			Page No.
PART I	FINANCIAL INFORMATION

	Item 1.	Condensed Financial Statements

		Consolidated Balance Sheets - September 30, 2008 (unaudited) and December 31, 2007	1

		Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)	3

		Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2008 and 2007 (unaudited)	4

		Consolidated Statement of Stockholders' Equity - Nine Months Ended September 30, 2008 (unaudited)	5

		Notes to Consolidated Financial Statements	6

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58

	Item 4.	Controls and Procedures	59

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings	60

	Item 1A.	Risk Factors	61

	Item 4.	Submission of Matters to a Vote of Security Holders	61

	Item 5.	Other Information	62

	Item 6.	Exhibits	63

(Amount in Thousands, Except for Share Amounts)	September 30, 2008 (Unaudited)			December 31, 2007

ASSETS
Current assets:
Cash	$	91		$	118
Restricted cash		55			55
Accounts receivable, net of allowance for doubtful accounts of $184 and $203, respectively		8,541			14,961
Unbilled receivables - current		11,286			10,433
Inventories		321			332
Prepaid and other assets		3,318			3,206
Current assets related to discontinued operations		177			3,505
Total current assets		23,789			32,610

Property and equipment:
Buildings and land		23,238			23,929
Equipment		31,397			32,240
Vehicles		993			1,302
Leasehold improvements		11,462			11,462
Office furniture and equipment		1,899			2,349
Construction-in-progress		2,812			1,673
		71,801			72,955
Less accumulated depreciation and amortization		(22,979	)		(23,161	)
Net property and equipment		48,822			49,794

Net property and equipment held for sale		349			349

Property and equipment related to discontinued operations		666			3,942

Intangibles and other long term assets:
Permits		16,991			16,826
Goodwill		10,822			9,046
Unbilled receivables - non-current		3,661			3,772
Finite Risk Sinking Fund		10,739			6,034
Other assets		2,320			2,496
Intangible and other assets related to discontinued operations		—			1,179
Total assets	$	118,159		$	126,048

(Amount in Thousands, Except for Share Amounts)	September 30, 2008 (Unaudited)			December 31, 2007

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,606		$	5,907
Current environmental accrual		228			475
Accrued expenses		10,514			9,982
Disposal/transportation accrual		6,818			6,850
Unearned revenue		1,933			4,978
Current liabilities related to discontinued operations		1,356			6,220
Current portion of long-term debt		3,875			15,352
Total current liabilities		31,330			49,764

Environmental accruals		653			705
Accrued closure costs		10,679			8,901
Other long-term liabilities		441			968
Long-term liabilities related to discontinued operations		1,877			2,817
Long-term debt, less current portion		11,234			2,880
Total long-term liabilities		24,884			16,271

Total liabilities		56,214			66,035

Commitments and Contingencies

Preferred Stock of subsidiary, $1.00 par value; 1,467,396 shares authorized, 1,284,730 shares issued and outstanding, liquidation value $1.00 per share		1,285			1,285

Stockholders' equity:
Preferred Stock, $.001 par value; 2,000,000 shares authorized, no shares issued and outstanding		¾			¾
Common Stock, $.001 par value; 75,000,000 shares authorized, 53,908,700 and 53,704,516 shares issued and outstanding, respectively		54			54
Additional paid-in capital		97,129			96,409
Stock subscription receivable		¾			(25	)
Accumulated deficit		(36,523	)		(37,710	)

Total stockholders' equity		60,660			58,728

Total liabilities and stockholders' equity	$	118,159		$	126,048

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Amounts in Thousands, Except for Per Share Amounts)	2008			2007			2008			2007

Net revenues	$	15,989		$	16,306		$	51,961		$	48,452
Cost of goods sold		11,884			11,693			37,536			33,564
Gross profit		4,105			4,613			14,425			14,888

Selling, general and administrative expenses		4,711			4,691			13,818			13,493
Asset impairment recovery		(507	)		¾			(507	)		¾
(Gain) loss on disposal of property and equipment		(2	)		(13	)		139			99
(Loss) income from operations		(97	)		(65	)		975			1,296

Other income (expense):
Interest income		52			71			170			238
Interest expense		(231	)		(482	)		(917	)		(964	)
Interest expense-financing fees		(14	)		(48	)		(124	)		(143	)
Other		¾			(40	)		(5	)		(55	)
(Loss) income from continuing operations before taxes		(290	)		(564	)		99			372
Income tax (benefit) expense		(14	)		(161	)		3			23
(Loss) income from continuing operations		(276	)		(403	)		96			349

Loss from discontinued operations, net of taxes		(159	)		(1,549	)		(1,218	)		(2,163	)
Gain on disposal of discontinued operations, net of taxes		94			¾			2,309			¾
Net (loss) income applicable to Common Stockholders	$	(341	)	$	(1,952	)	$	1,187		$	(1,814	)

Net (loss) income per common share - basic
Continuing operations	$	(.01	)	$	(.01	)	$	¾		$	.01
Discontinued operations		¾			(.03	)		(.02	)		(.04	)
Disposal of discontinued operations		¾			¾			.04			¾
Net (loss) income per common share	$	(.01	)	$	(.04	)	$	.02		$	(.03	)

Net (loss) income per common share - diluted
Continuing operations	$	(.01	)	$	(.01	)		¾		$	.01
Discontinued operations		¾			(.03	)		(.02	)		(.04	)
Disposal of discontinued operations		¾			¾			.04			¾
Net (loss) income per common share	$	(.01	)	$	(.04	)	$	.02		$	(.03	)

Number of common shares used in computing net income (loss) per share:
Basic		53,844			52,843			53,760			52,349
Diluted		53,844			52,843			54,149			53,673

	September 30,
(Amounts in Thousands)	2008			2007
Cash flows from operating activities:
Net income (loss)	$	1,187		$	(1,814	)
Less: Income (loss) on discontinued operations (Note 9)		1,091			(2,163	)

Income from continuing operations		96			349
Adjustments to reconcile net income (loss) to cash provided by operations:
Depreciation and amortization		3,817			2,970
Asset impairment recovery		(507	)		―
Provision for bad debt and other reserves		33			76
Loss on disposal of property and equipment		139			99
Issuance of common stock for services		201			165
Share based compensation		335			288
Changes in operating assets and liabilities of continuing operations, net of effect from business acquisitions:
Accounts receivable		6,387			2,710
Unbilled receivables		(742	)		465
Prepaid expenses, inventories, and other assets		2,367			2,260
Accounts payable, accrued expenses, and unearned revenue		(7,515	)		(2,958	)
Cash provided by continuing operations		4,611			6,424
Gain on disposal of discontinued operations (Note 9)		(2,309	)		―
Cash used in discontinued operations		(997	)		(98	)
Cash provided by operating activities		1,305			6,326

Cash flows from investing activities:
Purchases of property and equipment		(810	)		(2,295	)
Proceeds from sale of plant, property and equipment		31			69
Change in finite risk sinking fund		(4,031	)		(1,443	)
Cash used for acquisition consideration, net of cash acquired		(14	)		(2,685	)
Cash used in investing activities of continuing operations		(4,824	)		(6,354	)
Proceeds from sale of discontinued operations (Note 9)		6,620			―
Cash provided by (used in) discontinued operations		42			(202	)
Net cash provided by (used in) investing activities		1,838			(6,556	)

Cash flows from financing activities:
Net (repayments) borrowing of revolving credit		(3,483	)		5,202
Principal repayments of long term debt		(6,658	)		(7,319	)
Proceeds from issuance of long-term debt		7,000			―
Proceeds from issuance of stock		184			399
Repayment of stock subscription receivable		25			40
Cash used in financing activities of continuing operations		(2,932	)		(1,678	)
Principal repayment of long-term debt for discontinued operations		(238	)		(216	)
Cash used in financing activities		(3,170	)		(1,894	)

Decrease in cash		(27	)		(2,124	)
Cash at beginning of period		118			2,221
Cash at end of period	$	91		$	97

Supplemental disclosure:
Interest paid	$	915		$	697
Income taxes paid		29			311
Non-cash investing and financing activities:
Long-term debt incurred for purchase of property and equipment		20			613
Sinking fund financed		674			―

	Common Stock				Additional Paid-In Capital		Stock Subscription Receivable			Accumulated Deficit			Total Stockholders' Equity
(Amounts in thousands, except for share amounts)	Shares		Amount		Additional Paid-In Capital		Stock Subscription Receivable			Accumulated Deficit			Total Stockholders' Equity
Balance at December 31, 2007		53,704,516	$	54	$	96,409	$	(25	)	$	(37,710	)	$	58,728

Net income		¾		¾		¾		¾			1,187			1,187
Issuance of Common Stock for services		93,005		¾		201		¾			¾			201
Issuance of Common Stock upon exercise of Options		111,179		¾		184		¾			¾			184
Share based compensation		¾		¾		335		¾			¾			335
Repayment of stock subscription receivable		¾		¾		¾		25			¾			25
Balance at September 30, 2008		53,908,700	$	54	$	97,129	$	¾		$	(36,523	)	$	60,660

The consolidated financial statements included herein have been prepared by the Company (which may be referred to as we, us or our), without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the consolidated financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the nine months ended September 30, 2008, are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2008.

As previously disclosed, on May 18, 2007, our Board of Directors authorized divestiture of our Industrial Segment, which provides treatment, storage, processing, and disposal of hazardous and non-hazardous waste, wastewater management services, and environmental services, which includes emergency response, vacuum services, marine environmental, and other remediation services. As previously disclosed, we completed the sale of the following facilities/operations within our Industrial Segment as follows: on January 8, 2008, we completed sale of substantially all of the assets of Perma-Fix Maryland, Inc. (“PFMD”) for $3,825,000 in cash, subject to a working capital adjustment during 2008, and assumption by the buyer of certain liabilities of PFMD. As of the date of this report, we estimate receiving approximately $141,000 in working capital adjustment from the buyer in the fourth quarter of 2008, subject to finalization; on March 14, 2008, we completed the sale of substantially all of the assets of Perma-Fix of Dayton, Inc. (“PFD”) for approximately $2,143,000 in cash, plus assumption by the buyer of certain of PFD’s liabilities and obligations. In June 2008, we paid the buyer approximately $209,000 due to certain working capital adjustment. We do not anticipate making any further working capital adjustments on the sale of PFD; and on May 30, 2008, we completed the sale of substantially all of the assets of Perma-Fix Treatment Services, Inc. (“PFTS”) for approximately $1,503,000, and assumption by the buyer of certain liabilities of PFTS. In July 2008, we paid the buyer approximately $135,000 in final working capital adjustments (See “- Discontinued Operations and Divestiture” in this section for accounting treatment of divestitures and working capital adjustments).

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, certain assets and liabilities of the Industrial Segment were reclassified as discontinued operations in May 2007 in the Consolidated Balance Sheets, and we ceased depreciation for the long-lived assets classified as held for sale. In accordance with SFAS No. 144, the long-lived assets were written down to fair value less anticipated selling costs and we recorded $6,367,000 in impairment charges (including $507,000 for PFO and $1,329,000 for PFSG recorded in the fourth quarter of 2007), which were included in “loss from discontinued operations, net of taxes” on our Consolidated Statement of Operations for the year ended December 31, 2007.

On September 26, 2008, our Board of Directors approved retaining our Industrial Segment facilities/operations at Perma-Fix of Fort Lauderdale, Inc. (“PFFL”), Perma-Fix of South Georgia (“PFSG”), and Perma-Fix of Orlando, Inc. (“PFO”). The decision to retain operations at PFFL, PFSG, and PFO is based on our belief that these operations are self-sufficient, which should allow senior management the freedom to focus on growing our nuclear operations, while benefiting from the cash flow and growth prospects of these three facilities and the fact that we were unable in the current economic climate to obtain the values for these companies that we believe they are worth. The accompanying condensed consolidated financial statements have been restated for all periods presented to reflect the reclassification of these three facilities/operations back into our continuing operations. During the third quarter of 2008, we classified one of the two properties at PFO as “net property and equipment held for sale” within our continued operations in the Consolidated Balance Sheets in accordance to SFAS No. 144. The Company plans to continue to market this property for sale. PFO has transferred its operating permit to the property not held for sale. We do not expect any impact or reduction to PFO’s operating capability from the sale of the property at PFO. We evaluated the fair value of PFO’s assets and as a result, recorded a credit of $507,000 related to the recovery of previous impairment charges for PFO, which is included in “Asset Impairment Recovery” on the Condensed Consolidated Statements of Operations for the quarter ended September 30, 2008.

As the long-lived assets for PFFL, PFSG, and PFO facilities, (excluding the property subject to sale at our PFO facility as described above), no longer meets the held for sale criteria under SFAS No. 144, the long-lived assets for these facilities are reported individually at the lower of their respective carrying amount before they were initially classified as held for sale, adjusted for any depreciation expense that would have been recognized had these assets been continuously classified as held and used or the fair value at the date of the subsequent decision not to sell (See “Changes to Plan of Sale and Asset Impairment Charges (Recovery)” in “Notes to Consolidated Financial Statements” for impact on our consolidated financial statements).

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS 157, “Fair Value Measurements”, which simplifies and codifies guidance on fair value measurements under generally accepted accounting principles. This standard defines fair value, establishes a framework for measuring fair value, and prescribes expanded disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position No. 157-2, “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”), which delays the effective date of SFAS 157 for certain non-financial assets and non-financial liabilities. SFAS 157 is effective for financial assets and liabilities in fiscal years beginning after November 15, 2007 and for non-financial assets and liabilities in fiscal years beginning after March 15, 2008. We have evaluated the impact of the provisions applicable to our financial assets and liabilities and have determined that there is no current impact on our financial condition, results of operations, and cash flow. The aspects that have been deferred by FSP FAS 157-2 pertaining to non-financial assets and non-financial liabilities will be effective for us beginning January 1, 2009. We are currently evaluating the impact of SFAS 157 for non-financial assets and liabilities on the Company’s financial position and results of operations.

On October 10, 2008, the FASB issued FSP FAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active”, which clarifies the application of SFAS No. 157 in an inactive market and provides an example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements have not been issued. The adoption of this FSP had no impact on our financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined Benefit Pension and Other Postretirement Plan - an amendment of FASB Statement No. 87, 88, 106, and 132”, requiring employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and recognize changes in the funded status in the year in which the changes occur. SFAS 158 is effective for fiscal years ending December 15, 2006. SFAS 158 did not have a material effect on our financial condition, result of operations, and cash flows.

In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, permitting entities to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand use of fair value measurement, consistent with the Board’s long-term measurement objectives for accounting for financial instruments. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. If the fair value option is elected, the effect of the first re-measurement to fair value is reported as a cumulative effect adjustment to the opening balance of retained earnings. We have not elected the fair value option for any of our assets or liabilities.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS No. 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141R is effective for financial statements issued for fiscal years beginning after December 15, 2008. Accordingly, any business combinations the Company engages in will be recorded and disclosed following existing GAAP until December 31, 2008. The Company expects SFAS No. 141R will have an impact on its consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, terms, and size of acquisitions it consummates after the effective date.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51. SFAS No. 160 changes the accounting and reporting for minority interest. Minority interest will be recharacterized as noncontrolling interest and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interest that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim period within those fiscal years, except for the presentation and disclosure requirements, which will apply retrospectively. This standard is not expected to materially impact the Company’s future consolidated financial statements.

In December 2007, the SEC issued SAB No. 110, which expressed the views of the staff regarding the use of a “simplified” method, as discussed in SAB No. 107, in developing an estimate of expected term of “plain vanilla” share options in accordance with SFAS No. 123R, Share-Based Payment. In particular, the staff indicated in SAB No. 107 that it will accept a company’s election to use the simplified method, regardless of whether the Company has sufficient information to make more refined estimates of expected term. At the time SAB No. 107 was issued, the staff believed that more detailed external information about employee exercise behavior would, over time, become readily available to companies. Therefore, the SEC staff stated in SAB No. 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, SAB No. 110 states that the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company does not expect SAB No. 110 to materially impact its operations or financial position.

In March 2008, the FASB issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities”. SFAS 161 amends and expands the disclosure requirements of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities”, and requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company does not expect this standard to materially impact the Company’s future consolidated statements.

In April 2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”), which amends the factors to be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other U.S. generally accepted accounting principles. FSP FAS 142-3 requires an entity to disclose information for a recognized intangible asset that enables users of the financial statements to assess the extent to which the expected future cash flows associated with the asset are affected by the entity’s intent and/or ability to renew or extend the arrangement. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not expect the adoption of FSP FAS 142-3 to materially impact the Company’s financial position or results of operations.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles”. The implementation of this standard will not have a material impact on our consolidated financial position and results of operations.

In June 2008, the FASB ratified EITF Issue No. 07-5, “Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock” (EITF 07-5). EITF 07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including the instrument’s contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal year beginning and after December 15, 2008. The Company does not expect EITF 07-5 to materially impact the Company’s future consolidated financial statements.

In September 2008, the FASB issued FSP FAS 133-1 and FIN 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Statements No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (“FSP FAS 133-1 and FIN 45-4”). The FSP amends the disclosure requirements of FAS 133, “Accounting for Derivative Instruments and Hedging Activities”, requiring that the seller of a credit derivative, or writer of the contract, to disclose various items for each balance sheet presented including the nature of the credit derivative, the maximum amount of potential future payments the seller could be required to make, the fair value of the derivative at the balance sheet date, and the nature of any recorded provisions available to the seller to recover from third parties any of the amounts paid under the credit derivative. The FSP also amends FASB Interpretation No. 45 (“FIN 45”) “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” to require disclosure of the current status of the payment performance risk of the guarantee. The additional disclosure requirements above will be effective for reporting periods ending after November 15, 2008. It is not expected that the FSP will materially impact the Company’s current disclosure process. The FSP also clarifies that the effective date of FAS 161 will be for any period, annual or interim, beginning after November 15, 2008.

We follow the provisions of Financial Accounting Standards Board (“FASB”) Statement No. 123 (revised) ("SFAS 123R"), Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation, superseding APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes accounting standards for entity exchanges of equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.

The Company has certain stock option plans under which it awards incentive and non-qualified stock options to employees, officer, and outside directors. Stock options granted to employees have either a ten year contractual term with 1/5 yearly vesting over a five year period or a six year contractual term with 1/3 yearly vesting over a three year period. Stock options granted to outside directors have a ten year contractual term with vesting period of six months. On August 5, 2008, our Board of Directors authorized the grant of 918,000 Incentive Stock Options (“ISO”) to certain officers and employees of the Company which allows for the purchase of Common Stock from the Company’s 2004 Stock Option Plan. The options granted were for a contractual term of six years with vesting period over three year period at 1/3 increment per year. The exercise price of the options granted was $2.28 per share which was based on our closing stock price on the date of grant. We also granted 84,000 options from the Company’s 2003 Outside Directors Stock Plan to our seven outside directors as a result of the reelection our Board of Directors at our Annual Meeting of Stockholders on August 5, 2008. The options granted were for a contractual term of ten years with vesting period of six months. The exercise price of the options was $2.34 per share which was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Outside Directors Stock Plan.

As of September 30, 2008, we had 2,754,846 employee stock options outstanding, of which 1,577,013 are vested. The weighted average exercise price of the 1,577,013 outstanding and fully vested employee stock option is $1.85 with a remaining weighted contractual life of 3.29 years. Additionally, we had 645,000 director stock options outstanding, of which 561,000 are vested. The weighted average exercise price of the 561,000 outstanding and fully vested director stock option is $2.16 with a weighted remaining contractual life of 5.92 years.

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 employee and director stock options granted above and the related assumptions used in the Black-Scholes option pricing model used to value the options granted as of September 30, 2008 and September 30, 2007, were as follows:

We recognized share based compensation expense using a straight-line amortization method over the requisite period, which is the vesting period of the stock option grant. As SFAS 123R requires that stock based compensation expense be based on options that are ultimately expected to vest, we have reduced our stock based compensation for the August 5, 2008 employee and director stock option grants at an estimated forfeiture rate of 5.0% and 0.0%, respectively, for the first year of vesting. Our estimated forfeiture rate is based on historical trends of actual forfeitures. Forfeiture rates are evaluated, and revised as necessary. As of September 30, 2008, we have approximately $1,113,000 of total unrecognized compensation cost related to unvested options, of which $207,000 is expected to be recognized in remaining 2008, $380,000 in 2009, $303,000 in 2010, and $223,000 in 2011.

During the nine months ended September 30, 2008, we issued 111,179 shares of our Common Stock upon exercise of 106,179 employee stock options, at exercise prices ranging from $1.25 to $1.86 and 5,000 director stock options, at an exercise price of $1.75. Total proceeds received during the nine months ended September 30, 2008 related to option exercises totaled approximately $184,000. In addition, we received the remaining $25,000 from repayment of stock subscription resulting from exercise of warrants to purchase 60,000 shares of our Common Stock on a loan by the Company at an arms length basis in 2006 in the first six months of 2008.

On July 28, 2006, our Board of Directors has authorized a common stock repurchase program to purchase up to $2,000,000 of our Common Stock, through open market and privately negotiated transactions, with the timing, the amount of repurchase transactions and the prices paid under the program as deemed appropriate by management and dependent on market conditions and corporate and regulatory considerations. As of the date of this report, we have not repurchased any of our Common Stock under the program as we continue to evaluate this repurchase program within our internal cash flow and/or borrowings under our line of credit.

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding Janury 1, 2008		2,590,026		$	1.91
Granted		1,002,000			2.29
Exercised		(111,179	)		1.66			$	95,103
Forfeited		(81,001	)		1.80
Options outstanding End of Period ⁽¹⁾		3,399,846			2.03		4.6	$	572,397
Options Exercisable at September 30, 2008 ⁽¹⁾		2,138,013		$	1.94		4.0	$	511,727
Options Vested and expected to be vested at September 30, 2008		3,336,346		$	2.03		4.6	$	568,341

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding Janury 1, 2007		2,816,750		$	1.86
Granted		102,000			2.95
Exercised		(226,084	)		1.80			$	238,671
Forfeited		(34,999	)		1.83
Options outstanding End of Period ⁽¹⁾		2,657,667			1.91		4.8	$	3,086,524
Options Exercisable at September 30, 2007 ⁽¹⁾		1,965,000		$	1.87		4.6	$	2,358,911
Options Vested and expected to be vested at September 30, 2007		2,613,127		$	1.91		4.8	$	3,032,631

	Three Month Ended						Nine Months Ended
	September 30,						September 30,
	(Unaudited)						(Unaudited)
(Amounts in Thousands, Except for Per Share Amounts)	2008			2007			2008			2007
(Loss) earnings per share from continuing operations
(Loss) income from continuing operations applicable
to Common Stockholders	$	(276	)	$	(403	)		96		$	349
Basic (loss) income per share	$	(.01	)	$	(.01	)		¾		$	.01
Diluted (loss) income per share	$	(.01	)	$	(.01	)		¾		$	.01

Loss per share from discontinued operations
Loss from discontinued operations	$	(159	)	$	(1,549	)		(1,218	)	$	(2,163	)
Basic loss per share	$	¾		$	(.03	)		(.02	)	$	(.04	)
Diluted loss per share	$	¾		$	(.03	)		(.02	)	$	(.04	)

Income per share from disposal of discontinued operations
Gain on disposal of discontinued operations	$	94		$	¾			2,309		$	¾
Basic income per share	$	¾		$	¾			.04		$	¾
Diluted income per share	$	¾		$	¾			.04		$	¾

Weighted average common shares outstanding – basic		53,844			52,843			53,760			52,349
Potential shares exercisable under stock option plans		¾			¾			389			771
Potential shares upon exercise of Warrants		¾			¾			¾			553
Weighted average shares outstanding – diluted		53,844			52,843			54,149			53,673

Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:
Upon exercise of options		157			217			1,172			232

	(Unaudited)
	September 30,		December 31,
(Amounts in Thousands)	2008		2007
Revolving Credit facility dated December 22, 2000, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, variable interest paid monthly at prime rate plus ½% (5.50% at September 30, 2008), balance due in July 2012.	$	3,367	$	6,851
Term Loan dated December 22, 2000, payable in equal monthly installments of principal of $83, balance due in July 2012, variable interest paid monthly at prime rate plus 1% (6.00% at September 30, 2008).		6,916		4,500
Promissory Note dated June 25, 2001, payable in semiannual installments on June 30 and December 31 through December 31, 2008, variable interest accrues at the applicable law rate determined under the IRS Code Section (7.0% on September 30, 2008) and is payable in one lump sum at the end of installment period.		235		635
Promissory Note dated June 25, 2007, payable in monthly installments of principal of $160 starting July 2007 and $173 starting July 2008, variable interest paid monthly at prime rate plus 1.125% (6.125% at September 30, 2008)		1,598		3,039
Installment Agreement in the Agreement and Plan of Merger with Nuvotec and PEcoS, dated April 27, 2007, payable in three equal yearly installment of principal of $833 beginning June 2009. Interest accrues at annual rate of 8.25% on outstanding principal balance starting June 2007 and payable yearly starting June 2008		2,500		2,500
Installment Agreement dated June 25, 2001, payable in semiannual installments on June 30 and December 31 through December 31, 2008, variable interest accrues at the applicable law rate determined under the Internal Revenue Code Section (7.0% on September 30, 2008) and is payable in one lump sum at the end of installment period.		53		153
Various capital lease and promissory note obligations, payable 2008 to 2013, interest at rates ranging from 5.0% to 12.6%.		440		1,158
		15,109		18,836
Less current portion of long-term debt		3,875		15,352
Less long-term debt related to assets held for sale		—		604
	$	11,234	$	2,880

On December 22, 2000, we entered into a Revolving Credit, Term Loan and Security Agreement ("Agreement") with PNC Bank, National Association, a national banking association ("PNC") acting as agent ("Agent") for lenders, and as issuing bank, as amended. The Agreement provides for a term loan ("Term Loan") in the amount of $7,000,000, which requires monthly installments of $83,000 with the remaining unpaid principal balance due on December 22, 2005. The Agreement also provides for a revolving line of credit ("Revolving Credit") with a maximum principal amount outstanding at any one time of $18,000,000, as amended. The Revolving Credit advances are subject to limitations of an amount up to the sum of (a) up to 85% of Commercial Receivables aged 90 days or less from invoice date, (b) up to 85% of Commercial Broker Receivables aged up to 120 days from invoice date, (c) up to 85% of acceptable Government Agency Receivables aged up to 150 days from invoice date, and (d) up to 50% of acceptable unbilled amounts aged up to 60 days, less (e) reserves the Agent reasonably deems proper and necessary. As of September 30, 2008, the excess availability under our Revolving Credit was $3,729,000 based on our eligible receivables.

On March 26, 2008, we entered into Amendment No. 10 with PNC, which extended the due date of the $25 million credit facility from November 27, 2008 to September 30, 2009. This amendment also waived the Company’s violation of the fixed charge coverage ratio as of December 31, 2007 and revised and modified the method of calculating the fixed charge coverage ratio covenant contained in the loan agreement in each quarter of 2008. Pursuant to the amendment, we may terminate the agreement upon 60 days’ prior written notice upon payment in full of the obligation. As a condition to this amendment, we paid PNC a fee of $25,000.

On August 4, 2008, we entered into Amendment No. 12 with PNC. Pursuant to Amendment No. 12, PNC renewed and extended our credit facility by increasing our term loan back up to $7.0 million from the current principal outstanding balance of $0, with the revolving line of credit remaining at $18,000,000. Under Amendment No. 12, the due date of the $25 million credit facility is extended through July 31, 2012. The Term Loan continues to be payable in monthly installments of approximately $83,000, plus accrued interest, with the remaining unpaid principal balance and accrued interest, payable by July 31, 2012. Pursuant to the Amendment No. 12, we may terminate the agreement upon 90 days’ prior written notice upon payment in full of the obligation. We agreed to pay PNC 1% of the total financing fees in the event we pay off our obligations on or prior to August 4, 2009 and 1/2% of the total financing fees if we pay off our obligations on or after August 5, 2009, but prior to August 4, 2010. No early termination fee shall apply if we pay off our obligation after August 5, 2010. As part of Amendment No. 12, we agreed to grant mortgages to PNC as to certain of our facilities not previously granted to PNC under the Agreement. Amendment No. 12 also terminated the $2,000,000 of availability pursuant to Amendment No. 11 noted above in its entirety. All other terms and conditions to the credit facility remain principally unchanged. The $7.0 million in loan proceeds was used to reduce our revolver balance and our current liabilities. As a condition of Amendment No. 12, we agreed to pay PNC a fee of $120,000.

In conjunction with our acquisition of M&EC, M&EC issued a promissory note for a principal amount of $3.7 million to Performance Development Corporation (“PDC”), dated June 25, 2001, for monies advanced to M&EC for certain services performed by PDC. The promissory note is payable over eight years on a semiannual basis on June 30 and December 31. The note is due on December 31, 2008, with the final principal repayment of $235,000 to be made by December 31, 2008. Interest is accrued at the applicable law rate (“Applicable Rate”) pursuant to the provisions of section 6621 of the Internal Revenue Code of 1986 as amended (7.0% on September 30, 2008) and payable in one lump sum at the end of the loan period. On September 30, 2008, the outstanding balance was $2,421,000 including accrued interest of approximately $2,186,000. PDC has directed M&EC to make all payments under the promissory note directly to the IRS to be applied to PDC's obligations under its installment agreement with the IRS.

In conjunction with our acquisition of Nuvotec (n/k/a Perma-Fix of Northwest, Inc. - “PFNW”) and PEcoS (n/k/a Perma-Fix of Northwest Richland, Inc. - “PFNWR”), which was completed on June 13, 2007, we entered into a promissory note for a principal amount of $4.0 million to KeyBank National Association, dated June 13, 2007, which represents debt assumed by us as result of the acquisition. The promissory note is payable over a two years period with monthly principal repayment of $160,000 starting July 2007 and $173,000 starting July 2008, along with accrued interest. Interest is accrued at prime rate plus 1.125%. On September 30, 2008, the outstanding principal balance was $1,598,000. This note is collateralized by the assets of PFNWR as agreed to by PNC Bank and the Company.

Additionally, M&EC entered into an installment agreement with the Internal Revenue Service (“IRS”) for a principal amount of $923,000 effective June 25, 2001, for certain withholding taxes owed by M&EC. The installment agreement is payable over eight years on a semiannual basis on June 30 and December 31. The agreement is due on December 31, 2008, with final principal repayments of approximately $53,000 to be made by December 31, 2008. Interest is accrued at the Applicable Rate, and is adjusted on a quarterly basis and payable in lump sum at the end of the installment period. On September 30, 2008, the rate was 7.0%. On September 30, 2008, the outstanding balance was $584,000 including accrued interest of approximately $531,000.

Additionally, in conjunction with our acquisition of PFNW and PFNWR, we agreed to pay shareholders of Nuvotec that qualified as accredited investors pursuant to Rule 501 of Regulation D promulgated under the Securities Act of 1933, $2.5 million, with principal payable in equal installment of $833,333 on June 30, 2009, June 30, 2010, and June 30, 2011. Interest is accrued on outstanding principal balance at 8.25% starting in June 2007 and is payable on June 30, 2008, June 30, 2009, June 30, 2010, and June 30, 2011. Interest paid as of September 30, 2008 totaled $216,000. Interest accrued as of September 30, 2008 totaled $52,000.

In May 2007, the above facilities were named Partially Responsible Parties (“PRPs”) at the Marine Shale Superfund site in St. Mary Parish, Louisiana (“Site”). Information provided by the EPA indicates that, from 1985 through 1996, the Perma-Fix facilities above were responsible for shipping 2.8% of the total waste volume received by Marine Shale. Subject to finalization of this estimate by the PRP group, PFF, PFO and PFD could be considered de-minimus at .06%, .07% and .28% respectively. PFSG and PFM would be major at 1.12% and 1.27% respectively. However, at this time the contributions of all facilities are consolidated.

As of the date of this report, Louisiana DEQ (“LDEQ”) has collected approximately $8.4 million for the remediation of the site and has completed removal of above ground waste from the site. The EPA’s unofficial estimate to complete remediation of the site is between $9 and $12 million; however, based on preliminary outside consulting work hired by the PRP group, which we are a party to, the remediation costs can be below EPA’s estimation. The PRP Group has established a cooperative relationship with LDEQ and EPA, and is working closely with these agencies to assure that the funds held by LDEQ are used cost-effective. As a result of recent negotiations with LDEQ and EPA, further remediation work by LDEQ has been put on hold pending completion of a site assessment by the PRP Group. This site assessment could result in remediation activities to be completed within the funds held by LDEQ. As part of the PRP Group, we have paid an initial assessment of $10,000 in the fourth quarter of 2007, which was allocated among the facilities. In addition, we have accrued approximately $27,000 in the third quarter of 2008 for our estimated portion of the cost of the site assessment, which was allocated among the facilities. As of the date of this report, we cannot accurately access our total liability. The Company records its environmental liabilities when they are probable of payment and can be estimated within a reasonable range. Since this contingency currently does not meet this criteria, a liability has not been established.

The Environmental Protection Agency (“EPA”) alleged that prior to the date that we acquired the PEcoS facility in June 2007, the PEcoS facility was in violation of certain regulatory provisions relating to the facility’s handling of certain hazardous waste and Polychlorinated Biphenyl (“PCB”) waste. During May 2008, the EPA advised the facility as to these alleged violations that a total penalty of $317,500 is appropriate to settle the alleged violations. The $317,500 in potential penalty has been recorded as a liability in the purchase acquisition of Nuvotec and its wholly owned subsidiary, PEcoS. On September 26, 2008, PFNWR entered into a consent agreement with the EPA to resolve the allegations and to pay a penalty amount of $304,500. Under the consent agreement, PFNWR neither admits nor denies the specific EPA allegations. Under the agreements relating to our acquisition of Nuvotec and PEcoS, we are required, if certain revenue targets are met, to pay to the former shareholders of Nuvotec an earn-out amount not to exceed $4.4 million over a four year period ending June 30, 2011, with the first $1 million of the earn-out amount to be placed into an escrow account to satisfy certain indemnification obligations to us of Nuvotec, PEcoS, and the former shareholders of Nuvotec (including Mr. Robert Ferguson, a current member of our Board of Directors) (See “- Related Party Transaction” in “Note to Consolidated Financial Statements”). We may claim reimbursement of the penalty, plus out of pocket expenses, paid or to be paid by us in connection with this matter from the escrow account. As of the date of this report, we have not been required to pay any earn-out to the former shareholders of Nuvotec or deposit any amount into the escrow account pursuant to the agreement. Irrespective of the fact no amounts have been deposited into the escrow account, the parties have verbally agreed that the former shareholders of Nuvotec (including Mr. Ferguson, a member of our Board of Director) will pay to us $152,250 of the agreed penalty in satisfaction of their obligation under the indemnity provision in connection with the settlement with the EPA, subject to the execution of a definitive agreement. Under the verbal agreement between the Company and the former shareholders of Nuvotec, the $152,250 penalty to be paid by the former shareholders of Nuvotec will be recouped by the Nuvotec shareholder by adding to the $4.4 million in earn-out payment, if earned, pursuant to the terms of the earn-out, $152,250 at the end thereof.

In July 2008, PFTS received a notice of violation (“NOV”) from the Oklahoma Department of Environmental Quality (“ODEQ”) alleging that eight loads of waste materials received by PFTS between January 2007 and July 2007 were improperly analyzed to assure that the treatment process rendered the waste non-hazardous before disposition in PFTS’ non-hazardous injection well. The ODEQ alleges the handling of these waste materials violated regulations regarding hazardous waste. The ODEQ did not assert any penalties against PFTS in the NOV and requested PFTS to respond within 30 days from receipt of the letter. PFTS responded on August 22, 2008 and is currently in settlement discussions with the ODEQ. PFTS sold most all of its assets to a non-affiliated third party on May 30, 2008.

As previously disclosed, we sold substantially all of the assets of PFMD, PFD, and PFTS pursuant to various Asset Purchase Agreements on January 8, 2008, March 14, 2008, and May 30, 2008, respectively. Under these Asset Purchase Agreements the buyers have assumed certain debts and obligations of PFMD, PFD and PFTS, including, but not limited to, certain debts and obligations of the sellers to regulatory authorities under certain consent agreements entered into by the seller with the appropriate regulatory authority to remediate portions of the facility sold to the buyer. If any of these liabilities/obligations are not paid or preformed by the buyer, the buyer would be in violation of the Asset Purchase Agreement and we may assert claims against the buyer for failure to comply with its obligations under the agreement. We are currently in discussions with the buyer of the PFTS’ assets regarding certain liabilities which the buyer assumed and agreed to pay but which the buyer has refused to satisfy as of the date of this report. In addition, the buyers of the PFD and PFTS assets have six months to replace our financial assurance bonds with their own financial assurance bonds for facility closures. Our financial assurance bonds of $40,000 for PFD and $683,000 for PFTS remain in place until the buyers have satisfied this requirement. The regulatory authority will not release our financial assurance bonds until the buyers have complied with the appropriate regulations. At of the date of this report, neither of the buyers for PFD and PFTS has replaced its financial assurance bond for ours. However, PFD’s replacement financial assurance bond is currently with the state regulatory authority for approval and PFTS has until November 30, 2008, to replace its financial assurance bond with ours. If either buyer is unable to substitute its financial assurance for ours pursuant to the regulations, the appropriate regulatory authority could take action against the buyer, including, but not limited to, action to limit or revoke its permit to operate the facility, and could take action against our bond, including drawing down on our bond to remediate or close the facility in question, and we would be limited to bringing legal action against the buyer for any losses we sustain or suffer as a result.

We believe we maintain insurance coverage adequate for our needs and which is similar to, or greater than, the coverage maintained by other companies of our size in the industry. There can be no assurances, however, those liabilities, which may be incurred by us, will be covered by our insurance or that the dollar amount of such liabilities, which are covered, will not exceed our policy limits. Under our insurance contracts, we usually accept self-insured retentions, which we believe is appropriate for our specific business risks. We are required by EPA regulations to carry environmental impairment liability insurance providing coverage for damages on a claims-made basis in amounts of at least $1,000,000 per occurrence and $2,000,000 per year in the aggregate. To meet the requirements of customers, we have exceeded these coverage amounts.

In June 2003, we entered into a 25-year finite risk insurance policy with AIG (see “Part II, Item 1A. - Risk Factors” for certain potential risk related to AIG), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. Prior to obtaining or renewing operating permits, we are required to provide financial assurance that guarantees to the states that in the event of closure, our permitted facilities will be closed in accordance with the regulations. The policy provides a maximum $35 million of financial assurance coverage of which the coverage amount totals $32,552,000 at September 30, 2008, and has available capacity to allow for annual inflation and other performance and surety bond requirements. In the third quarter of 2008, we increased our assurance coverage by $1,673,000 due to a revision to our DSSI facility hazardous waste permit. Our finite risk insurance policy required an upfront payment of $4.0 million, of which $2,766,000 represented the full premium for the 25-year term of the policy, and the remaining $1,234,000, was deposited in a sinking fund account representing a restricted cash account. In February 2008, we paid our fifth of nine required annual installments of $1,004,000, of which $991,000 was deposited in the sinking fund account, the remaining $13,000 represents a terrorism premium. As of September 30, 2008, we have recorded $6,886,000 in our sinking fund on the balance sheet, which includes interest earned of $697,000 on the sinking fund as of September 30, 2008. Interest income for the three and nine months ended September 30, 2008, was $33,000 and $122,000, respectively. On the fourth and subsequent anniversaries of the contract inception, we may elect to terminate this contract. If we so elect, the insurer will pay us an amount equal to 100% of the sinking fund account balance in return for complete releases of liability from both us and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.

In August 2007, we entered into a second finite risk insurance policy for our PFNWR facility with AIG (see “Part II, Item 1A. - Risk Factors” for certain potential risk related to AIG), which we acquired in June 2007. The policy provides an initial $7.8 million of financial assurance coverage with annual growth rate of 1.5%, which at the end of the four year term policy, will provide maximum coverage of $8.2 million. The policy will renew automatically on an annual basis at the end of the four year term and will not be subject to any renewal fees. The policy requires total payment of $4.4 million, consisting of an annual payment of $1.4 million, and two annual payments of $1.5 million, starting July 31, 2007. In July 2007, we paid the first of our three annual payments of $1.4 million, of which $1.1 million represented premium on the policy and the remaining $258,000 was deposited into a sinking fund account. Each of the two remaining $1.5 million payments will consist of $176,000 in premium with the remaining $1.3 million to be deposited into a sinking fund. In July 2008, we paid the second of the two remaining payments. As part of the acquisition of PFNWR facility in June 2007, we have a large disposal accrual related to the legacy waste at the facility of approximately $4,696,000 as of September 30, 2008. We anticipate disposal of this legacy waste by March 31, 2009. In connection with this waste, we are required to provide financial assurance coverage of approximately $2.8 million, consisting of five equal payment of approximately $550,604, which will be deposited into a sinking fund. We have made four of the five payments as of September 30, 2008, with the final payment payable by November 30, 2008. As of September 30, 2008, we have recorded $3,853,000 in our sinking fund on the balance sheet, which includes interest earned of $49,000 on the sinking fund as of September 30, 2008. Interest income for the three and nine months ended September 30, 2008, was $19,000 and $44,000, respectively.

On September 26, 2008, our Board of Directors approved retaining our Industrial Segment facilities/operations at Perma-Fix of Fort Lauderdale, Inc. (“PFFL”), Perma-Fix of South Georgia (“PFSG”), and Perma-Fix of Orlando, Inc. (“PFO”). As previously disclosed on May 18, 2007, our Board of Directors authorized divestiture of our Industrial Segment. The decision to retain operations at PFFL, PFSG, and PFO within our Industrial Segment is based on our belief that these operations are self-sufficient, which should allow senior management the freedom to focus on growing our nuclear operations, while benefiting from the cash flow and growth prospects of these three facilities and the fact that we were unable in the current economic climate to obtain the values for these companies that we believe they are worth.

In May 2007, our Industrial Segment met the held for sale criteria under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, and therefore, certain assets and liabilities of the Industrial Segment were classified as discontinued operations in the Consolidated Balance Sheets, and we ceased depreciation of these facilities’ long-lived assets classified as held for sale. In accordance with SFAS No. 144, the long-lived assets were written down to fair value less anticipated selling costs and we recorded $6,367,000 in impairment charges (including $507,000 for PFO and $1,329,000 for PFSG recorded in the fourth quarter of 2008), which were included in “loss from discontinued operations, net of taxes” on our Consolidated Statement of Operations for the year ended December 31, 2007.

As a result of our Board of Directors approving the retention of our PFFL, PFO, and PFSG facilities/operations in the third quarter of 2008, we restated the condensed consolidated financial statements for all periods presented to reflect the reclassification of these three facilities/operations back into our continuing operations. During the third quarter of 2008, we classified one of the two properties at PFO as “net property and equipment held for sale” within our continued operations in the Consolidated Balance Sheets in accordance to SFAS No. 144. The Company plans to continue to market this property for sale. PFO has transferred its operating permit to the property not held for sale. We do not expect any impact or reduction to PFO’s operating capability from the sale of the property at PFO. We evaluated the fair value of PFO’s assets and as a result, recorded a credit of $507,000 related to the recovery of previous impairment charges for PFO, which is included in “Asset Impairment Recovery” on the Condensed Consolidated Statements of Operations for the quarter ended September 30, 2008.

As the long-lived assets for PFFL, PFSG, and PFO facilities, (excluding the property subject to sale at our PFO facility as described above), no longer meets the held for sale criteria under SFAS No. 144, long-lived assets for these facilities are reported individually at the lower of their respective carrying amount before they were initially classified as held for sale, adjusted for any depreciation expense that would have been recognized had these assets been continuously classified as held and used or the fair value at the date of the subsequent decision not to sell. As a result of our decision to retain PFFL, PFSG, and PFO facilities/operations, we incurred incremental depreciation expense of approximately $486,000, which is included in our Condensed Consolidated Statements of Operations for the three and nine months ended September, 30, 2008.

Our discontinued operations encompass our PFMD, PFD, and PFTS facilities within our Industrial Segment as well as two previously shut down locations, Perma-Fix of Pittsburgh (“PFP”) and Perma-Fix of Michigan (“PFMI”), two facilities which were approved as discontinued operations by our Board of Directors effective November 8, 2005, and October 4, 2004, respectively. As previously discussed in “Note 1 - Basis of Presentation”, in May 2007, PFMD, PFD, and PFTS met the held for sale criteria under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, and therefore, certain assets and liabilities of these facilities are classified as discontinued operations in the Consolidated Balance Sheet, and we have ceased depreciation of these facilities’ long-lived assets classified as held for sale. In accordance with SFAS No. 144, the long-lived assets for these facilities were written down to fair value less anticipated selling costs. We recorded $4,531,000 in impairment charges for PFD and PFTS, all of which were included in “loss from discontinued operations, net of taxes” on our Consolidated Statement of Operations for the year ended December 31, 2007. The results of operations and cash flows of the aforementioned facilities have been reported in the Consolidated Financial Statements as discontinued operations for all periods presented.

On January 8, 2008, we sold substantially all of the assets of PFMD within our Industrial Segment, pursuant to the terms of an Asset Purchase Agreement, dated January 8, 2008. In consideration for such assets, the buyer paid us $3,811,000 (purchase price of $3,825,000 less closing costs) in cash at the closing and assumed certain liabilities of PFMD. The cash consideration is subject to certain working capital adjustments during 2008. Pursuant to the terms of our credit facility, $1,400,000 of the proceeds received was used to pay down our term loan, with the remaining funds used to pay down our revolver. As of the September 30, 2008, we have sold approximately $3,100,000 of PFMD’s assets, which excludes approximately $10,000 of restricted cash. The buyer assumed liabilities in the amount of approximately $1,108,000. As of September 30, 2008, expenses relating to the sale of PFMD totaled approximately $131,000, of which $3,000 was incurred in the third quarter of 2008. As of September 30, 2008, we have paid $128,000 of the expenses relating to the sale of PFMD, of which $78,000 was paid in the third quarter of 2008. We anticipate paying the remaining expenses by the end of the fourth quarter of 2008. As of September 30, 2008, the gain on the sale of PFMD totaled approximately $1,750,000 (net of taxes of $78,000), which includes $141,000 in working capital adjustments we estimate receiving from the buyer in the fourth quarter of 2008. This estimated $141,000 in working capital adjustment is subject to finalization in the fourth quarter of 2008. The gain is recorded separately on the Consolidated Statement of Operations as “Gain on disposal of discontinued operations, net of taxes”.

On March 14, 2008, we completed sale of substantially all of the assets of PFD within our Industrial Segment, pursuant to the terms of an Asset Purchase Agreement, dated March 14, 2008, for approximately $2,143,000 in cash, subject to certain working capital adjustments after the closing, plus the assumption by the buyer of certain of PFD’s liabilities and obligations. We received cash of approximately $2,139,000 at closing, which was net of certain closing costs. The proceeds received were used to pay down our term loan. As of September 30, 2008, we have sold approximately $3,103,000 of PFD’s assets. The buyer assumed liabilities in the amount of approximately $1,635,000. As of September 30, 2008, expenses relating to the sale of PFD totaled approximately $198,000, of which $1,000 was incurred in the third quarter of 2008. As of September 30, 2008, we have paid $197,000 of the expenses relating to the sale of PFD, of which $169,000 was paid in the third quarter of 2008. We anticipate paying the remaining expenses by the fourth quarter of 2008. As of September 30, 2008, our gain on the sale of PFD totaled approximately $265,000, net of taxes of $0, which includes a working capital adjustment of approximately $209,000 paid to the buyer in the second quarter of 2008. We do not anticipate making any further working capital adjustments on the sale of PFD. The gain is recorded separately on the Consolidated Statement of Operations as “Gain on disposal of discontinued operations, net of taxes”.

On May 30, 2008, we completed sale of substantially all of the assets of PFTS within our Industrial Segment, pursuant to the terms of an Asset Purchase Agreement, dated May 14, 2008 as amended by a First Amendment dated May 30, 2008. In consideration for such assets, the buyer paid us $1,468,000 (purchase price of $1,503,000 less certain closing/settlement costs) in cash at closing and assumed certain liabilities of PFTS. The cash consideration is subject to certain working capital adjustments after closing. Pursuant to the terms of our credit facility, the proceeds received were used to pay down our term loan with the remaining funds used to pay down our revolver. As of September 30, 2008, we had sold approximately $1,861,000 of PFTS’s assets. The buyer assumed liabilities in the amount of approximately $996,000. As of September 30, 2008, expenses relating to the sale of PFTS totaled approximately $173,000, of which $8,000 was incurred in the third quarter of 2008. As of September 30, 2008, we have paid $129,000 of the expenses relating to the sale of PFD, all of which were paid in the third quarter of 2008. We anticipate paying the remaining expenses by the fourth quarter of 2008. As of September 30, 2008, our gain on the sale of PFTS totaled approximately $294,000, net of taxes of $0, which includes a $135,000 final working capital adjustment paid to the buyer in July 2008. The gain is recorded separately on the Consolidated Statement of Operations as “Gain on disposal of discontinued operations, net of taxes”.

The following table summarizes the results of discontinued operations for the three and nine months ended September 30, 2008 and 2007. The gains on disposals of discontinued operations, net of taxes, as mentioned above, are reported separately on our Consolidated Statements of Operations as “Gain on disposal of discontinued operations, net of taxes”. The operating results of discontinued operations are included in our Consolidated Statements of Operations as part of our “Loss from discontinued operations, net of taxes”.

The Industrial Segment includes two previously shut-down facilities which were presented as discontinued operations in prior years. These facilities include Perma-Fix of Pittsburgh (“PFP”) and Perma-Fix of Michigan (“PFMI”). Our decision to discontinue operations at PFP was due to our reevaluation of the facility and our inability to achieve profitability at the facility. During February 2006, we completed the remediation of the leased property and the equipment at PFP, and released the property back to the owner. Our decision to discontinue operations at PFMI was principally a result of two fires that significantly disrupted operations at the facility in 2003, and the facility’s continued drain on the financial resources of our Industrial Segment. As a result of the discontinued operations at the PFMI facility, we were required to complete certain closure and remediation activities pursuant to our RCRA permit, which were completed in January 2006. In September 2006, PFMI signed a Corrective Action Consent Order with the State of Michigan, requiring performance of studies and development and execution of plans related to the potential clean-up of soils in portions of the property. The level and cost of the clean-up and remediation are determined by state mandated requirements. Upon discontinuation of operations in 2004, we engaged our engineering firm, SYA, to perform an analysis and related estimate of the cost to complete the RCRA portion of the closure/clean-up costs and the potential long-term remediation costs. Based upon this analysis, we estimated the cost of this environmental closure and remediation liability to be $2,464,000. During 2006, based on state-mandated criteria, we re-evaluated our required activities to close and remediate the facility, and during the quarter ended June 30, 2006, we began implementing the modified methodology to remediate the facility. As a result of the reevaluation and the change in methodology, we reduced the accrual by $1,182,000. We have spent approximately $717,000 for closure costs since September 30, 2004, of which $14,000 has been spent during the nine months of 2008 and $81,000 was spent during 2007. In the 4^th quarter of 2007, we reduced our reserve by $9,000 as a result of our reassessment of the cost of remediation. We have $550,000 accrued for the closure, as of September 30, 2008, and we anticipate spending $164,000 in the remaining three months of 2008 with the remainder over the next six years. Based on the current status of the Corrective Action, we believe that the remaining reserve is adequate to cover the liability.

As of September 30, 2008, PFMI has a pension payable of $1,129,000. The pension plan withdrawal liability is a result of the termination of the union employees of PFMI. The PFMI union employees participate in the Central States Teamsters Pension Fund ("CST"), which provides that a partial or full termination of union employees may result in a withdrawal liability, due from PFMI to CST. The recorded liability is based upon a demand letter received from CST in August 2005 that provided for the payment of $22,000 per month over an eight year period. This obligation is recorded as a long-term liability, with a current portion of $171,000 that we expect to pay over the next year.

The Consulting Engineering Services Segment (“Engineering Segment”) provides environmental engineering and regulatory compliance services through Schreiber, Yonley & Associates, Inc. which includes oversight management of environmental restoration projects, air, soil, and water sampling, compliance reporting, emission reduction strategies, compliance auditing, and various compliance and training activities to industrial and government customers, as well as, engineering and compliance support needed by our other segments.

	Nuclear			Engineering		Industrial		Segments Total		Corporate ⁽²⁾			Consolidated Total
Revenue from external customers	$	12,519	⁽³⁾	$	846	$	2,624	$	15,989	$	—		$	15,989
Intercompany revenues		802			200		213		1,215		¾			1,215
Gross profit		3,168			347		590		4,105		¾			4,105
Interest income		¾			¾		¾		¾		52			52
Interest expense		72			¾		4		76		155			231
Interest expense-financing fees		2			¾		¾		2		12			14
Depreciation and amortization		1,073			8		485		1,566		13			1,579
Segment profit (loss)		782			170		309		1,261		(1,537	)		(276	)
Segment assets⁽¹⁾		93,044			2,110		6,021		101,175		16,984	⁽⁴⁾		118,159
Expenditures for segment assets		207			3		3		213		5			218
Total long-term debt		4,655			¾		171		4,826		10,283			15,109

	Nuclear			Engineering		Industrial			Segments Total		Corporate ⁽²⁾			Consolidated Total
Revenue from external customers	$	13,211	⁽³⁾	$	629	$	2,466		$	16,306	$	¾		$	16,306
Intercompany revenues		1,036			302		199		$	1,537		¾			1,537
Gross profit		4,035			231		347		$	4,613		¾			4,613
Interest income		¾			¾		¾			¾		71			71
Interest expense		240			¾		6		$	246		236			482
Interest expense-financing fees		¾			¾		¾			¾		48			48
Depreciation and amortization		1,092			10		¾		$	1,102		16			1,118
Segment profit (loss)		1,319			70		(279	)	$	1,110		(1,513	)		(403	)
Segment assets⁽¹⁾		95,319			2,012		7,739		$	105,070		25,925	⁽⁴⁾		130,995
Expenditures for segment assets		488			¾		72		$	560		4			564
Total long-term debt		7,665			8		231		$	7,904		9,952			17,856

	Nuclear			Engineering		Industrial		Segments Total		Corporate ⁽²⁾			Consolidated Total
Revenue from external customers	$	41,510	⁽³⁾	$	2,537	$	7,914	$	51,961	$	¾		$	51,961
Intercompany revenues		2,086			466		457		3,009		¾			3,009
Gross profit		11,279			931		2,215		14,425		¾			14,425
Interest income		2			¾		¾		2		168			170
Interest expense		460			¾		13		473		444			917
Interest expense-financing fees		3			¾		¾		3		121			124
Depreciation and amortization		3,276			22		485		3,783		33			3,816
Segment profit (loss)		3,521			433		609		4,563		(4,467	)		96
Segment assets⁽¹⁾		93,044			2,110		6,021		101,175		16,984	⁽⁴⁾		118,159
Expenditures for segment assets		752			12		52		816		14			830
Total long-term debt		4,655			¾		171		4,826		10,283			15,109

	Nuclear			Engineering		Industrial			Segments Total		Corporate ⁽²⁾			Consolidated Total
Revenue from external customers	$	38,560	⁽³⁾	$	1,738	$	8,154		$	48,452	$	¾		$	48,452
Intercompany revenues		2,328			845		588			3,761		¾			3,761
Gross profit		13,105			565		1,218			14,888		¾			14,888
Interest income		1			¾		¾			1		237			238
Interest expense		462			1		15			478		486			964
Interest expense-financing fees		¾			¾		¾			¾		143			143
Depreciation and amortization		2,666			27		225			2,918		52			2,970
Segment profit (loss)		5,860			162		(1,097	)		4,925		(4,576	)		349
Segment assets⁽¹⁾		95,319			2,012		7,739		$	105,070		25,925	⁽⁴⁾		130,995
Expenditures for segment assets		2,337			13		366			2,716		17			2,733
Total long-term debt		7,665			8		231		$	7,904		9,952			17,856

⁽³⁾

The consolidated revenues within the Nuclear Segment include the LATA/Parallax revenues for the three and nine months ended September 30, 2008 of $1,443,000 (or 9.0%) and $4,287,000 (or 8.2%), respectively, of our total consolidated revenue, and $2,029,000 (or 12.4%) and $7,167,000 (or 14.8%) for the corresponding period ended September 30, 2007, respectively. In addition, the consolidated revenues within the Nuclear Segment include the Fluor Hanford revenues of $2,787,000 (or 17.4%) and $6,662,000 (or 12.8%) for the three and nine months period September 30, 2008, respectively, of our total consolidated revenue and $1,538,000 (or 9.4%) and $4,962,000 (or 10.2%) for the corresponding period ended September 30, 2007, respectively.

The provision for income taxes is determined in accordance with SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. 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.

SFAS No. 109 requires that deferred income tax assets be reduced by a valuation allowance if it is more likely that not that some portion or all of the deferred income tax assets will not be realized. We evaluate the realizability of our deferred income tax assets, primarily resulting from impairment loss and net operating loss carryforwards, and adjust our valuation allowance, if necessary. Once we utilize our net operating loss carryforwards, we would expect our provision for income tax expense in future periods to reflect an effective tax rate that will be significantly higher than past periods.

In July 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, which attempts to set out a consistent framework for preparers to use to determine the appropriate level of tax reserve to maintain for uncertain tax positions. This interpretation of FASB Statement No. 109 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. FIN 48 also sets out disclosure requirements to enhance transparency of an entity’s tax reserves. The Company adopted this Interpretation as of January 1, 2007. As a result of the implementation of FIN 48, we have concluded that we have not taken any material uncertain tax positions on any of our open tax returns filed through December 31, 2007.

We reassess 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. As we believe that all such positions are fully supportable by existing Federal law and related interpretations, there are no uncertain tax positions to consider in accordance with FIN 48. The impact of our reassessment of our tax positions in accordance with FIN 48 for the third quarter of 2008 did not have any impact on our result of operations, financial condition or liquidity.

Mr. Robert Ferguson, was nominated to serve as a Director in connection with the closing of the acquisition by the Company of Nuvotec (n/k/a Perma-Fix Northwest, Inc.) and its wholly owned subsidiary, Pacific EcoSolutions, Inc. (“PEcoS”) (n/k/a Perma-Fix Northwest Richland, Inc.) in June 2007 and subsequently elected a Director at our Annual Meeting of Shareholders held in August 2007. At the time of the acquisition, Mr. Ferguson was the Chairman, Chief Executive Officer, and individually or through entities controlled by him, the owner of approximately 21.29% of Nuvotec’s outstanding Common Stock. Under the agreements relating to our acquisition of Nuvotec and PEcoS, we are required, if certain revenue targets are met, to pay to the former shareholders of Nuvotec an earn-out amount not to exceed $4.4 million over a four year period ending June 30, 2011, with the first $1 million of the earn-out amount to be placed into an escrow account to satisfy certain indemnification obligations to us of Nuvotec, PEcoS, and the former shareholders of Nuvotec, including Mr. Robert Ferguson.

Under the agreements relating to our acquisition of Nuvotec and PEcoS, we may claim reimbursement of the penalty, plus out of pocket expenses, paid or to be paid by us in connection with this matter from the escrow account. As of the date of this report, we have not been required to pay any earn-out to the former shareholders of Nuvotec or deposit any amount into the escrow account pursuant to the agreement. Irrespective of the fact no amounts have been deposited into the escrow account, the parties have verbally agreed that the former shareholders of Nuvotec (including Mr. Ferguson, a member of our Board of Director) will pay to us $152,250 of the agreed penalty in satisfaction of their obligation under the indemnity provision in connection with the settlement with the EPA, subject to the execution of a definitive agreement. Under the verbal agreement between the Company and the former shareholders of Nuvotec, the $152,250 penalty to be paid by the former shareholders of Nuvotec will be recouped by the Nuvotec shareholder by adding to the $4.4 million in earn-out payment, if earned, pursuant to the terms of the earn-out, $152,250 at the end thereof.

Certain statements in this report may be deemed "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, the "Private Securities Litigation Reform Act of 1995"). All statements in this report other than a statement of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and Company performance to differ materially from such statements. The words "believe," "expect," "anticipate," "intend," "will," and similar expressions identify forward-looking statements. Forward-looking statements herein include, among other things,

·	ability to continue and improve operations and achieve profitability on an annualized basis;
·	ability to retain or receive certain permits, licenses, or patents;
·	ability to comply with the Company's general working capital requirements;
·	ability to continue to meet our fixed charge coverage ratio in 2008;
·	ability to be able to continue to borrow under the Company's revolving line of credit;
·	we plan to fund any repurchases under the common stock repurchase plan through our internal cash flow and/or borrowing under our line of credit;
·	ability to generate sufficient cash flow from operations to fund all operations;
·	ability to remediate certain contaminated sites for projected amounts;
·	despite our aggressive compliance and auditing procedures for disposal of wastes, we could, in the future, be designated as a Partially Responsible Party (“PRP”) at a remedial action site, which could have a material adverse effect;
·	ability to fund budgeted capital expenditures of $3,100,000 during 2008 through our operations or lease financing or a combination of both;
·	growth of our Nuclear Segment;
·	we believe that our cash flows from operations and our available liquidity from our line of credit are sufficient to service the Company’s current obligations;
·	we expect backlog levels to continue to fluctuate in 2008, depending on the complexity of waste streams and the timing of receipts and processing of materials;
·	the high levels of backlog material contin

Delaware (State or other jurisdiction of incorporation or organization)	58-1954497 (IRS Employer Identification Number)

8302 Dunwoody Place, Suite 250, Atlanta, GA (Address of principal executive offices)	30350 (Zip Code)

Class		Outstanding at November 3, 2008
Common Stock, $.001 Par Value		53,908,700 shares of registrant’s Common Stock

	Employee Stock Options Granted
	September 30, 2008			September 30, 2007 ⁽⁴⁾
Weighted-average fair value per share	$	1.17		$	—
Risk -free interest rate ⁽¹⁾		3.28	%		—
Expected volatility of stock ⁽²⁾		55.54	%		—
Dividend yield		None			—
Expected option life ⁽³⁾		5.1 years			—

	Outside Director Stock Options Granted
	September 30, 2008			September 30, 2007
Weighted-average fair value per share	$	1.79		$	2.30
Risk -free interest rate ⁽¹⁾		4.04	%		4.77	%
Expected volatility of stock ⁽²⁾		66.53	%		67.60	%
Dividend yield		None			None
Expected option life ⁽³⁾		10.0 years			10.0 years

	Three Months Ended				Nine Months Ended
Stock Options	September 30,				September 30,
	2008		2007		2008		2007
Employee Stock Options	$	106,000	$	52,000	$	247,000	$	190,000
Director Stock Options		45,000		75,000		88,000		98,000
Total	$	151,000	$	127,000	$	335,000	$	288,000

·	from which we may earn revenue and incur expenses;
·	whose operating results are regularly reviewed by the segment president to make decisions about resources to be allocated to the segment and assess its performance; and
·	for which discrete financial information is available.