Exhibit 99.1 - Audited Financial Statements

To the Board of Directors
East Tennessee Materials and Energy Corporation
Oak Ridge, Tennessee

We have audited the accompanying consolidated balance sheets of East Tennessee Materials and Energy Corporation and subsidiary (the "Company") as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of East Tennessee Materials and Energy Corporation and subsidiary at December 31, 2000 and 1999 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Effective June 25, 2001, the Company was acquired by Perma-Fix Environmental Services, Inc. (see Note 16).

December 31,	Estimated Useful Lives		2000		1999

Plant equipment	5 years	$	22,500	$	22,500
Transportation equipment	5 years		34,253		34,253
Office equipment and furniture	3-7 years		6,436		19,443
Construction in progress			9,440,131		3,898,338

			9,503,320		3,974,534
Less accumulated depreciation			(23,032	)	(16,689	)

		$	9,480,288	$	3,957,845

	December 31,		2000		1999

	Prime + 6% (15.5 % at December 31, 2000) unsecured notes payable to stockholders, interest and principal due January 2000, guaranteed by certain stockholders and related parties of the Company	$	50,000	$	50,000

	Prime + 4% (13.5% at December 31, 2000) unsecured notes payable to stockholders, interest and principal due in January and February of 2000, guaranteed by certain stockholders and related parties of the Company		44,000		44,000

	Prime +1% (10.5 % at December 31, 2000) unsecured note payable to a bank, interest and principal due January 2000, guaranteed by certain stockholders and related parties of the Company		13,600		14,400

	Unsecured notes payable to stockholders, interest ranging from 12% to 14% payable monthly, principal and all unpaid accrued interest due January 2000, guaranteed by certain stockholders and related parties of the Company		100,000		100,000

	10% note payable to stockholder, interest and principal due July 2000, secured by the assignment of certain accounts receivable of the Company and guaranteed by certain stockholders and related parties of the Company		60,000		60,000

14
East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

	December 31,		2000		1999

	10% unsecured note payable to former stockholder, interest and principal due March 2000, guaranteed by a stockholder of the Company.		25,000		25,000

	5.18% note payable to a bank, interest payable monthly, principal and all unpaid accrued interest due March 2000, secured by a pledge of a certificate of deposit belonging to a related party, guaranteed by certain stockholders and related parties of the Company.		100,000		100,000

	10.08% unsecured note payable, interest and principal due October 2000, guaranteed by certain stockholders and related parties of the Company.		40,000		40,000

	20% note payable to stockholder, principal and interest due September 2000, secured by the assignment of certain accounts receivable of the Company and guaranteed by certain stockholders and related parties of the Company		145,000		--

	9.75% unsecured note payable, interest payable quarterly, principal and all unpaid accrued interest due March 2001, guaranteed by a stockholder of the Company		350,000		--

	Total	$	927,600	$	433,400


	2001	$	20,022
	2002		10,010
	2003		60,065
	2004		80,088
	2005		200,213
	Thereafter		553,098

		$	923,496


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East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

11.

Redeemable Series A Cumulative Preferred Stock

The Company has authorized 1,000,000 shares of preferred stock consisting of 500,000 shares designated as Series A cumulative preferred stock which is nonvoting and nonconvertible. The Company issued 110,687 shares of Series A preferred stock in 1997 in exchange for $553,435 of engineering and administrative services provided by its majority stockholder, PDC, (see Note 14). During 1998 and 1999, the Company issued 134,800 and 25,000 shares of Series A preferred stock, respectively, in connection with the issuance of notes payable. No value was assigned to this preferred stock (see Note 7). Total Series A preferred stock issued and outstanding were 270,487 and 245,487 at December 31, 2000 and 1999, respectively.

Dividends on the Series A preferred stock are cumulative and accrue at $.50 per preferred share annually from June 30, 1999 to June 30, 2003 and from June 30, 2004 to June 30, 2013 at the greater of (i) $1.00 per preferred share annually or (ii) one percent of the Company's gross revenue for the preceding 12 months divided by $100,000. The Company recorded preferred stock dividends of $67,622 and $135,244 during 1999 and 2000, respectively. These dividends were unpaid at December 31, 2000 and are included in the carrying value of the Series A preferred stock.

The Series A preferred stock is redeemable at the option of the holder upon the later of June 30, 2003 or the fifth anniversary of the issuance of the Series A preferred stock. The Company may redeem the Series A preferred stock at any time after June 30, 2003. The Company is required to redeem all Series A preferred stock upon a change of control or public offering. All outstanding shares of the Series A preferred stock was converted to common stock in March 2001 (see Note 16). The redemption price is equal to the liquidation value of $5 per preferred share plus the contingent redemption value plus all accrued and unpaid dividends. The contingent redemption value is equal to the greater of (i) $1.00 per preferred share or (ii) an amount per share equal to one percent of the Company's gross revenues for the preceding 12 months divided by $100,000. The excess of the minimum

		19

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		redemption value of $1,622,922 over the initial carrying value of $553,435 is being accreted and recorded as preferred stock dividends from the issuance date to the redemption date (June 30, 2003). The Company recorded preferred stock dividends related to the accretion of the redemption value of the Series A preferred stock of $214,097, $214,097 and $107,049 during 2000, 1999 and 1998, respectively. The carrying value of the Series A preferred stock was $1,291,544 and $942,203 at December 31, 2000 and 1999, respectively.
12.	Common Stock	During 1998 and 1999, the Company issued 337,000 and 65,500 shares of common stock to note holders valued at $1,348,000 and $262,000, respectively. The value of these shares was accounted for as a debt discount as more fully described in Note 7. During 1999, the Company issued 50,000 shares of common stock in connection with the First Choice acquisition valued at $200,000 (see Note 2), 50,000 shares of common stock for consulting services valued at $200,000, and sold 45,450 shares of common stock for $180,800. During 2000, the Company issued 18,750 shares of common stock for consulting services valued at $75,000. The Company recorded dividends in connection with its Series A preferred stock as more fully described in Note 11. Dividends and accretion of the redemption value of preferred stock recorded in 2000, 1999 and 1998 were $349,341, $281,719 and $107,049, respectively, and reduced the amount available to common stockholders.


20

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

13.	Income Taxes	The Company files its tax returns using the cash basis of accounting which requires adjustments to the Company's net loss recorded using the accrual basis of accounting. The components of deferred tax assets and liabilities consist of the following:

December 31,		2000		1999

Deferred tax assets:
Depreciation and amortization	$	6,800	$	2,800
Accrual to cash conversion		1,188,100		630,300
Net operating loss carryforward		863,100		897,600
Valuation allowance		(1,978,000	)	(1,430,800	)

Deferred tax assets		80,000		99,900

Deferred tax liabilities:
Accrual to cash conversion		(80,000	)	(99,900	)

Net deferred tax assets	$	--	$	--

The net deferred tax asset is reduced by a valuation allowance due to the uncertainty associated with the realization of the net deferred tax asset. The valuation increased $ 547,200 during 2000 from the allowance of $ 1,430,800 at December 31, 1999.

At December 31, 2000, the Company had unused net operating loss carryforwards of approximately $ 2,300,000, which expire in varying amounts during 2018 through 2019.


		21

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

14.	Related Party Transactions	The Company incurred expenses for engineering and administrative services rendered by its majority stockholder, PDC, in the approximate amount of $1,188,500 and $2,008,000 during 2000 and 1999, respectively. PDC also advanced approximately $436,000 during 1999, which was paid back during 2000. Amounts due PDC for services and advances at December 31, 2000 and 1999 were $4,489,845 and $3,882,567, respectively.

The Company derived revenue of approximately $69,300 and $38,500 during 2000 and 1999, respectively, from providing subcontract services to PDC. Accounts receivable from this stockholder at December 31, 2000 and 1999 were $-0- and $34,557, respectively.

Notes payable of the Company have been personally guaranteed by certain stockholders (see Notes 6 and 7).

15.

Supplemental Cash Flow Information

Supplemental cash flow information is as follows:

Year ended December 31,		2000		1999

Interest paid	$	30,160	$	147,131

Non-cash investing and financing activities:
Capital lease obligation for equipment	$	--	$	22,500
Issuance of common stock for acquisition		--		200,000
Note payable issued for payment of accounts payable		--		40,000
Purchase of treasury stock in exchange for note payable		- --		100,000
Common stock issued for notes payable		--		262,000
Accrual of preferred stock dividends		135,244		67,622
Accretion of redemption value of preferred stock		214,097		214,097
Common stock issued for consulting services		75,000		200,000


		22

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

16.	Perma-Fix Acquisition	On June 25, 2001, the Company was acquired by Perma-Fix Environmental Services, Inc. ("Perma-Fix") pursuant to the terms of the Stock Purchase Agreement, dated January 18, 2001, (the "Purchase Agreement"). Pursuant to the terms of the Purchase Agreement, all of the outstanding voting stock of the Company was acquired by Perma-Fix and the Company with (a) the Company acquiring 20% of its own outstanding shares of voting common stock (held as treasury stock), and (b) Perma-Fix acquiring all of the remaining outstanding shares of the Company's voting common stock (the "Acquisition"). As a result, Perma-Fix now owns all of the issued and outstanding voting capital stock of the Company.

In March 2001, in contemplation of the Acquisition, the Company's Series A Preferred stockholders converted each preferred share into three shares of common stock and the Series A Preferred Stock was eliminated. In addition, the Company's Board authorized the issuance of 1,500,000 shares of preferred stock, of which 1,467,396 were designated as Series B Preferred Stock as described below.

Perma-Fix issued 1,597,576 shares of its common stock valued at $2,396,000, or $1.50 per share, in exchange for all of the Company's remaining outstanding common stock. Of the common shares issued, 947,733 were issued in satisfaction of $357,600 of the Company's notes payable and $1,064,000 of long-term debt (see Notes 6 and 7). In addition, as partial consideration of the Acquisition, the Company issued shares of its newly designated Series B Preferred Stock to former common shareholders of the Company having a stated value of approximately $1,285,000. The Series B Preferred Stock is non-voting and non-convertible, has a $1.00 liquidation preference per share and may be redeemed at $1.00 per share at the option of the Company at any time after one year from the date of issuance. Following the first 12 months after the original issuance of the Series B Preferred Stock, the holders of the Series B Preferred Stock will be entitled to receive,


		23

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		when, as, and if declared by the Board of Directors of the Company out of legally available funds, dividends at the rate of 5% per year per share applied to the amount of $1.00 per share, which shall be fully cumulative. As a condition to the closing of the acquisition, Perma-Fix also issued 346,666 shares of the Common Stock to certain creditors of the Company in satisfaction of $520,000 of the Company's liabilities, of which $350,000 was in satisfaction of an unsecured note payable (see Note 6). At the date of closing, Perma-Fix advanced funds to the Company to pay certain liabilities to the IRS ($50,000), 401(k) plans ($1,336,000) and certain long-term debt holders ($434,000), in the aggregate amount of $1,820,000.
		Prior to the date of acquisition, Perma-Fix provided design and construction services under a subcontract agreement with the Company. As of the date of acquisition, Perma-Fix had loaned and advanced the Company approximately $2.3 million for working capital purposes and had billed approximately $9.8 million under the subcontract agreement, of which approximately $2,641,000 had been billed during 2000. As of December 31, 2000, $3,754,410 was due Perma-Fix for billings and advances related to the construction of the facility.

As a condition to the closing of the Acquisition, the Company entered into an installment agreement with the IRS relating to withholding taxes owing by the Company in the amount of $923,496 ("Installment Agreement") (see Note 10). The Installment Agreement provides for the payment of such withholding taxes over a term of approximately eight years. In addition, as a condition to such closing, one of the Company's shareholders, Performance Development Corporation ("PDC"), and two corporations affiliated with PDC, PDC Services Corporation ("PDC Services") and Management Technologies, Inc. ("MTI") each entered into an installment agreement with the IRS relating to withholding taxes owing by each of PDC, PDC Services and MTI ("PDC Installment Agreement"). The PDC Installment Agreement provides for the payment of semi-annual installments over a term of


		24

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		eight years in the aggregate amount of approximately $3,714,000. The Installment Agreement and the PDC Installment Agreement provide that (a) Perma-Fix does not have any liability for any taxes, interest or penalty with respect to the Company, PDC, PDC Services or MTI; (b) the Company will be solely liable for paying the obligations of the Company under the Installment Agreement; (c) the IRS will not assert any liability against Perma-Fix, the Company or any current or future related affiliate of Perma-Fix for any tax, interest or penalty of PDC, PDC Services or MTI; and (d) as long as the payments by the Company under the Installment Agreement are made timely, the IRS will not file a notice of a federal tax lien, change or cancel the Installment Agreement. Perma-Fix did not acquire any interest in PDC, PDC Services or MTI.
		Prior to the closing of the Acquisition, PDC had advanced monies to, and performed certain services for the Company aggregating approximately $3,700,000 (see Note 14). Amounts due to PDC for such advances and services were $4,489,845 and $3,882,567 at December 31, 2000 and 1999, respectively. In payment of such advances and services and as a condition to closing, the Company issued a promissory note, dated June 7, 2001, to PDC in the principal amount of approximately $3,700,000. The promissory note is payable over eight years to correspond to payments due to the IRS under the PDC Installment Agreement. PDC has directed the Company to make all payments under the promissory note directly to the IRS to be applied to PDC's obligations under the PDC Installment Agreement.

In connection with the closing of the Acquisition, Perma-Fix also made corrective contributions to the Company's 401(k) Plan and to the PDC 401(k) Plan. The amounts paid to the PDC Plan by Perma-Fix reduced the Company's accounts payable to PDC.

The Company recently completed the construction of its low-level radioactive and hazardous waste ("mixed waste") treatment facility in Oak Ridge, Tennessee. The 125,000 square-foot facility, located on


		25

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		the grounds of the Oak Ridge K-25 Weapons Facility of the Department of Energy ("DOE"), will use Perma-Fix's various proprietary technologies to treat mixed waste coming from governmental, institutional and commercial generators nationwide. The Company operates under both a hazardous waste treatment and storage permit and a license to store and treat low-level radioactive waste. The Company also has three subcontracts with Bechtel-Jacobs Company, LLC, DOE's site manager, which were awarded in 1998 and cover the treatment of legacy, operational and remediation nuclear waste. The facility began accepting waste in June 2001 and became fully operational during the third quarter of 2001.
		Upon the acquisition of the Company, Perma-Fix accrued for the estimated closure costs, determined pursuant to RCRA guidelines, for the Company's facility. This accrual, recorded at $2,025,000, represents the potential future liability to close and remediate the facility, should such a cessation of operations ever occur. No insurance or third party recovery was taken into account in determining the cost estimates or reserve, nor do the cost estimates or reserve reflect any discount for present value purposes. These estimated closure costs were not accrued by the Company at December 31, 1999 or 2000 since the construction of the facility had not been completed.

17.

Restatement

The Company's financial statements for the year ended December 31, 1998 were restated to correct the valuation of common and preferred stock issued to certain note holders and to record the accretion of the Series A preferred stock redemption value as discussed in Note 11. As a result of this restatement, the accumulated deficit at December 31, 1998 was increased by $67,216. The Company's restated net loss applicable to common stockholders for the year ended December 31, 1998 was increased to $997,350 compared to the amount previously reported of $930,134.

Independent Auditors' Report			3

Consolidated Financial Statements
Balance sheets Statements of operations Statements of stockholders' deficit Statements of cash flows Notes to consolidated financial statements	4 9	-- - --	5 6 7 7 27

December 31,		2000		1999

Assets

Current:
Accounts receivable	$	212,693	$	265,374
Prepaid expenses		14,044		4,793

Total current assets		226,737		270,167

Plant and equipment, net		9,480,288		3,957,845

Other assets:
Permits, net of accumulated amortization of $509,094 and $170,091		1,276,627		1,447,466
Lease acquisition costs, net of accumulated amortization of $87,536 and $53,848		213,111		246,798
Goodwill, net of accumulated amortization of $24,052 and $12,026		96,213		108,238
Other		9,648		9,438

Total other assets		1,595,599		1,811,940

	$	11,302,624	$	6,039,952

December 31,		2000		1999

Liabilities and Stockholders' Deficit

Current liabilities:
Accounts payable	$	1,128,465	$	461,937
Accrued expenses		920,787		460,996
Due to related party		4,489,845		3,882,567
Due to Perma-Fix		3,754,410		--
Notes payable		927,600		433,400
Current maturities of long-term debt		748,750		42,764
Current portion of payroll tax liability		20,022		--

Total current liabilities		11,989,879		5,281,664

Long-term debt, less current maturities		14,703		405,042
Payroll tax liability, less current portion		903,474		625,000
Other long-term liabilities		200,420		157,036

Total liabilities		13,108,476		6,468,742

Commitments		--		--

Redeemable Series A Cumulative Preferred Stock		1,291,544		942,203

Stockholders' deficit:
Common stock; no par value; authorized 4,000,000 shares; issued 2,066,700 and 2,047,950 shares		1,527,691		1,802,032
Accumulated deficit		(4,525,087	)	(3,073,025	)
Less treasury stock at cost, 25,000 shares		(100,000	)	(100,000	)

Total stockholders' deficit		(3,097,396	)	(1,370,993	)

	$	11,302,624	$	6,039,952

Year ended December 31,		2000		1999

Net revenues	$	905,480	$	1,208,226

Cost of goods sold		558,806		876,779

Gross profit		346,674		331,447

Selling, general and administrative expenses		1,290,352		1,725,784
Depreciation and amortization		452,345		301,840

Loss from operations		(1,396,023	)	(1,696,177	)

Other income (expense):
Other income		119,005		--
Interest expense		(175,044	)	(266,171	)

Total other income (expense)		(56,039	)	(266,171	)

Net loss		(1,452,062	)	(1,962,348	)

Preferred stock dividends		(349,341	)	(281,719	)

Net loss applicable to common stockholders	$	(1,801,403	) $	(2,244,067	)

	Common Stock			Accumulated		Treasury		Total Stockholders'
	Shares		Amount	Deficit		Stock		Deficit

Balance, December 31, 1998, as previously reported	1,837,000	$	1,837	$(1,043,461	) $	--		$(1,041,624	)

Restatement (Note 17)	--		1,239,114	(67,216	)	--		1,171,898

Balance, December 31, 1998, as restated	1,837,000		1,240,951	(1,110,677	)	--		130,274

Issuance of common stock for acquisition	50,000		200,000	--		--		200,000

Issuance of common stock to note holders	65,500		262,000	--		--		262,000

Issuance of common stock for consulting services	50,000		200,000	--		--		200,000

Sale of common stock	45,450		180,800	--		--		180,800

Purchase of treasury stock	--		--			(100,000	)	(100,000	)

Accretion of redemption value of preferred stock	--		(214,097)	--		--		(214,097	)

Preferred stock dividends	--		(67,622)	--		--		(67,622	)

Net loss	--		--	(1,962,348	)	--		(1,962,348	)

Balance, December 31, 1999	2,047,950		1,802,032	(3,073,025	)	(100,000	)	(1,370,993	)

Issuance of common stock for consulting services	18,750		75,000	--				75,000
						--
Accretion of redemption value of preferred stock	--		(214,097)	--		--		(214,097	)

Preferred stock dividends	--		(135,244)	--		--		(135,244	)

Net loss	--		--	(1,452,062	)	--		(1,452,062	)

Balance, December 31, 2000	2,066,700	$	1,527,691	$(4,525,087	) $	(100,000	)	$(3,097,396	)

		9

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements
		Goodwill Goodwill is stated at cost less accumulated amortization. Goodwill is amortized using the straight-line method over a period of ten years. Amortization expense was approximately $12,000 for each of the years ended December 31, 2000 and 1999, respectively.


	10

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements
	taxable income. Deferred tax liabilities are recognized when incurred; deferred tax assets, when necessary, are reduced by a valuation allowance when it is more likely than not that the asset will not be realized.
	Fair Value of Financial Instruments Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2000. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses and due to stockholder. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of the notes payable and long-term debt are estimated based on the current rates available to the Company for debt of the same remaining maturities and approximates its carrying amount.


		11
East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		the purchase price was allocated to the net assets acquired based upon the estimated fair market values. The excess of the purchase price over the estimated fair value of the net assets acquired was approximately $120,000, which has been accounted for as goodwill and is being amortized over its estimated useful life of ten years. The operating results of FCTS are included in the Company's results of operations from the date of acquisition. FCTS is an engineering and consulting firm that provides services related to hazardous mixed waste storage, analysis, treatment and disposal.
3.	Recission of ICM Merger	In June 1999, the Company's Board approved a merger with International Credit & Mercantile, Inc. ("ICM"). The merger was rescinded on July 20, 2000, and the stock purchase agreement was terminated. The acquisition of ICM was not recorded in the Company's financial statements as a result of the recission.


		12

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		The Company incurred approximately $6.6 million of additional costs to complete the construction of its treatment facility. The Company capitalized $448,112 and $226,778 of interest expense to construction in progress during 2000 and 1999, respectively.

Year ending December 31,

2001	$	24,000
2002		48,000
2003		119,000
2004		125,000
2005		125,000
Thereafter		260,000

Total	$	701,000


		13

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		will be renewed at the end of its term if the facility operations are in compliance with the applicable regulatory requirements.
		Legal The Company is involved in various litigation in the normal course of conducting its business. The Company is currently not a party to any litigation or governmental proceeding which management believes could have a material adverse affect on their financial position or results of operations.

		16

East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

		of the debt discount was amortized to interest expense. As of December 31, 2000, the unamortized debt discount was $831,200.
8.	Employee Benefit Plan	The Company has a defined contribution employee benefit plan under the provisions of Section 401(k) of the Internal Revenue Code. Prior to January 1, 1999, the Company participated in the 401(k) Plan of its majority stockholder, Performance Development Corporation ("PDC"). Effective January 1, 1999, the Company adopted its own separate 401(k) Plan at which time the assets and liabilities associated with its employees were transferred from the PDC Plan to the Company's new 401(k) Plan (the "Plan"). All employees who have completed one year of service and attained age 21 are eligible to participate in the Plan. The Company contributes an amount equal to 100% of the employees' salary deferral not to exceed 2% of the employees' compensation plus 50% of any deferral above 2%, but not exceeding 6% of the employees' compensation.


		17
East Tennessee Materials and Energy Corporation Notes to Consolidated Financial Statements

9.	Accrued Expenses	Accrued expenses consist of the following: