, the Company determined that it is more likely than not that the Company’s net U.S. deferred tax asset will not be realized. As a result, in 2024, the Company provided a full valuation allowance against its U.S. federal and state deferred tax assets and recorded an income tax expense in the amount of approximately $ 8,194,000 . The Company continues to maintain a valuation allowance against foreign tax attributes that may not be realized. The Company has estimated net operating loss carryforwards (“NOLs”) for federal and state income tax purposes of approximately $ 33,470,000 and $ 81,775,000 , respectively, as of December 31, 2024. These NOLs can be carried forward and applied against future taxable income, if any, and expire in various amounts starting in 2024 . All of our federal NOLs were generated after December 31, 2017 and thus do not expire. The Company accounts for uncertainties in income tax pursuant to ASC 740. A reconciliation of the beginning and ending amount of our unrecognized tax expense is summarized as follows (in thousands): SCHEDULE OF RECOGNIZED TAX EXPENSES 2024 2023 Balances at beginning of year $ 81 $ — Addition related to R&D tax credit 30 81 Balances at end of the year $ 111 $ 81 The Company does not include interest and penalties related to income taxes, including uncertain tax positions, within the provision for income taxes due to immateriality. The tax years 2021 through 2023 remain open to examination by taxing authorities in the jurisdictions in which the Company operates. The Company had $ 0 and $ 44,000 federal income tax payable for the years ended December 31, 2024, and 2023, respectively. Beginning 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 each tax years 2024 and 2023, the Company has capitalized $ 2,240,000 of research and development expenses. While Management believes the estimate for 2024 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, 2024. 66 NOTE 13 COMMITMENTS AND CONTINGENCIES Hazardous Waste In 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. 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. Legal Matters In 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. Tetra Tech EC, Inc. (“Tetra Tech”) During July 2020, Tetra Tech EC, Inc. (“Tetra Tech”) filed a complaint in the U.S. District Court for the Northern District of California (the “Court”) against CH2M Hill, Inc. (“CH2M”) and four subcontractors of CH2M, including the Company (“Defendants”). The complaint alleges various claims, including a claim for negligence, negligent misrepresentation, equitable indemnification and related business claims against all Defendants related to alleged damages suffered by Tetra Tech in respect of certain draft reports prepared by Defendants at the request of the U.S. Navy as part of an investigation and review of certain whistleblower complaints about Tetra Tech’s environmental restoration at the Hunter’s Point Naval Shipyard in San Francisco. CH2M was hired by the Navy in 2016 to review Tetra Tech’s work. CH2M subcontracted with environmental consulting and cleanup firms Battelle Memorial Institute, Cabrera Services, Inc., SC&A, Inc. and the Company to assist with the review, according to the complaint. The Company’s insurance carrier is providing a defense on our behalf in connection with this lawsuit, subject to a $ 100,000 self-insured retention and the terms and limitations contained in the insurance policy. The 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 Tetra Tech. Michael O’Neill On November 25, 2024, purported shareholder Michael O’Neill filed a complaint in the Court of Chancery of the State of Delaware against the Company and all current directors of the Company, asserting individual and class action claims for alleged breach of contract and breach of fiduciary duty. The case is styled Michael O’Neill v. Perma-Fix Environmental Services, Inc., et al., C.A. No. 2024-1211-PAF. The complaint purports to be brought by the named plaintiff individually and on behalf of all “similarly situated Perma-Fix stockholders.” According to the complaint, defendants allegedly made materially false and misleading statements in its proxy statement filed with the Securities and Exchange Commission on June 8, 2023 regarding the effect of broker non-votes. In particular, the complaint alleges that defendants incorrectly stated in the proxy statement that broker non-votes would have no effect on the vote solicited to approve an amendment to the Company’s 2017 Stock Option Plan to increase by 600,000 shares the number of shares of Common Stock issuable under the plan, resulting in an alleged defective approval of the plan amendment. As of the date of this Form 10-K, the Company has not issued any options under the plan relating to the additional shares included in the plan amendment. The Company believes that the complaint is without merit. The Company and the individual defendants intend to vigorously defend against the complaint. The Company’s insurance carrier is providing a defense in connection with this lawsuit, subject to a $ 1,000,000 self-insured retention and the terms and limitations contained in the insurance policy. Insurance The Company has a 25 -year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG, which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The 2003 Closure Policy, as amended, provides for a maximum allowable coverage of $ 28,177,000 which includes available capacity to allow for annual inflation and other performance and surety bond requirements. Total coverage under the 2003 Closure Policy, as amended, was $ 23,379,000 as of December 31, 2024. As of December 31, 2024, and 2023, finite risk sinking funds contributed by the Company related to the 2003 Closure Policy which is included in other long term assets on the accompanying Consolidated Balance Sheets totaled $ 12,680,000 and $ 12,074,000 , respectively, which included interest earned of $ 3,209,000 and $ 2,603,000 on the finite risk sinking funds as of December 31, 2024 and 2023, respectively. Interest income for the year ended 2024 and 2023 was approximately $ 606,000 and $ 504,000 , respectively. If the Company so elects, AIG is obligated to pay the Company an amount equal to 100 % of the finite risk sinking fund account balance in return for complete release of liability from both the Company and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements. Letter of Credits and Bonding Requirements From time to time, the Company is required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. As of December 31, 2024, the total amount of standby letters of credit outstanding was approximately $ 3,200,000 and the total amount of bonds outstanding was approximately $ 20,930,000 . 67 NOTE 14 PROFIT SHARING PLAN The Company adopted a 401(k) Plan in 1992, which is intended to comply with Section 401 of the Internal Revenue Code and the provisions of the Employee Retirement Income Security Act of 1974. All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) Plan. Eligibility is immediate upon employment but enrollment is only allowed during four quarterly open periods of January 1, April 1, July 1, and October 1. Participating employees may make annual pretax contributions to their accounts up to 100 % of their compensation, up to a maximum amount as limited by law. The Company, at its discretion, may make matching contributions of 25 % based on the employee’s elective contributions. Company contributions vest over a period of five years . During 2024 and 2023, the Company contributed approximately $ 580,000 and $ 576,000 in 401(k) matching funds, respectively. NOTE 15 RELATED PARTY TRANSACTIONS David Centofanti serves as our Vice President of Information Systems. For such position, he received annual compensation of $ 191,000 for each of the years 2024 and 2023. David Centofanti is the son of our EVP of Strategic Initiatives and a Board member. NOTE 16 SEGMENT REPORTING In accordance with ASC 280, “Segment Reporting”, the Company defines an operating segment as a business activity: ● 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; and ● for which discrete financial information is available. The Company has two reporting segments, consisting of the Treatment and Services Segments, which are primarily based on a service offering approach (see “Note 1- Description of Business and Basis of Presentation” for the type of services from which each of the Company’s reportable segments derives its revenue). The Company’s reporting segments exclude our corporate headquarter which serves to support its two reporting segments through various functions, such as our executives, finance, treasury, human resources, accounting, and legal departments. Financial results for the corporate headquarter are not considered by the CODM in evaluating the performance of the reportable segments. Our reporting segment also excludes our discontinued operations (see “Note 8 – Discontinued Operations”) which do not generate revenues. The Company’s CODM, which is its chief executive officer, evaluates the performance of the Treatment and Services segments and allocates resources (including financial or capital resources) to each reporting segment based on revenue and (loss) income from operations by comparing actual results for these metrics to budgeted and forecasted amounts for these metrics on a monthly, quarterly and year-to-date basis. The Company’s CODM does not evaluate and allocate resources for the reportable segments using assets; therefore, the Company does not disclosure assets for its reporting segments. The table below summarizes (loss) income from operations for the Company’s two reporting segments and its corporate headquarter and provides reconciliation of such financial metric to the Company’s consolidated totals for the years 2024 and 2023 for our continuing operations. Significant segment expenses that are included in the measure of segment profit or losses for each reportable segment, and regularly provided to the CODM include payroll and benefit, material and supplies, disposal and transportation and subcontract expenses and are reflected separately, where applicable (in thousands). SCHEDULE OF SEGMENT REPORTING INFORMATION Segment Reporting as of and for the year ended December 31, 2024 Treatment Services Segments Total Corporate (1) Consolidated Total Revenue from external customers $ 34,953 $ 24,164 $ 59,117 (4)(5) $ — $ 59,117 Cost of Goods Sold: Payroll and benefits expenses 16,257 9,494 25,751 — 25,751 Material and supplies expenses 4,074 — 4,074 — 4,074 Disposal expenses 5,317 — 5,317 — 5,317 Transportation expenses 1,118 — 1,118 — 1,118 Subcontract expenses — 7,152 7,152 — 7,152 Other cost of goods sold (2) 9,297 6,406 15,703 — 15,703 Total cost of goods sold 36,063 23,052 59,115 — 59,115 Gross (loss) profit ( 1,110 ) 1,112 2 — 2 Selling, general and administrative expenses (“SG&A”): Payroll and benefits 2,858 2,413 5,271 3,296 8,567 Other SG&A (3) 1,432 892 2,324 3,600 5,924 Total SG&A 4,290 3,305 7,595 6,896 14,491 Research and development 842 111 953 219 1,172 Loss on disposal of property and equipment 18 3 21 — 21 Loss from operations $ ( 6,260 ) $ ( 2,307 ) $ ( 8,567 ) $ ( 7,115 ) ( 15,682 ) Interest income 921 Interest expense ( 473 ) Interest expense-financing fees ( 66 ) Other income 166 Loss from continuing operations before taxes ( 15,134 ) Income tax expense 4,435 Loss from continuing operations, net of taxes $ ( 19,569 ) 68 Segment Reporting as of and for the year ended December 31, 2023 Treatment Services Segments Total Corporate (1) Consolidated Total Revenue from external customers $ 43,477 $ 46,258 $ 89,735 (4)(5) $ — $ 89,735 Cost of goods sold: Payroll and benefit expenses 14,655 11,800 26,455 — 26,455 Material and supplies expenses 3,747 — 3,747 — 3,747 Disposal expenses 6,576 — 6,576 — 6,576 Transportation expenses 1,457 — 1,457 — 1,457 Subcontract expenses — 15,555 15,555 — 15,555 Other cost of goods sold (2) 10,166 9,410 19,576 — 19,576 Total cost of goods sold 36,601 36,765 73,366 — 73,366 Gross profit 6,876 9,493 16,369 — 16,369 Selling, general and administrative expenses (“SG&A”): Payroll and benefits 2,438 2,662 5,100 3,812 8,912 Other SG&A (3) 1,811 834 2,645 3,418 6,063 Total SG&A 4,249 3,496 7,745 7,230 14,975 Research and development 418 38 456 105 561 Loss on disposal of property and equipment — 77 77 — 77 Income (loss) from operations $ 2,209 $ 5,882 $ 8,091 $ ( 7,335 ) 756 Interest income 606 Interest expense ( 323 ) Interest expense-financing fees ( 93 ) Other expense ( 11 ) Income from continuing operations before taxes 935 Income tax expense 17 Income from continuing operations, net of taxes $ 918 (1) Amounts reflect the activity for corporate headquarters not included in the segment reporting information. (2) Other cost of goods sold for each reportable segment includes: Treatment - lab, regulatory, maintenance, depreciation and amortization, travel, outside services and general expenses. Services - material and supplies, disposal and transportation, lab, regulatory, maintenance, depreciation and amortization, travel, outside services and general expenses. (3) Other SG&A for each reportable segment and Corporate includes: Treatment -depreciation and amortization, travel, outside services, maintenance and general expenses. Services - travel, outside services, maintenance and general expenses. Corporate -maintenance, depreciation and amortization, travel, public company, outside services and general expenses. (4) The Company performed services relating to waste generated by federal government clients, either directly as a prime contractor or indirectly for others as a subcontractor to federal government entities, representing approximately $ 40,550,000 or 68.6 % of total revenue for 2024 and $ 68,595,000 or 76.4 % of total revenue for 2023. (5) The following table reflects revenue based on customer location: SCHEDULE OF REVENUE BASED ON CUSTOMER LOCATION 2024 2023 United States $ 56,665 $ 87,669 Canada 513 1,685 Germany 734 206 Italy 77 — Mexico 394 — Slovenia 181 87 United Kingdom 553 88 Total $ 59,117 $ 89,735 The following table presents depreciation and amortization for the years ended December 31, (in thousand): SCHEDULE OF DEPRECIATION AND AMORTIZATION 2024 2023 Treatment $ 1,484 $ 2,112 Services 177 397 Total segment 1,661 2,509 Corporate 102 59 Total $ 1,763 $ 2,568 The following table presents capital expenditures for the years ended December 31, (net of financed amount of $ 406 and $ 784 for 2024 and 2023, respectively (in thousand): SCHEDULE OF CAPITAL EXPENDITURES 2024 2023 Treatment $ 3,002 $ 1,696 Services 403 10 Total segment 3,405 1,706 Corporate — 8 Total $ 3,405 $ 1,714 The following table presents long-lived assets for the Company’s continuing operations for the years ended December 31, (in thousand): SCHEDULE OF LONG-LIVED ASSETS FOR CONTINUED OPERATIONS 2024 2023 United States $ 21,133 $ 19,009 Foreign Subsidiaries — — Total $ 21,133 $ 19,009 69 NOTE 17 SALES OF COMMON STOCK May 2024 On May 21, 2024, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional and retail investors (the “Purchasers”), pursuant to which the Company sold and issued, in a registered direct public offering, an aggregate of 2,051,282 shares of the Company’s Common Stock, at a negotiated purchase price per share of $ 9.75 (the “Shares”), for aggregate gross proceeds to the Company of approximately $ 20,000,000 , before deducting fees payable to the placement agents and other estimated offering expenses payable by the Company (the “Offering”). The net proceeds from the Offering was utilized to fund (i) continued R&D and business development relating to the Company’s patent-pending process for the destruction of PFAS (Per- and polyfluoroalkyl substances), as well as the cost of installing at least one commercial treatment unit; (ii) ongoing facility capital expenditures and maintenance costs; and (iii) general corporate and working capital purposes. The Shares were offered and sold by the Company pursuant to the Company’s “shelf” registration statement on Form S-3 and prospectus supplement relating thereto. Craig-Hallum Capital Group LLC (“Craig-Hallum”) and Wellington Shields & Co. LLC (“Wellington Shields”) (Wellington Shields and Craig-Hallum together are known as the “Placement Agents”) served as the exclusive placement agents in connection with the Offering. The Company paid the Placement Agents an aggregate cash fee of $ 1,200,000 , representing 6.00 % of the gross proceeds of the Offering. The Company also reimbursed the Placement Agents certain expenses in connection with the Offering in an aggregate amount of approximately $ 80,000 . As additional compensation to the Placement Agents in connection with the Offering, the Company also issued to the Placement Agents and two (2) of their designees, warrants (the “Placement Agents’ Warrants”) to purchase an aggregate of 61,538 shares of Common Stock (the “Warrant Shares”), an amount equal to 3.0% of the number of Shares sold in the registered direct offering. The Placement Agents’ Warrants have an exercise price per share equal to $12.19, which is equal to approximately 125% of the price per share of the Shares sold in the Offering. Neither the Placement Agents’ Warrants nor the Warrant Shares have been registered under the Registration Statement or otherwise. The Placement Agents’ Warrants have a term of five years, are exercisable at any time and from time to time, in whole or in part, during the four and one-half (4 ½) year period commencing 180 days from the closing date of the Offering which was May 24, 2024, and are exercisable via “cashless exercise” in certain circumstances. The aggregate fair value of the “Placement Agents’ Warrants” was determined to be approximately $ 331,000 using the Black-Scholes pricing model with the following assumptions: 58.78 % volatility, risk free interest rate of 4.53 %, an expected life of five years and no dividend. The aggregate fair market value of the Placement Agent’s Warrants was recorded as an offset to gross proceeds of the Offering and an increase to additional-paid-in capital. After deducting costs incurred and paid of approximately $ 1,544,000 (exclusive of the aggregate fair market value of the Placement Agents’ Warrants as discussed above) which were recorded as a deduction to equity in connection with the Offering, net cash proceeds to the Company totaled approximately $ 18,456,000 . December 2024 On December 18, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group, LLC (the “Underwriter”) to which the Company sold and issued pursuant to the terms and conditions of the Underwriting Agreement, 2,200,000 shares of the Company’s Common Stock. The shares of Common stock were sold at a negotiated price to the public of $ 10.00 per share. The Underwriting Agreement also allowed the Underwriter a 30-day over-allotment option (the “Over-Allotment Option”) to purchase up to an additional 330,000 shares of the Company’s Common Stock on the same terms and conditions, which option was exercised in its entirely on December 18, 2024. The shares were offered and sold to the public pursuant to the Company’s “universal shelf” registration statement on Form S-3 filed with the Commission on December 2, 2024, and declared effective by the Commission on December 12, 2024, and prospectus supplement relating thereto. The aggregate gross proceeds received by the Company from the sale of the 2,530,000 shares sold totaled $ 25,300,000 , before deducting fees payable to the Underwriter and other estimated offering expenses payable by the Company (the “Offering”). The net proceeds from the Offering is anticipated to fund (i) continued R&D and business development relating to the Company’s patent-pending process for the destruction of PFAS, as well as the cost of installing at least one second-generation Perma-FAS commercial treatment unit; (ii) ongoing facility capital expenditures and maintenance costs; and (iii) general corporate and working capital purposes. The Company paid the Underwriter a total cash fee of 7.00 % of the aggregate gross proceeds in the Offering, which totaled approximately $ 1,771,000 . The Company also reimbursed the Underwriter certain expenses in connection with the Offering in an aggregate amount of approximately $ 95,000 . As additional compensation to the Underwriter in connection with the Offering, the Company also issued to the Underwriter and three (3) of their designees, warrants (the “Underwriters’ Warrant’s”) to purchase an aggregate of 126,500 shares of Common Stock (the “Warrant Shares”), equal to 5.0% of the number of Shares sold in the offering, at an exercise price per share equal to $11.50, which exercise price is equal to approximately 115% of the price per share of the shares sold in the Offering. The Underwriter’s Warrants have a term of five years, are exercisable at any time and from time to time, in whole or in part, during the five (5) year period commencing on December 19, 2024, the closing date of the Offering, and are exercisable via “cashless exercise” in certain circumstances. The aggregate fair value of the “Underwriter’s Warrants” was determined to be approximately $ 695,000 using the Black-Scholes pricing model with the following assumptions: 58.51 % volatility, risk free interest rate of 4.43 %, an expected life of five years and no dividend. The aggregate fair market value of the Underwriter’s Warrants was recorded as an offset to gross proceeds of the Offering and an increase to additional-paid-in capital. After deducting costs incurred of approximately $ 2,092,000 (exclusive of the aggregate fair market value of the Underwriter’s Warrants as discussed above) which were recorded as a deduction to equity in connection with the Offering, net cash proceeds to the Company totaled approximately $ 23,208,000 . The Company has paid approximately $ 1,897,000 of the $ 2,092,000 costs incurred in connection with the Offering. 70 NOTE 18 SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date through March 13, 2025, the date that these consolidated financial statements were available to be issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than the events described below. Appointment of Chief Operating Officer (“COO”) On January 23, 2025, the Company’s Board approved the appointment of Mr. Troy Eshleman as the Company’s Chief Operating Officer (“COO”) at an annual salary of $ 320,000 . Mr. Troy Eshleman was originally hired by the Company on January 6, 2025 as Vice President of Operations. EVP of Hanford and International Waste Operations On January 23, 2025, the Board appointed Mr. Richard Grondin as the Company’s EVP of Hanford and International Waste Operations, at an annual salary of $ 315,267 . Prior to his appointment to such office, Mr. Grondin previously served as the Company’s EVP of Waste Treatment Operations. Mr. Grondin remains a named executive officer of the Company. Grant of Option In connection with the Board’s appointment of Mr. Eshleman to the position of COO, the Compensation Committee recommended, and the Board approved, the grant to Mr. Eshleman of an ISO for the purchase, under the Company’s 2017 Plan, of up to 50,000 shares of the Company’s Common Stock. The ISO has a term of six years , and vests 20 % per year over a five-year period commencing on the first anniversary date of grant. The exercise price of the ISO is $ 10.70 per share, which is equal to the closing price as quoted on Nasdaq of the Company’s Common Stock on the date of grant. MIPs On January 23, 2025, the Board (with Mr. Mark Duff and Dr. Louis Centofanti abstaining) and the Compensation Committee approved individual MIP for the calendar year 2025 for each of the Company’s executive officers. Each MIP is effective January 1, 2025 and applicable for year 2025. Each MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. The performance compensation under each of the MIPs is based upon meeting certain of the Company’s separate target objectives during 2025. The total potential target performance compensation payable ranges from 25 % to 150 % of the 2025 base salary for the CEO ($ 104,287 to $ 625,733 ), 29 % to 100 % of the 2025 base salary for the CFO ($ 95,681 to $ 332,811 ), 29 % to 100 % of the 2025 base salary for the EVP of Strategic Initiatives ($ 79,736 to $ 277,346 ), 25 % to 100 % ($ 78,817 to $ 315,267 ) of the 2025 base salary for the EVP of Hanford and International Waste Operations, and 25 % to 100 % of the 2025 base salary for the COO ($ 80,000 to $ 320,000 ). On March 11, 2025, the Company entered into an amendment to its Loan Agreement with its lender which provided the following, among other things: ● removes the quarterly FCCR testing requirement for the fourth quarter of 2024; ● removes the requirement that the Company maintains a minimum of $ 3,000,000 in daily Liquidity through September 29, 2025, which was removable earlier subject to meeting certain conditions; ● removes the quarterly FCCR covenant testing requirement utilizing a twelve-month trailing basis; however, such FCCR testing requirement will be triggered on the day the Company fails to meet a minimum of $ 5,000,000 in daily Liquidity. If triggered, the Company will be required to show compliance of a FCCR ratio of not less than 1.15 to 1.00 utilizing a trailing twelve-month-period ended starting with the most recently reported fiscal quarter and each fiscal quarter thereafter. The FCCR testing requirement can be removed again once the Company is able to achieve a minimum of $ 5,000,000 in daily Liquidity for a thirty-consecutive-day period from the trigger date; and ● revises the Facility Fee (as defined) from .375% to .500%. Such fee percentage will revert back to .375% at such time that the Company is able to achieve a minimum 1.15 to 1.00 ratio in FCCR on a twelve-month trailing basis. In connection with the amendment, the Company paid its lender a fee of $ 12,500 . Shareholder Demand Letter The Company’s Board has received a demand letter, dated February 4, 2025 (the “Letter”), from a putative shareholder of the Company, claiming that a provision in the Company’s Amended and Restated Bylaws (“Bylaws”), requiring shareholders to indemnify the Company for attorneys’ fees in certain corporate proceedings in which the shareholder is not the prevailing party, must be removed. This provision of the Company’s Bylaws was adopted in 2012 when the Company adopted its Amended and Restated Bylaws. The statute prohibiting certain reimbursements of attorneys’ fees was adopted in 2015. The Letter demands that the Board amend its Bylaws to remove the particular provision in question. The Board has established a committee of the Board comprised of independent directors who each became a member of the Board after 2012 to review and consider the Letter. 71 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.