SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	March 31, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from		to

Commission File No. 111596

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

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)

(770) 587-9898

(Registrant's telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes T No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes £ No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer,” “accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £ Accelerated Filer T Non-accelerated Filer £ Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No T

Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the close of the latest practical date.

Class

Common Stock, $.001 Par Value

Outstanding at May 8, 2009

54,019,324

shares of registrant’s

Common Stock

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

INDEX

				Page No.
PART I	FINANCIAL INFORMATION

	Item 1.	Condensed Financial Statements

		Consolidated Balance Sheets -
			March 31, 2009 (unaudited) and December 31, 2008	1

		Consolidated Statements of Operations -
			Three Months Ended March 31, 2009 and 2008 (unaudited)	3

		Consolidated Statements of Cash Flows -
			Three Months Ended March 31, 2009 and 2008 (unaudited)	4

		Consolidated Statement of Stockholders' Equity -
			Three Months Ended March 31, 2009 (unaudited)	5

		Notes to Consolidated Financial Statements		6

	Item 2.	Management's Discussion and Analysis of
			Financial Condition and Results of Operations	26

	Item 3.	Quantitative and Qualitative Disclosures
			About Market Risk	48

	Item 4.	Controls and Procedures		49

PART II	OTHER INFORMATION

	Item 1.	Legal Proceedings		50

	Item 1A.	Risk Factors		50

	Item 5.	Other Information		50

	Item 6.	Exhibits		52

PART I - FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

	March 31,
	2009			December 31,
(Amount in Thousands, Except for Share Amounts)	(Unaudited)			2008

ASSETS
Current assets:
Cash	$	70		$	129
Restricted cash		55			55
Accounts receivable, net of allowance for doubtful
accounts of $387 and $333, respectively		13,158			13,416
Unbilled receivables - current		11,840			13,104
Inventories		284			344
Prepaid and other assets		2,708			2,565
Current assets related to discontinued operations		60			110
Total current assets		28,175			29,723

Property and equipment:
Buildings and land		26,706			24,726
Equipment		31,498			31,315
Vehicles		628			637
Leasehold improvements		11,455			11,455
Office furniture and equipment		1,913			1,904
Construction-in-progress		1,285			1,159
		73,485			71,196
Less accumulated depreciation and amortization		(24,940	)		(23,762	)
Net property and equipment		48,545			47,434

Property and equipment related to discontinued operations		651			651

Intangibles and other long term assets:
Permits		17,250			17,125
Goodwill		11,320			11,320
Unbilled receivables – non-current		3,043			3,858
Finite Risk Sinking Fund		14,042			11,345
Other assets		2,415			2,256
Total assets	$	125,441		$	123,712

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS, CONTINUED

	March 31,
	2009			December 31,
(Amount in Thousands, Except for Share Amounts)	(Unaudited)			2008

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	9,636		$	11,076
Current environmental accrual		191			186
Accrued expenses		8,617			8,896
Disposal/transportation accrual		5,222			5,847
Unearned revenue		3,579			4,371
Current liabilities related to discontinued operations		1,211			1,211
Current portion of long-term debt		2,020			2,022
Total current liabilities		30,476			33,609

Environmental accruals		543			620
Accrued closure costs		12,126			10,141
Other long-term liabilities		460			457
Long-term liabilities related to discontinued operations		1,280			1,783
Long-term debt, less current portion		16,887			14,181
Total long-term liabilities		31,296			27,182

Total liabilities		61,772			60,791

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	—			—
Common Stock, $.001 par value; 75,000,000 shares authorized,
53,985,119 and 53,934,560 shares issued and outstanding, respectively		54			54
Additional paid-in capital		97,581			97,381
Accumulated deficit		(35,251	)		(35,799	)

Total stockholders' equity		62,384			61,636

Total liabilities and stockholders' equity	$	125,441		$	123,712

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended March 31,
(Amounts in Thousands, Except for Per Share Amounts)	2009			2008

Net revenues	$	22,002		$	17,470
Cost of goods sold		16,914			13,024
Gross profit		5,088			4,446

Selling, general and administrative expenses		4,339			4,460
Gain on disposal of property and equipment		12			―
Income (loss) from operations		761			(14	)

Other income (expense):
Interest income		51			68
Interest expense		(547	)		(371	)
Interest expense-financing fees		(13	)		(52	)
Other		1			6
Income (loss) from continuing operations before taxes		253			(363	)
Income tax expense		9			―
Income (loss) from continuing operations, net of taxes		244			(363	)

Income (loss) from discontinued operations, net of taxes		304			(675	)
Gain on disposal of discontinued operations, net of taxes		―			2,107
Net income	$	548		$	1,069

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

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

Number of common shares used in computing net income (loss) per share:
Basic		53,982			53,704
Diluted		54,005			53,704

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 31,
(Amounts in Thousands)	2009			2008
Cash flows from operating activities:
Net income	$	548		$	1,069
Less: Income on discontinued operations		304			1,432

Income (loss) from continuing operations		244			(363	)
Adjustments to reconcile net income (loss) to cash provided by operations:
Depreciation and amortization		1,180			1,121
Provision (benefit) for bad debt and other reserves		59			(20	)
Gain on disposal of plant, property and equipment		(12	)		―
Issuance of common stock for services		64			14
Share based compensation		136			126
Changes in operating assets and liabilities of continuing operations, net of
effect from business acquisitions:
Accounts receivable		200			(51	)
Unbilled receivables		2,079			1,892
Prepaid expenses, inventories and other assets		(176	)		333
Accounts payable, accrued expenses and unearned revenue		(3,400	)		957
Cash provided by continuing operations		374			4,009
Cash used in discontinued operations		(158	)		(2,625	)
Cash provided by operating activities		216			1,384

Cash flows from investing activities:
Purchases of property and equipment		(304	)		(565	)
Proceeds from sale of plant, property and equipment		12			―
Payment to finite risk sinking fund		(2,697	)		(2,158	)
Cash used for acquisition considerations, net of cash acquired		―			(12	)
Cash used in investing activities of continuing operations		(2,989	)		(2,735	)
Proceeds from sale of discontinued operations		―			5,950
Cash provided by (used in) discontinued operations		11			(28	)
Net cash (used in) provided by investing activities		(2,978	)		3,187

Cash flows from financing activities:
Net borrowing (repayments) of revolving credit		3,001			(124	)
Principal repayments of long term debt		(298	)		(4,473	)
Repayment of stock subscription receivable		―			15
Cash provided by (used in) financing activities of continuing operations		2,703			(4,582	)
Principal repayment of long-term debt for discontinued operations		―			(30	)
Cash provided by (used in) financing activities		2,703			(4,612	)

Decrease in cash		(59	)		(41	)
Cash at beginning of period		129			118
Cash at end of period	$	70		$	77

Supplemental disclosure:
Interest paid, net of amounts capitalized	$	475		$	297
Income taxes paid		3			―
Non-cash investing and financing activities:
Long-term debt incurred for purchase of property and equipment		―			―
Sinking fund financed		―			―

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited, for the three months ended March 31, 2009)

(Amounts in thousands,	Common Stock				Additional Paid-In		Accumulated			Total Stockholders'
except for share amounts)	Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2008		53,934,560	$	54	$	97,381	$	(35,799	)	$	61,636

Net income	—		—		—			548			548
Issuance of Common Stock for services		50,559	—			64	—				64
Share Based Compensation	—		—			136	—				136
Balance at March 31, 2009		53,985,119	$	54	$	97,581	$	(35,251	)	$	62,384

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2009

(Unaudited)

Reference is made herein to the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2008.

1.	Basis of Presentation

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 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 three months ended March 31, 2009, are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2009.

It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

As previously disclosed, in May 2007, as result of the Company’s decision to divest the facilities within our Industrial Segment, our Industrial Segment facilities were reclassified in the second quarter of 2007 (with the exception of Perma-Fix of Michigan, Inc. (“PFMI”) and Perma-Fix of Pittsburgh, Inc. (“PFP”), two non-operational facilities which were already reclassified as discontinued operations in 2004 and 2005, respectively) as discontinued operations, in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). In 2008, we sold substantially all of the assets of Perma-Fix of Maryland, Inc. (“PFMD”), Perma-Fix of Dayton, Inc. (“PFD”), and Perma-Fix Treatment Services, Inc. (“PFTS”) within our Industrial Segment on January 8, 2008, March 14, 2008, and May 30, 2008, respectively. The respective buyer of each facility’s assets also assumed certain liabilities/obligations of the facility (see “ – Discontinued Operations and Divestitures” in this section for accounting treatment of the divested facilities). In September 2008, the Company’s Board of Directors approved the retention of Perma-Fix of Fort Lauderdale, Inc. (“PFFL”), Perma-Fix of Orlando, Inc. (“PFO”), and Perma-Fix of South Georgia, Inc. (“PFSG”) within our Industrial Segment. As the result of this decision and in accordance with SFAS No. 144, the accompanying condensed financial statements have been restated for all periods presented to reflect the reclassification of these three facilities back into our continuing operations.

2.	Summary of Significant Accounting Policies

Our accounting policies are as set forth in the notes to consolidated financial statements referred to above.

Recently Adopted Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS 157, “Fair Value Measurements”, which 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 was effective for us beginning January 1, 2009. The adoption of the aspects of SFAS 157 that pertains to non-financial assets and liabilities did not have a significant effect on our earnings or financial position.

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 did not have any impact the Company’s financial position and results of operations.

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 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. FSP No. 142-3 did not 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 (Emerging Issues Task Force) Issue No. 08-3, “Accounting for Lessees for Maintenance Deposits Under Lease Arrangement” (EITF 08-3), to provide guidance on the accounting of nonrefundable maintenance deposits. It also provides revenue recognition accounting guidance for the lessor. EITF 08-3 is effective for fiscal years beginning after December 15, 2008. EITF 08-3 did not materially impact our financial condition, result of operations, and cash flows.

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. EITF 07-5 did not materially impact our financial condition, result of operations, and cash flows.

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. The FSP also clarifies that the effective date of FAS 161 will be for any period, annual or interim, beginning after November 15, 2008. This standard did not materially impact the Company’s current disclosure process.

In November 2008, the Emerging Issues Task Force issued EITF Issue No. 08-06, "Equity Method Investment Considerations", which clarifies the accounting for certain transactions involving equity method investments. This interpretation is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and interim periods within those years. EITF Issue No. 08-06 did not materially impact the Company’s financial position or results of operations.

In December 2008, the FASB issued FASB Staff Position FSP 132(R)-1, "Employers Disclosures about Postretirement Benefit Plan Assets", which provides additional guidance on employers' disclosures about plan assets of a defined benefit pension or other postretirement plan. This interpretation is effective for financial statements issued for fiscal years ending after December 15, 2009. The Company does not expect FSP 132(R)-1 to materially impact operations or financial positions.

Recently Issued Accounting Standards

In April 2009, the FASB issued three related FSPs intended to provide additional application guidance and enhanced disclosures regarding fair value measurement and other-than-temporary impairments of securities.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“ FSP FAS 157-4”), provides guidance for making fair value measurements more consistent with the principles presented in FASB Statement No, 157, “Fair Value Measurement”. FSP FAS 157-4 must be applied prospectively and retrospective application is not permitted. FSP FAS 157-4 is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity adopting FSP FAS 157-4 early must also adopt FSP FAS 115-2 and FAS 124-2 early.

FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2 and FSP 124-2”), provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on debt securities. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual period ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. An entity may adopt this FSP early only if it also elects to adopt FSP FAS 157-4 early.

FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1 and APB 28-1”), enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP FAS 107-1 and APB 28-1 is effective for interim periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. However, an entity may adopt these interim fair value disclosure requirements early only if it also elects to adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2 early.

We are currently evaluating the impact of these standards on our consolidated financial position and results of operations.

In April 2009, the FASB issued FSP No. 141R-1 “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” (“FSP 141R-1”). FSP 141R-1 amends the provisions in Statement 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. FSP 141R-1 eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in Statement 141R and instead carries forward most of the provisions in SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company expects FSP 141R-1 may have an impact on its consolidated financial statements when effective, but the nature and magnitude of the specific effects will depend upon the nature, term and size of the acquired contingencies.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation.

3.	Stock Based Compensation

We follow the provisions of SFAS 123R, “Share-Based Payment “ (“SFAS 123R”), a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), 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 one-fifth yearly vesting over a five year period or a six year contractual term with one-third 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 February 26, 2009, our Board of Directors authorized the grant of 75,000 Incentive Stock Options (“ISO”) to our newly named Chief Financial Officer (“CFO”) and 70,000 ISO to certain employees of the Company which allows for the purchase of Common Stock from the Company’s 2004 Stock Option Plan. Both option grants were for a contractual term of six years with vesting period over a three year period at one-third increments per year. The exercise price of the options granted was $1.42 per share which was based on our closing stock price on the date of grant.

As of March 31, 2009, we had 2,913,347 employee stock options outstanding, of which 1,777,847 are vested. The weighted average exercise price of the 1,777,847 outstanding and fully vested employee stock option is $1.85 with a remaining weighted contractual life of 2.81 years. Additionally, we had 645,000 outstanding and fully vested director stock options with a weighted average exercise price and remaining contractual life of $2.19 and 5.94 years, respectively.

The Company estimates fair value of stock options using the Black-Scholes valuation model. Assumptions used to estimate the fair value of stock options granted include the exercise price of the award, the expected term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The fair value of the options granted to our CFO and certain employees noted above and the related assumptions used in the Black-Scholes option pricing model used to value the options granted as of March 31, 2009 were as follows. The Company did not grant any options in the first quarter of 2008:

	Employee Stock Options Granted
	March 31, 2009
Weighted-average fair value per share	$	1.42
Risk -free interest rate (1)		2.07% - 2.40	%
Expected volatility of stock (2)		59.16% - 60.38	%
Dividend yield	None
Expected option life (3)	4.6 years - 5.8 years

(1) The risk-free interest rate is based on the U.S. Treasury yield in effect at the grant date over the expected term of the option.

(2) The expected volatility is based on historical volatility from our traded Common Stock over the expected term of the option.

(3) The expected option life is based on historical exercises and post-vesting data.

The following table summarizes stock-based compensation recognized for the three months ended March 31, 2009 and 2008 for our employee and director stock options.

	Three Months Ended
Stock Options	March 31,
	2009		2008
Employee Stock Options	$	106,000	$	83,000
Director Stock Options		30,000		43,000
Total	$	136,000	$	126,000

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. SFAS 123R requires that stock based compensation expense be based on options that are ultimately expected to vest. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. When actual forfeitures vary from our estimates, we recognize the difference in compensation expense in the period the actual forfeitures occur or when options vest. For the February 26, 2009 option grant to our new CFO and certain employees, we estimated forfeiture rate of 0.0% for both for the first year of vesting. Our estimated forfeiture rate is based on historical trends of actual forfeitures for similar positions. As of March 31, 2009, we have approximately $901,000 of total unrecognized compensation cost related to unvested options, of which $266,000 is expected to be recognized in remaining 2009, $355,000 in 2010, $275,000 in 2011, and $5,000 in 2012.

4.	Capital Stock And Stock Plans

During the three months ended March 31, 2009, we had no option exercise. We issued 50,559 shares of our Common Stock under our 2003 Outside Directors Stock Plan to our outside directors as compensation for serving on our Board of Directors. We pay each of our outside directors $2,167 monthly in fees for serving as a member of our Board of Directors. The Audit Committee Chairman receives an additional monthly fee of $1,833 due to the position’s additional responsibility. In addition, each board member is paid $1,000 for each board meeting attendance as well as $500 for each telephonic conference call. As a member of the Board of Directors, each director elects to receive either 65% or 100% of the director’s fee in shares of our Common Stock based on 75% of the fair market value of our Common Stock determined on the business day immediately preceding the date that the quarterly fee is due. The balance of each director’s fee, if any, is payable in cash.

On July 28, 2006, our Board of Directors 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.

The summary of the Company’s total Plans as of March 31, 2009 as compared to March 31, 2008, and changes during the period then ended are presented as follows:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding Janury 1, 2009		3,417,347		$	2.03
Granted		145,000			1.42
Exercised	─			─				$	─
Forfeited		(4,000	)		1.97
Options outstanding End of Period (1)		3,558,347			2.01		4.2	$	413,175
Options Exercisable at March 31, 2009 (1)		2,422,847		$	1.94		3.6	$	336,325
Options Vested and expected to be vested at March 31, 2009		3,516,989		$	1.94		4.2	$	413,175

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding Janury 1, 2008		2,590,026		$	1.91
Granted	─			─
Exercised	─			─				$	─
Forfeited		(47,334	)		1.82
Options outstanding End of Period (1)		2,542,692			1.91		4.3	$	96,673
Options Exercisable at March 31, 2008 (1)		2,244,692		$	1.92		4.4	$	96,673
Options Vested and expected to be vested at March 31, 2008		2,524,879		$	1.91		4.3	$	96,673

(1) Option with exercise price ranging from $1.22 to $2.98

5.	Earnings (Loss) Per Share

Basic earning per share excludes any dilutive effects of stock options, warrants, and convertible preferred stock. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share.

The following is a reconciliation of basic net income (loss) per share to diluted net income (loss) per share for the three months ended March 31, 2009 and 2008:

	Three Months Ended March 31,
(Amounts in Thousands, Except for Per Share Amounts)	2009		2008
Income (loss) per share from continuing operations
Income (loss) from continuing operations	$	244	$	(363	)
Basic loss per share	$	—	$	(.01	)
Diluted loss per share	$	—	$	(.01	)

Income (loss) per share from discontinued operations
Income (loss) from discontinued operations	$	304	$	(675	)
Basic income (loss) per share	$	.01	$	(.01	)
Diluted income (loss) per share	$	.01	$	(.01	)

Income per share from disposal of discontinued operations
Gain on disposal of discontinued operations	$	—	$	2,107
Basic income per share	$	—	$	.04
Diluted income per share	$	—	$	.04

Weighted average common shares outstanding – basic		53,982		53,704
Potential shares exercisable under stock option plans		23	—
Weighted average shares outstanding – diluted		54,005		53,704


Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:
Upon exercise of options		3,361		845

6.	Long Term Debt

Long-term debt consists of the following at March 31, 2009 and December 31, 2008:

(Amounts in Thousands)	March 31, 2009		December 31, 2008
Revolving Credit facility dated December 22, 2000, borrowings based
upon eligible accounts receivable, subject to monthly borrowing base
calculation, variable interest paid monthly at option of prime rate
(3.25% at March 31,2009) plus 2.0 or minimum floor base London
InterBank Offer Rate ("LIBOR") of 2.5% plus 3.0%, balance due in
July 2012. (1)	$	9,517	$	6,516
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 option of prime rate plus 2.5% or minimum floor
base LIBOR of 2.5% plus 3.5%. (1)		6,417		6,667
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
Various capital lease and promissory note obligations, payable 2009 to
2013, interest at rates ranging from 5.0% to 12.6%.		473		520
		18,907		16,203
Less current portion of long-term debt		2,020		2,022
	$	16,887	$	14,181

(1) Prior to March 5, 2009, variable interest was paid monthly at prime plus ½% for our Revolving Credit and prime plus 1.0% for our Term Loan.

Revolving Credit and Term Loan Agreement

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 provided for a term loan ("Term Loan") in the amount of $7,000,000, which requires monthly installments of $83,000. The Agreement also provided 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 March 31, 2009, the excess availability under our Revolving Credit was $4,381,000 based on our eligible receivables.

Pursuant to the Agreement, as amended, 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 in the event we pay off our obligations on or prior to August 4, 2009 and 1/2 % of the total financing 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 obligations after August 5, 2010.

On March 5, 2009, we entered into an Amendment to our PNC Agreement. This Amendment increased our borrowing availability by approximately an additional $2,200,000. In addition, pursuant to the Amendment, monthly interest due on our revolving line of credit was amended from prime plus 1/2% to prime plus 2.0% and monthly interest due on our Term Loan was amended from prime plus 1.0% to prime plus 2.5%. The Company also has the option to pay monthly interest due on the revolving line of credit by using the LIBOR, with the minimum floor base LIBOR rate of 2.5%, plus 3.0% and to pay monthly interest due on the Term Loan using the minimum floor base LIBOR of 2.5%, plus 3.5%. In addition, pursuant to the Amendment, the fixed charge coverage ratio was amended to reduce the availability monthly by $48,000. The Amendment also allowed us to retain funds received from the sale of our PFO property which was completed in the fourth quarter of 2008. All other terms and conditions to the credit facility remain principally unchanged. As a condition of this Amendment, we agreed to pay PNC a fee of $25,000. Funds made available under this Amendment were used to secure the additional financial assurance coverage needed by our DSSI subsidiary to operate under the PCB permit issued by the EPA on November 26, 2008 (see “Commitment and Contingency – Insurance” footnote for information regarding this financial assurance coverage).

Promissory Note and Installment Agreement

In acquiring our Material &Energy Corporation (“M&EC”) subsidiary, M&EC issued a promissory note in the principal amount of $3,700,000, together with interest at an annual rate equal to the applicable law rate pursuant to Section 6621 of the Internal Revenue Code, to Performance Development Corporation (“PDC”), dated June 25, 2001, for monies advanced to M&EC by PDC and certain services performed by PDC on behalf of M&EC prior to our acquisition of M&EC. The principal amount of the promissory note was payable over eight years on a semiannual basis on June 30 and December 31, with a final principal payment to be made by December 31, 2008. All accrued and unpaid interest on the promissory note was payable in one lump sum on December 31, 2008. PDC directed M&EC to make all payments under the promissory note directly to the IRS to be applied to PDC’s obligations to the IRS. On December 29, 2008, M&EC and PDC entered into an amendment to the promissory note, whereby the outstanding principal and accrued interest due under the promissory note totaling approximately $3,066,000 is to be paid in the following installments: $500,000 payment to be made by December 31, 2008 and five monthly payment of $100,000 to be made starting January 27, 2009, with the balance consisting of accrued and unpaid interest due on June 30, 2009. We made the $500,000 payment on December 31, 2008 and have made three of the five monthly payments of $100,000 as of March 31, 2009. Interest is to continue to accrue at the applicable law rate pursuant to the provisions of section 6621 of the Internal Revenue Code of 1986, as amended. We have been directed by PDC to make all payments under the promissory note, as amended, directly to the IRS to be applied to PDC’s obligations under its obligations with the IRS. As of March 31, 2009, the outstanding balance due under the promissory note to PDC, as amended, was approximately $2,309,000, which consists of interest only.

In acquiring Perma-Fix Northwest, Inc. (“PFNW”) and Perma-Fix Northwest Richland, Inc. (“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, $2,500,000, 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. As of March 31, 2008, interest paid totaled approximately $216,000. Interest accrued as of March 31, 2009 totaled approximately $155,000. We also have an earn-out obligation to the former shareholders of PFNW as more fully discussed under Note 7 “Commitments and Contingencies – Earn Out Amount – Perma-Fix Northwest, Inc. (“PFNW”) and Perma-Fix Northwest Richland, Inc. (“PFNWR”).

7.	Commitments and Contingencies

Hazardous Waste

In connection with our waste management services, we handle both hazardous and non-hazardous waste, which we transport to our own, or other facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required, we could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.

Legal

In the normal course of conducting our business, we are involved in various litigations.

Perma-Fix of Dayton (“PFD”), Perma-Fix of Florida (“PFF”), Perma-Fix of Orlando (“PFO”), Perma-Fix of South Georgia (“PFSG”), and Perma-Fix of Memphis (“PFM”)

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, the Louisiana Department of Environmental Quality (“LDEQ”) has collected approximately $8,400,000 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 $9,000,000 and $12,000,000; however, based on preliminary outside consulting work hired by the PRP group, which we are a party to, the remediation costs could 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-effectively. 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 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. Approximately $9,000 of the accrued amount was paid to the PRP Group in the fourth quarter of 2008. As of the date of this report, we cannot accurately access our ultimate 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.

Notice of Violation - Perma-Fix Treatment Services, Inc. (“PFTS”)

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. Settlement discussions have resulted in a proposal to fund a supplemental environmental project (“SEP”) in lieu of a civil penalty. The estimated cost of the SEP is approximately $5,000, which is subject to finalization and execution of a settlement agreement. The settlement date is estimated to be during the second quarter of 2009. PFTS sold most all of its assets to a non-affiliated third party on May 30, 2008.

Industrial Segment Divested Facilities/Operations

We sold substantially all of the assets of PFTS pursuant to an Asset Purchase Agreement on May 30, 2008. Under this Agreement the buyer assumed certain debts and obligations of PFTS, including, but not limited to, certain debts and obligations of PFTS to regulatory authorities under certain consent agreements entered into by PFTS 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 breach of the Asset Purchase Agreement and we may assert claims against the buyer for such breach. We currently are discussing 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.

Earn-Out Amount – Perma-Fix Northwest, Inc. (“PFNWR”) and Perma-Fix Northwest Richland, Inc. (“PFNWR”)

In connection with the acquisition of PFNW (f/n/a “Nuvotec”) and PFNWR (f/k/a Pacific EcoSolutions, Inc. (“PEcoS”) in 2007, we could be required to pay an earn-out amount not to exceed $4,552,000 over a four year period, pursuant to the Merger Agreement, as amended, with the first $1,000,000 of the earn-out amount to be placed into an escrow account to satisfy any indemnification obligations to us of Nuvotec, PEcoS, and the former shareholders of Nuvotec. The earn-out amounts will be earned if certain annual revenue targets are met by the Company’s consolidated Nuclear Segment. We anticipate that all or a portion of the first $1,000,000 of the earn-out amount could be placed in an escrow account during the later part of 2009 to satisfy any indemnification obligations under the Agreement.

Insurance

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 American International Group, Inc. (“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 provided an initial maximum $35,000,000 of financial assurance coverage and has available capacity to allow for annual inflation and other performance and surety bond requirements. Our initial finite risk insurance policy required an upfront payment of $4,000,000, 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. We are required to make seven annual installments, as amended, of $1,004,000, of which $991,000 is to be deposited in the sinking fund account, with the remaining $13,000 represents a terrorism premium. In addition, we are required to make a final payment of $2,008,000, of which $1,982,000 is to be deposited in the sinking fund account, with the remaining $26,000 represents a terrorism premium. In March 2009, we paid our sixth of the eight required remaining payments. In March 2009, we secured additional financial assurance coverage of approximately $5,421,000 with AIG which will enable our Diversified Scientific Services, Inc. (“DSSI”) facility to receive and process wastes under a permit issued by the U.S. Environment Protection Agency (“EPA”) Region 4 on November 26, 2008 to commercially store and dispose of Polychlorinated Biphenyls (“PCBs”). DSSI began the permitting process to add Toxic Substances Control Act (“TSCA”) regulated wastes, namely PCBs, containing radioactive constituents to its authorization in 2004 in order to meet the demand for the treatment of government and commercially generated radioactive PCB wastes. We secured this additional financial assurance coverage requirement by increasing our initial 25-year finite risk insurance policy with AIG from maximum policy coverage of $35,000,000 to $39,000,000, of which our total financial coverage amounts to $35,871,000 as of March 31, 2009. Payment for this additional financial assurance coverage requires a total payment of approximately $5,219,000, consisting of an upfront payment of $2,000,000, of which approximately $1,655,000 will be deposited into a sinking fund account, with the remaining representing fee payable to AIG. In addition, we are required to make three yearly payments of approximately $1,073,000 starting December 31, 2009, of which $888,000 will be deposited into a sinking fund account, with the remaining to represent fee payable to AIG. We made our initial $2,000,000 payment to AIG on March 6, 2009 from funds made available from an Amendment to our loan Agreement entered between us, our subsidiary, and PNC Bank, National Association, on March 5, 2009.

As of March 31, 2009, we have recorded $9,591,000 in our sinking fund related to the policy noted above on the balance sheet, which includes interest earned of $757,000 on the sinking fund as of March 31, 2009. Interest income for the three month ended March 31, 2009 was $26,000. On the fourth and subsequent anniversaries of the contract inception, we may elect to terminate this contract. If we so elect, the Insurer is obligated to 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, which we acquired in June 2007, with AIG. The policy provides an initial $7,800,000 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 $8,200,000. 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 $7,158,000, consisting of an annual payment of $1,363,000, two annual payments of $1,520,000, starting July 31, 2007 and an additional $2,755,000 payment to be made in five quarterly payments of $551,000 beginning September 2007. In July 2007, we paid the $1,363,000, of which $1,106,000 represented premium on the policy and the remaining was deposited into a sinking fund account. In July 2008, we paid the first of the two $1,520,000 payments, with $1,344,000 deposited into a sinking fund account and the remaining representing premium. We have made all of the five quarterly payments which were deposited into a sinking fund. As of March 31, 2009, we have recorded $4,451,000 in our sinking fund related to this policy on the balance sheet, which includes interest earned of $96,000 on the sinking fund as of March 31, 2009. Interest income for the three months ended March 31, 2009 totaled $25,000.

8.	Discontinued Operations and Divestitures

Our discontinued operations encompass our PFMD, PFD, and PFTS facilities within our Industrial Segment as well as two previously shut down locations, PFP and PFMI, two facilities which were approved as discontinued operations by our Board of Directors effective November 8, 2005, and October 4, 2004, respectively. As 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 were classified as discontinued operations in the Consolidated Balance Sheet, and we ceased depreciation of these facilities’ long-lived assets classified as held for sale in May 2007.

On January 8, 2008, we sold substantially all of the assets of PFMD, 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 was subject to certain working capital adjustments after closing. 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. In the fourth quarter of 2008, we received a final working capital adjustment of $170,000 from the buyer. We sold $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. Total expenses related to the sale of PFMD totaled approximately $132,000. We recorded $1,786,000 (net of taxes of $71,000) in final gain on the sale of PFMD which was recorded separately on the Consolidated Statement of Operations as “Gain on disposal of discontinued operations, net of taxes” for the year ended December 31, 2008.

On March 14, 2008, we completed the sale of substantially all of the assets of PFD, 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. In the second quarter of 2008, we paid to the buyer a final working capital adjustment of $209,000. We sold approximately $3,103,000 of PFD’s assets. The buyer assumed liabilities in the amount of approximately $1,635,000. Expenses related to the sale of PFD totaled approximately $206,000. Our final gain on the sale PFD totaled $256,000, net of taxes of $0, which was recorded on the Consolidated Statement of Operations as “Gain on disposal of discontinued operations, net of taxes”, for the year ended December 31, 2008.

On May 30, 2008, we completed sale of substantially all of the assets of PFTS, 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 was 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. In July 2008, we paid the buyer a final working capital adjustment of $135,000. We sold $1,861,000 of PFTS’s assets. The buyer assumed liabilities in the amount of approximately $996,000. Expenses related to the sale of PFTS totaled approximately $186,000. We recorded a final gain on the sale of PFTS of $281,000, net of taxes of $0, which was recorded on the Consolidated Statement of Operations as “Gain on disposal of discontinued operations, net of taxes”, for the year ended December 31, 2008.

In connection with the divestiture of PFTS above, the buyer of PFTS’s assets is required to replace our financial assurance bond with its own financial assurance mechanism for facility closures. Our financial assurance bond of $685,000 for PFTS was required to remain in place until the buyer has provided replacement coverage. On March 24, 2009, the appropriate regulatory authority authorized the release of our financial assurance bond of $685,000 for PFTS. As a result of this authorized financial assurance release, we recorded a recovery of approximately $400,000 in closure costs which was included in “income from discontinued operations, net of taxes” on the Consolidated Statement of Operations for the three months ended March 31, 2009.

The following table summarizes the results of discontinued operations for the three months ended March 31, 2009 and 2008. The gains on disposals of discontinued operations, net of taxes, were 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 “Income (loss) from discontinued operations, net of taxes”.

	Three Months Ended March 31,
(Amounts in Thousands)	2009			2008

Net revenues	$	—		$	2,387
Interest expense		(20	)		(40	)
Operating income (loss) from discontinued operations (1)		304			(675	)
Gain on disposal of discontinued operations (2)		—			2,107
Income (loss) from discontinued operations		304			1,432

(1) Net of taxes of $0 for each of the three months ended March 31, 2009 and 2008, respectively.

(2) Net of taxes of $0 and $43 for three months ended March 31, 2009 and 2008, respectively.

Assets and liabilities related to discontinued operations total $711,000 and $2,491,000 as of March 31, 2009, respectively and $761,000 and $2,994,000 as of December 31, 2008, respectively.

The following table presents the Industrial Segment’s major classes of assets and liabilities of discontinued operations that are classified as held for sale as of March 31, 2009 and December 31, 2008. The held for sale asset and liabilities balances as of December 31, 2008 may differ from the respective balances at closing:

	March 31,		December 31,
(Amounts in Thousands)	2009		2008

Account receivable, net	$	—	$	—
Inventories		—		—
Other assets		—		22
Property, plant and equipment, net (1)		651		651
Total assets held for sale	$	651	$	673
Account payable	$	—	$	—
Deferred revenue		—		—
Accrued expenses and other liabilities		22		5
Note payable		—		—
Environmental liabilities		—		—
Total liabilities held for sale	$	22	$	5

(1) net of accumulated depreciation of $13 for as of March 31, 2009 and December 31, 2008.

The following table presents the Industrial Segment’s major classes of assets and liabilities of discontinued operations that are not held for sale as of March 31, 2009 and December 31, 2008:

	March 31,		December 31,
(Amounts in Thousands)	2009		2008

Other assets	$	60	$	88
Total assets of discontinued operations	$	60	$	88
Account payable	$	—	$	15
Accrued expenses and other liabilities		1,467		1,947
Deferred revenue		—		—
Environmental liabilities		1,002		1,027
Total liabilities of discontinued operations	$	2,469	$	2,989

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. During 2006, based on state-mandated criteria, we began implementing the modified methodology to remediate the facility. We have spent approximately $751,000 for closure costs since discontinuation of PFMI in October 2004, of which approximately $6,000 was spent during the three months ended March 31, 2009 and $26,000 was spent during 2008. We have $532,000 accrued for the closure, as of March 31, 2009, and we anticipate spending $267,000 in the remaining nine months of 2009, with the remainder over the next five years. Based on the current status of the Corrective Action, we believe that the remaining reserve is adequate to cover the liability.

As of March 31, 2009, PFMI has a pension payable of $1,067,000. 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 $184,000 that we expect to pay over the next year.

9.	Operating Segments

Pursuant to FAS 131, we define an operating segment as a business activity:

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.

We currently have three operating segments, which are defined as each business line that we operate. This however, excludes corporate headquarters, which does not generate revenue, and our discontinued operations, which include certain facilities within our Industrial Segment (See “Note 8 – Discontinued Operations and Divestitures” to “Notes to Consolidated Financial Statements”).

Our operating segments are defined as follows:

The Nuclear Waste Management Services Segment (“Nuclear Segment”) provides treatment, storage, processing and disposal of nuclear, low-level radioactive, mixed (waste containing both hazardous and non-hazardous constituents), hazardous and non-hazardous waste through our four facilities: Perma-Fix of Florida, Inc., Diversified Scientific Services, Inc., East Tennessee Materials and Energy Corporation, and Perma-Fix of Northwest Richland, Inc.

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.

The Industrial Waste Management Services Segment (“Industrial Segment”) provides on-and-off site treatment, storage, processing and disposal of hazardous and non-hazardous industrial waste, and wastewater through our three facilities: Perma-Fix of Ft. Lauderdale, Inc., Perma-Fix of Orlando, Inc., and Perma-Fix of South Georgia, Inc.

The table below presents certain financial information of our operating segment as of and for the three months ended March 31, 2009 and 2008 (in thousands).

Segment Reporting for the Quarter Ended March 31, 2009
	Nuclear			Engineering		Industrial		Segments Total		Corporate (2)			Consolidated Total
Revenue from external customers	$	19,114	(3)	$	779	$	2,109	$	22,002	$	—		$	22,002
Intercompany revenues		751			170		188		1,109		—			1,109
Gross profit		4,292			226		570		5,088		—			5,088
Interest income		—			—		—		—		51			51
Interest expense		360			1		5		366		181			547
Interest expense-financing fees		—			—		—		—		13			13
Depreciation and amortization		1,056			10		103		1,169		11			1,180
Segment profit (loss)		1,749			86		54		1,889		(1,645	)		244
Segment assets (1)		98,377			2,152		5,431		105,960		19,481	(4)		125,441
Expenditures for segment assets		252			—		49		301		3			304
Total long-term debt		2,802			27		144		2,973		15,934			18,907

Segment Reporting for the Quarter Ended March 31, 2008
	Nuclear			Engineering		Industrial			Segments Total		Corporate (2)			Consolidated Total
Revenue from external customers	$	13,981	(3)	$	902	$	2,587		$	17,470	$	—		$	17,470
Intercompany revenues		611			98		197			906		—			906
Gross profit		3,554			255		637			4,446		—			4,446
Interest income		2			—		—			2		66			68
Interest expense		206			1		5			212		159			371
Interest expense-financing fees		—			—		—			—		52			52
Depreciation and amortization		1,103			7		—			1,110		11			1,121
Segment profit (loss)		976			128		(35	)		1,069		(1,432	)		(363	)
Segment assets (1)		95,578			2,196		6,107			103,881		15,702	(4)		119,583
Expenditures for segment assets		512			—		46			558		7			565
Total long-term debt		6,152			3		201			6,356		7,280			13,636

(1)	Segment assets have been adjusted for intercompany accounts to reflect actual assets for each segment.

(2)	Amounts reflect the activity for corporate headquarters not included in the segment information.

(3)

The consolidated revenues within the Nuclear Segment include the CH Plateau Remediation Company (“CHPRC”) revenue of $10,748,000 or 48.8% of our total consolidated revenue for the quarter ended March 31, 2009. Our M&EC facility was awarded a subcontract by CHPRC, a general contractor to the Department of Energy (“DOE”), in the second quarter of 2008. The consolidated revenue within the Nuclear Segment also include the Fluor Hanford revenue of $0 or 0% and $1,766,000 or 10.1% for the quarter ended March 31, 2009 and 2008, respectively. Effective October 1, 2008, CHPRC began management of waste activities previously under Fluor Hanford, DOE’s general contractor prior to CHPRC. See “Known Trends and Uncertainties – Significant Customers” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the revenue transition discussion.

(4)	Amount includes assets from discontinued operations of $711,000 and $2,541,000 as of March 31, 2009 and 2008, respectively.

10.	Income Taxes

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 the recognition and measurement of 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. The adoption of FIN 48 did not have a material impact on our financial statements.

We have not yet filed our income tax returns for the period ended December 31, 2008 tax year; however, we expect that the actual return will mirror tax positions taken within our income tax provision for 2008. 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 first quarter of 2009 did not have any impact on our result of operations, financial condition or liquidity.

11.	Closure Costs

We accrue for the estimated closure costs as determined pursuant to Resource Conservation and Recovery Act (“RCRA”) guidelines for all fixed-based regulated operating and discontinued facilities, even though we do not intend to or have present plans to close any of our existing facilities. The permits and/or licenses define the waste, which may be received at the facility in question, and the treatment or process used to handle and/or store the waste. In addition, the permits and/or licenses specify, in detail, the process and steps that a hazardous waste or mixed waste facility must follow should the facility be closed or cease operating as a hazardous waste or mixed waste facility. Closure procedures and cost calculations in connection with closure of a facility are based on guidelines developed by the federal and/or state regulatory authorities under RCRA and the other appropriate statutes or regulations promulgated pursuant to the statutes. The closure procedures are very specific to the waste accepted and processes used at each facility. We recognize the closure cost as a liability on the balance sheet. Since all our facilities are acquired facilities, the closure cost for each facility was recognized pursuant to a business combination and recorded as part of the purchase price allocation of fair value to identifiable assets acquired and liabilities assumed.

The closure calculation is increased annually for inflation based on RCRA guidelines, and for any approved changes or expansions to the facility, which may result in either an increase or decrease in the approved closure amount. If there is a change to the closure estimate, we record this change in the liability and asset, with the asset depreciated in accordance with our depreciation policy. Annual inflation factor increases are expensed during the current year. In the first quarter of 2009, due to change in estimate of the costs to close our DSSI facility based on federal/state regulatory guidelines, we increased our closure accrual for our DSSI facility by approximately $1,980,000. This change in estimate resulted from the permit that our DSSI facility received from the U.S. EPA Region 4 in November 2008 which will enable the facility to commercially store and dispose of PCBs.

12.	Subsequent Event

Shelf Registration

On April 8, 2009, the Company filed a shelf registration statement on Form S-3 with the SEC. The shelf registration statement, if and when declared effective by the SEC, would give the Company the ability to sell up to 5,000,000 shares of its Common Stock. After the shelf registration is declared effective by the SEC, the Common Stock may be sold from time to time and through one or more methods of distribution, subject to market conditions and the Company’s capital needs, and any sales of securities through the registration statement will be used for general working capital requirements and/or to fund possible acquisitions or investments. Under the terms of our existing credit facility, we are required to maintain such investments with our lender or its affiliates, which will serve as additional collateral under our credit facility. The terms of any offering would be established at the time of the offering. The shelf registration was put in place given the current market environment, as it provides the Company greater financial flexibility in the event we identify strategic opportunities that may require additional capital. The registration statement referred to above has not become effective. These securities covered by this registration statement may not be sold nor may offers to buy be accepted prior to the time the registration statement become effective. The above reference to the registration statement shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

Loan and Securities Purchase Agreement

The Audit Committee of the Company recommended to the Board of Directors, and the Company’s Board of Director approved, the Company entering into a Loan and Securities Purchase Agreement (“Agreement”) with Mr. William N. Lampson and Mr. Diehl Rettig. As a result of such approval, the parties have executed the Agreement. Under the Agreement, Messrs. Lampson and Rettig (collectively, the “Lenders”) have loaned us $3,000,000 pursuant to the terms of the Agreement. Mr. Lampson was formerly a major shareholder of Nuvotec USA, Inc. (n/k/a Perma-Fix Northwest, Inc. (“PFNWR”)) and its wholly owned subsidiary, Pacific EcoSolution, Inc. (n/k/a Perma-Fix Northwest Richland, Inc. (“PFNWR”)) prior to our acquisition of PFNW and PFNWR, and Mr. Rettig was formerly a shareholder of, and counsel for, Nuvotec USA, Inc. at the time of our acquisition. The Company has entered into a Promissory Note (“Note”) in the amount of $3,000,000 with the Lenders. The proceeds of the loan are to be used primarily to pay off a certain promissory note, dated June 25, 2001, as amended on December 28, 2008, entered into by our M&EC subsidiary with Performance Development Corporation (“PDC”), with the remaining funds, if any, used for working capital purposes. The balance of the PDC promissory was approximately $2,309,000 as of March 31, 2009. The Agreement and the Note provide for monthly principal repayment of approximately $87,000 plus accrued interest, starting June 8, 2009, and on the 8th day of each month thereafter, with interest payable at LIBOR plus 4.5%, with LIBOR of at least 1.5%. Any unpaid principal balance along with accrued interest is due May 8, 2011. The Note may be prepaid at anytime by the Company without penalty.

The Agreement provides that, in consideration of the Company receiving the loan, the Company is to issue to Messrs. Lampson and Rettig, pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Act”), and/or Rule 506of Regulation D promulgated under the Act, within five business days following the closing date of the loan an aggregate of 200,000 shares of the Company’s Common Stock (“Shares”) and two Warrants to purchase up to an aggregate 150,000 shares of the Company’s Common Stock (“Warrant Shares”) at an exercise price of $1.50 per share, with Mr. Lampson receiving 180,000 Shares and a Warrant to purchase up to an aggregate of 135,000 Warrant Shares and Mr. Rettig receiving 20,000 Shares and a Warrant to purchase up to an aggregate of 15,000 Warrant Shares. In addition, under the terms of the Agreement and Note, if the Company defaults in payment of any principal or interest under the Note and such default continues for 30 days, the Lenders shall have the right to declare the Note immediately due and payable and to have payment of the remaining unpaid principal amount and accrued interest (“Payoff Amount”) in one of the two methods, at their option:

in cash, or

subject to certain limitations and pursuant to an exemption from registration under Section 4(2) of the Act and/or Rule 506 of Regulation D, in shares of Company Common Stock, with the number of shares to be issued determined by dividing the unpaid principal balance as of the date of default, plus accrued interest, by a dollar amount equal to the closing bid price of the Company’s Common Stock on the date of default as reported on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) (“Payoff Shares”). The Payoff Amount is to be paid as follows: 90% to Mr. Lampson and 10% to Mr. Rettig.

The aggregate number of Shares, Warrant Shares, and Payoff Shares that are to be issued to the Lenders under the Agreement and Note, together with the aggregate shares of the Company’s Common Stock and other Company voting securities owned by the Lenders as of the date of issuance of the Payoff Shares, if any, shall not exceed:

the number of shares equal to 19.9% of the number of shares of the Company’s Common Stock issued and outstanding as of the date of the Agreement, or

19.9% of the voting power of all of the Company’s voting securities issued and outstanding as of the date of the Agreement.

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

PART I, ITEM 2

Forward-looking Statements

Certain statements contained within 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 performance of the Company to differ materially from such statements. The words "believe," "expect," "anticipate," "intend," "will," and similar expressions identify forward-looking statements. Forward-looking statements contained herein relate to, among other things,

·	cash flow from operations and our available liquidity from our line of credit are sufficient to service our current obligations;
·	government funding and economic stimulus package should positively impact our existing government contracts;
·	demand for our service will continue to be subject to fluctuations;
·	effect on us due to reductions in the level of government funding;
·	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 costs of operations;
·	ability to remediate certain contaminated sites for projected amounts;
·	no further impairment of intangible or tangible assets;
·	despite our aggressive compliance and auditing procedures for disposal of wastes, we could, in the future, be notified that we are a Partially Responsible Party (“PRP”) at a remedial action site, which could have a material adverse effect;
·	ability to generate funds internally to remediate sites;
·	ability to fund budgeted capital expenditures of $1,300,000 during 2009 through our operations or lease financing or a combination of both;
·	growth of our Nuclear Segment;
·	we believe full operations under the CHPRC subcontract will result in revenues for on-site and off-site work of approximately $200,000,000 to $250,000,000 over the five year base period;
·	settlement of the Notice of Violation at PFTS is estimated to be during the second quarter of 2009, subject to finalization and execution of a settlement agreement;
·	Our inability to continue under existing contracts that we have with the federal government (directly or indirectly as a subcontractor) could have a material adverse effect on our operations and financial condition;
·	although we have seen smaller fluctuation in government receipts between quarters in recent years, as government spending is contingent upon its annual budget and allocation of funding, we cannot provide assurance that we will not have larger fluctuations in the quarters in the near future;
·	we anticipate spending $267,000 in the remaining nine months of 2009 to remediate the PFMI site, with the remainder over the next five years;
·	based on the current status of Corrective Action for PFMI, we believe that the remaining reserve is adequate to cover the liability;
·	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;
·	we anticipate remediation of these control weaknesses by the third quarter of 2009;
·	potential for fines and remediation of our waste management facilities;
·	In the event of failure of AIG, this could significantly impact our operations and our permits;
·	the Company expects SFAS No. 141R and FSP No. 141R-1 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 effect date;

·	the Company does not expect the adoption of SAB No. 110 and FSP 132(R)-1 to materially impact our operations or financial position; and
·	placing the first $1,000,000 of the escrow amount we may be required to pay in connection with the acquisition of PFNWR and PFNW in an escrow account during the later part of 2009.

While the Company believes the expectations reflected in such forward-looking statements are reasonable, it can give no assurance such expectations will prove to have been correct. There are a variety of factors, which could cause future outcomes to differ materially from those described in this report, including, but not limited to:

·	general economic conditions;
·	material reduction in revenues;
·	ability to meet PNC covenant requirements;
·	inability to collect in a timely manner a material amount of receivables;
·	increased competitive pressures;
·	the ability to maintain and obtain required permits and approvals to conduct operations;
·	the ability to develop new and existing technologies in the conduct of operations;
·	ability to retain or renew certain required permits;
·	discovery of additional contamination or expanded contamination at any of the sites or facilities leased or owned by us or our subsidiaries which would result in a material increase in remediation expenditures;
·	changes in federal, state and local laws and regulations, especially environmental laws and regulations, or in interpretation of such;
·	potential increases in equipment, maintenance, operating or labor costs;
·	management retention and development;
·	financial valuation of intangible assets is substantially more/less than expected;
·	the requirement to use internally generated funds for purposes not presently anticipated;
·	inability to continue to be profitable on an annualized basis;
·	the inability of the Company to maintain the listing of its Common Stock on the NASDAQ;
·	terminations of contracts with federal agencies or subcontracts involving federal agencies, or reduction in amount of waste delivered to the Company under the contracts or subcontracts;
·	renegotiation of contracts involving the federal government;
·	disposal expense accrual could prove to be inadequate in the event the waste requires re-treatment; and
·	Risk Factors contained in Item 1A of our 2008 Form 10-K.

The Company undertakes no obligations to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

Overview

We provide services through three reportable operating segments: Nuclear Waste Management Services Segment (“Nuclear Segment”), Industrial Waste Management Services Segment (“Industrial Segment”), and Consulting Engineering Services Segment (“Engineering Segment”). The Nuclear Segment provides treatment, storage, processing and disposal services of mixed waste (waste containing both hazardous and low-level radioactive materials) and low-level radioactive wastes, including research, development and on-site and off-site waste remediation. Our Industrial Segment provides on-and-off site treatment, storage, processing and disposal of hazardous and non-hazardous industrial waste and wastewater. Our Engineering Segment provides a wide variety of environmental related consulting and engineering services to both industry and government. These services include oversight management of environmental restoration projects, air, soil, and water sampling, compliance reporting, emission reduction strategies, compliance auditing, and various compliance and training activities.

The first quarter of 2009 reflected a revenue increase of $4,532,000 to $22,002,000 or 25.9% from revenue of $17,470,000 for the same period of 2008. Within our Nuclear Segment, we generated revenue of $19,114,000 in the first quarter of 2009, an increase of $5,133,000 or 36.7% from the corresponding period of 2008. The increase in revenue within our Nuclear Segment was primarily due to revenue generated from the subcontract awarded to our M&EC subsidiary by CH Plateau Remediation Company (“CHPRC”), a general contractor to the Department of Energy (“DOE”), in the second quarter of 2008. This increase in revenue was offset by lower receipts from remaining generators. Our Industrial Segment generated $2,109,000 in revenue in the quarter ended March 31, 2009, as compared to $2,587,000 for the corresponding period of 2008, or 18.5 % decrease. This decrease was primarily the result of lower oil sales revenue resulting from both decreased volume and lower average price per gallon and less field service work in the first quarter of 2009 as compared to first quarter of 2008 resulting from the slow down in the economy. Revenue in our Industrial Segment includes revenue of Perma-Fix of Fort Lauderdale, Inc. (“PFFL”), Perma-Fix of South Georgia, Inc. (“PFSG”), and Perma-Fix of Orlando, Inc. (“PFO”). In May 2007, our Board of Directors authorized the divestiture of our Industrial Segment. In September 2008, our Board of Directors approved retaining the three facilities/operations at PFFL, PFSG, and PFO, which resulted in the reclassification of these three facilities/operations back into our continuing operations. Revenue for the first quarter of 2009 from the Engineering Segment decreased $123,000 or 13.6% to $779,000 from $902,000 for the same period of 2008.

The first quarter 2009 gross profit increased $642,000 or 14.4% from the corresponding period of 2008 due primarily to the CHPRC subcontract at M&EC.

SG&A for the first quarter of 2009 decreased 2.7% to $4,339,000 from $4,460,000 in the corresponding period of 2008.

Our working capital position at March 31, 2008 was a negative $2,301,000, which includes working capital of our discontinued operations, as compared to a negative working capital of $3,886,000 as of December 31, 2008. The improvement in our working capital was primarily the result of the reduction in our current unbilled receivable of approximately $1,264,000 as we continue our efforts to invoice our customers. In addition, we continue to reduce our account payables and other current debts by utilizing funds generated by our operations. Our working capital in the first quarter of 2009 was also impacted by the annual cash payment to the finite risk sinking fund of $1,004,000 and capital spending of approximately $304,000.

Outlook

We believe that the higher government funding made available to remediate DOE sites than past years under the 2009 government budget along with the economic stimulus package (American Recovery and Reinvestment Act), enacted by the Congress in February 2009, will provide substantial funds to remediate DOE sites and thus should positively impact our existing government contracts within our Nuclear Segment. However, we expect that demand for our services will continue to be subjected to fluctuations due to a variety of factors beyond our control, including the current economic recession and conditions, and the manner in which the federal government will be required to spend funding to remediate federal sites. Our operations depend, in large part, upon governmental funding, particularly funding levels at the DOE. In addition, our governmental contracts and subcontracts relating to activities at governmental sites are subject to termination or renegotiation on 30 days notice at the government’s option. Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flows.

Results of Operations

The reporting of financial results and pertinent discussions are tailored to three reportable segments: Nuclear, Industrial, and Engineering.

	Three Months Ended March 31,
Consolidated (amounts in thousands)	2009		%		2008		%
Net revenues	$	22,002		100.0	$	17,470		100.0
Cost of good sold		16,914		76.9		13,024		74.6
Gross profit		5,088		23.1		4,446		25.4
Selling, general and administrative		4,339		19.7		4,460		25.5
Gain on disposal of property and equipment		12		—