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 June 30, 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 x 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 x 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 x

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		Outstanding at August 3, 2009
Common Stock, $.001 Par Value		54,243,704
		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 –
	June 30, 2009 (unaudited) and December 31, 2008	1

	Consolidated Statements of Operations -
	Three and Six Months Ended June 30, 2009 and 2008 (unaudited)	3

	Consolidated Statements of Cash Flows -
	Six Months Ended June 30, 2009 and 2008 (unaudited)	4

	Consolidated Statement of Stockholders' Equity -
	Six Months Ended June 30, 2009 (unaudited)	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of
	Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures
	About Market Risk	51

Item 4.	Controls and Procedures	52

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 4.	Submission of Matters to a Vote of Security Holders	55

Item 6.	Exhibits	56

PART I - FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

	June 30,
	2009			December 31,
(Amount in Thousands, Except for Share Amounts)	(Unaudited)			2008

ASSETS
Current assets:
Cash	$	59		$	129
Restricted cash		55			55
Accounts receivable, net of allowance for doubtful
accounts of $516 and $333, respectively		13,037			13,416
Unbilled receivables - current		10,947			13,104
Inventories		259			344
Prepaid and other assets		2,283			2,565
Current assets related to discontinued operations		73			110
Total current assets		26,713			29,723

Property and equipment:
Buildings and land		26,718			24,726
Equipment		31,549			31,315
Vehicles		628			637
Leasehold improvements		11,455			11,455
Office furniture and equipment		1,917			1,904
Construction-in-progress		1,466			1,159
		73,733			71,196
Less accumulated depreciation and amortization		(26,125	)		(23,762	)
Net property and equipment		47,608			47,434

Property and equipment related to discontinued operations		651			651

Intangibles and other long term assets:
Permits		17,295			17,125
Goodwill		12,054			11,320
Unbilled receivables – non-current		3,119			3,858
Finite Risk Sinking Fund		14,083			11,345
Other assets		2,327			2,256
Total assets	$	123,850		$	123,712

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS, CONTINUED

	June 30,
	2009			December 31,
(Amount in Thousands, Except for Share Amounts)	(Unaudited)			2008

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,483		$	11,076
Current environmental accrual		199			186
Accrued expenses		6,187			8,896
Disposal/transportation accrual		4,337			5,847
Unearned revenue		3,995			4,371
Current liabilities related to discontinued operations		1,391			1,211
Current portion of long-term debt		3,056			2,022
Total current liabilities		26,648			33,609

Environmental accruals		511			620
Accrued closure costs		12,131			10,141
Other long-term liabilities		476			457
Long-term liabilities related to discontinued operations		1,138			1,783
Long-term debt, less current portion		17,707			14,181
Total long-term liabilities		31,963			27,182

Total liabilities		58,611			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		¾			¾
Common Stock, $.001 par value; 75,000,000 shares authorized,
54,219,324 and 53,934,560 shares issued and outstanding, respectively		54			54
Additional paid-in capital		98,400			97,381
Accumulated deficit		(34,500	)		(35,799	)

Total stockholders' equity		63,954			61,636

Total liabilities and stockholders' equity	$	123,850		$	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						Six Months Ended
	June 30,						June 30,
(Amounts in Thousands, Except for Per Share Amounts)	2009			2008			2009			2008

Net revenues	$	23,698		$	18,502		$	45,700		$	35,972
Cost of goods sold		17,673			12,628			34,587			25,651
Gross profit		6,025			5,874			11,113			10,321

Selling, general and administrative expenses		4,465			4,596			8,805			9,056
Loss (gain) on disposal of property and equipment		¾			141			(12	)		141
Income from operations		1,560			1,137			2,320			1,124

Other income (expense):
Interest income		41			49			93			117
Interest expense		(468	)		(367	)		(1,015	)		(738	)
Interest expense-financing fees		(63	)		(57	)		(76	)		(110	)
Other		9			(12	)		10			(6	)
Income from continuing operations before taxes		1,079			750			1,332			387
Income tax expense		91			17			100			16
Income from continuing operations		988			733			1,232			371

(Loss) income from discontinued operations, net of taxes		(237	)		(383	)		67			(1,060	)
Gain on disposal of discontinued operations, net of taxes		¾			108			¾			2,216
Net income applicable to Common Stockholders	$	751		$	458		$	1,299		$	1,527

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

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

Number of common shares used in computing
net income (loss) per share:
Basic		54,124			53,729			54,054			53,717
Diluted		54,537			54,173			54,189			54,035

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
(Amounts in Thousands)	2009			2008
Cash flows from operating activities:
Net income	$	1,299		$	1,527
Less: Income on discontinued operations		67			1,156

Income from continuing operations		1,232			371
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization		2,381			2,238
Non-cash financing costs		49			―
Provision for bad debt and other reserves		212			3
(Gain) loss on disposal of plant, property and equipment		(12	)		141
Issuance of common stock for services		129			28
Share based compensation		224			184
Changes in operating assets and liabilities of continuing operations, net of
effect from business acquisitions:
Accounts receivable		168			4,197
Unbilled receivables		2,896			1,354
Prepaid expenses, inventories and other assets		297			1,874
Accounts payable, accrued expenses and unearned revenue		(9,167	)		(3,639	)
Cash (used in) provided by continuing operations		(1,591	)		6,751
Cash used in discontinued operations		(371	)		(3,023	)
Cash (used in) provided by operating activities		(1,962	)		3,728

Cash flows from investing activities:
Purchases of property and equipment		(552	)		(611	)
Proceeds from sale of plant, property and equipment		12			27
Payment to finite risk sinking fund		(2,738	)		(2,757	)
Cash used for acquisition considerations, net of cash acquired		―			(14	)
Cash used in investing activities of continuing operations		(3,278	)		(3,355	)
Proceeds from sale of discontinued operations		―			7,131
Cash provided by discontinued operations		11			42
Net cash (used in) provided by investing activities		(3,267	)		3,818

Cash flows from financing activities:
Net borrowing (repayments) of revolving credit		3,691			(1,435	)
Principal repayments of long term debt		(1,514	)		(6,052	)
Proceeds from issuance of long term debt		2,982			―
Proceeds from issuance of stock		―			95
Repayment of stock subscription receivable		―			25
Cash provided by (used in) financing activities of continuing operations		5,159			(7,367	)
Principal repayment of long-term debt for discontinued operations		―			(238	)
Cash provided by (used in) financing activities		5,159			(7,605	)

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

Supplemental disclosure:
Interest paid, net of amounts capitalized	$	3,628		$	768
Income taxes paid		57			3
Non-cash investing and financing activities:
Long-term debt incurred for purchase of property and equipment		―			―
Issuance of Common Stock for debt		476			―
Issuance of Warrants for debt		190			―

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 six months ended June 30, 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		¾		¾		¾		1,299			1,299
Issuance of Common Stock for debt		200,000		¾		476		¾			476
Issuance of Warrants for debt		¾		¾		190		¾			190
Issuance of Common Stock for services		84,764		¾		129		¾			129
Share Based Compensation		¾		¾		224		¾			224
Balance at June 30, 2009		54,219,324	$	54	$	98,400	$	(34,500	)	$	63,954

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 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 six months ended June 30, 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.

The Company evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q on August 7, 2009. We are not aware of any significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our Condensed Consolidated Financial Statements.

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 April 2009, the Financial Accounting Standard Board (“FASB”) issued three related FASB Staff Positions (“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.

The above standards did not materially impact the Company’s financial position, results of operations, or its disclosure requirements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which modifies the definition of what qualifies as a subsequent event, those events or transactions that occur following the balance sheet date, but before the financial statements are issued, or are available to be issued, and requires companies to disclose the date through which it has evaluated subsequent events and the basis for determining that date. This standard is effective for interim and annual financial period ending after June 15, 2009. This standard did not have a material effect on our results of operations or financial position.

Recently Issue Accounting Standards

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.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an amendment to SFAS No. 140” (“SFAS 166”). SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not expect SFAS 166 to materially impact its operations or financial position.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. SFAS 167 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company is currently evaluating the impact of this standard on its consolidated financial position and results of operations.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (“SFAS 168”). SFAS 168 replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles”, and establishes the FASB Accounting Standards Codification TM (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”). SFAS 168 is effective for interim and annual periods ending after September 15, 2009. The Company will begin to use the new Codification beginning with the Form 10-Q for the quarter ending September 30, 2009.

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, officers, 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. As of June 30, 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 2.56 years. Additionally, we had 630,000 outstanding and fully vested director stock options with a weighted average exercise price and remaining contractual life of $2.21 and 5.83 years, respectively.

The Company did not grant any stock options for the quarter ended June 30, 2009 and the corresponding period of 2008. For the six months ended June 30, 2009, the Company granted a total of 145,000 Incentive Stock Options (“ISO”) to our Chief Financial Officer (“CFO”) and certain employees of the Company which allows for the purchase of 145,000 shares of Common Stock from the Company’s 2004 Stock Option Plan. The options granted were for a contractual term of six years with vesting period over 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. No stock options were granted for the six months ended June 30, 2008.

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 June 30, 2009 were as follows.

	Employee Stock Options Granted
	as of June 30, 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 and six months ended June 30, 2009 and 2008 for our employee and director stock options.

	Three Months Ended				Six Months Ended
Stock Options	June 30,				June 30,
	2009		2008		2009		2008
Employee Stock Options	$	89,000	$	59,000	$	194,000	$	141,000
Director Stock Options		¾		¾		30,000		43,000
Total	$	89,000	$	59,000	$	224,000	$	184,000

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. We have generally estimated forfeiture rate based on historical trends of actual forfeitures. As of June 30, 2009, we have approximately $813,000 of total unrecognized compensation cost related to unvested options, of which $178,000 is expected to be recognized in remaining 2009, $355,000 in 2010, $275,000 in 2011, and $5,000 in 2012.

4.	Capital Stock, Stock Plans, and Warrants

During the six months ended June 30, 2009, No options were exercised. We issued 84,764 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, with 50,559 shares and 34,205 shares issued in the first and second quarter of 2009, respectively. 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 attended 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.

The summary of the Company’s total Plans as of June 30, 2009 as compared to June 30, 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		(19,000	)		1.38
Options outstanding End of Period (1)		3,543,347			2.01		4.0	$	1,524,369
Options Exercisable at June 30, 2009 (1)		2,407,847		$	1.95		3.4	$	1,209,349
Options Vested and expected to be vested at June 30, 2009		3,501,989		$	1.95		4.0	$	1,518,579

	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		(58,334	)		1.64			$	46,167
Forfeited		(76,834	)		1.78
Options outstanding End of Period (2)		2,454,858			1.92		4.1	$	2,384,309
Options Exercisable at June 30, 2008 (2)		2,190,858		$	1.93		4.2	$	2,112,056
Options Vested and expected to be vested at June 30, 2008		2,437,097		$	1.92		4.1	$	2,366,015

(1) Option with exercise price ranging from $1.25 to $2.98

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

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.

On May 8, 2009, the Company entered into a Loan and Securities Purchase Agreement (“Agreement”) with Mr. William N. Lampson and Mr. Diehl Rettig (collectively, the “Lenders”). Mr. Lampson was formerly a major shareholder of Nuvotec USA, Inc. (n/k/a Perma-Fix Northwest, Inc. (“PFNW”)) 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. and its subsidiaries at the time of our acquisition and after our acquisition has continued to perform certain legal services for PFNWR. Both of the Lenders are also stockholders of the Company having received shares of our Common Stock in connection with our acquisition of PFNW and PFNWR. Under the Agreement, we entered into a Promissory Note (“Note”) with the Lenders in the amount of $3,000,000 (see note 6 - “Long Term Debt” for information regarding terms of the Promissory Note). As consideration of the Company receiving the loan pursuant to the Agreement, we issued 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 506 of Regulation D promulgated under the Act, 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. The Warrants are exercisable six months from May 8, 2009 and expire two years from May 8, 2009. We determined the fair value of the 200,000 shares of Common Stock to be $476,000 which was based on the closing price of the stock of $2.38 per share on May 8, 2009. We estimated the fair value of the Warrants using the Black-Scholes option pricing model. The fair value of the Common Stock and Warrants was recorded as a debt discount to the loan and is being amortized over the term of the loan as interest expense – financing fees. (See Note 6 – “Long Term Debt – Promissory Note and Installment Agreement” for valuation and accounting treatment of the Common Stock and Warrants).

Under the terms of the Agreement and Note, if the Company defaults in the 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.

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 and six months ended June 30, 2009 and 2008:

	Three Months Ended June 30,						Six Months Ended June 30,
	(Unaudited)						(Unaudited)
(Amounts in Thousands, Except for Per Share Amounts)	2009			2008			2009		2008
Earnings per share from continuing operations
Income from continuing operations applicable to
Common Stockholders	$	988		$	733			1,232	$	371
Basic income per share	$	.02		$	.02			.02	$	.01
Diluted income per share	$	.02		$	.02			.02	$	.01

(Loss) income per share from discontinued operations
(Loss) income from discontinued operations	$	(237	)	$	(383	)		67	$	(1,060	)
Basic loss per share	$	(.01	)	$	(.01	)		—	$	(.02	)
Diluted loss per share	$	(.01	)	$	(.01	)		—	$	(.02	)

Income per share from disposal of discontinued operations
Gain on disposal of discontinued operations	$	—		$	108			—	$	2,216
Basic income per share	$	—		$	—			—	$	.04
Diluted income per share	$	—			—			—	$	.04

Weighted average common shares outstanding – basic		54,124			53,729			54,053		53,717
Potential shares exercisable under stock option plans		367			444			111		318
Potential shares upon exercise of Warrants		46			¾			25		¾
Weighted average shares outstanding – diluted		54,537			54,173			54,189		54,035

Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:
Upon exercise of options		1,546			172			2,645		740
Upon exercise of Warrants		¾			¾			¾		¾

6.	Long Term Debt

Long-term debt consists of the following at June 30, 2009 and December 31, 2008:

(Amounts in Thousands)	June 30, 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 June 30,2009) plus 2.0% or minimum floor base London
InterBank Offer Rate ("LIBOR") of 2.5% plus 3.0%, balance due in
July 2012. (1) (3)	$	10,207	$	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) (3)		6,167		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		1,667		2,500
Promissory Note dated May 8, 2009, payable in monthly installments of
principal of $87 starting June 8, 2009, balance due May 8, 2011, variable
interest paid monthly at LIBOR plus 4.5%, with LIBOR at least 1.5%.(2)		2,296	──
Various capital lease and promissory note obligations, payable 2009 to
2013, interest at rates ranging from 5.0% to 12.6%.		426		520
		20,763		16,203
Less current portion of long-term debt		3,056		2,022
	$	17,707	$	14,181

(1) Prior to March 5, 2009, variable interest was paid monthly at prime plus 1/2% for our Revolving Credit and prime plus 1.0% for our Term Loan.

(2) Net of debt discount recorded ($666,000) and amortized ($49,000) based on the estimated fair value of two Warrants and 200,000 shares of the Company’s Common Stock issued on May 8, 2009 in connection with a $3,000,000 promissory note entered into by the Company and Mr. William Lampson and Mr. Diehl Rettig. See “Promissory Note and Installment Agreement” below for additional information.

(3) Our Revolving Credit is collateralized by our account receivables and our Term Loan is collateralized by our property, plant, and equipment.

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 June 30, 2009, the excess availability under our Revolving Credit was $4,446,000 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 paid 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.

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 was 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 were directed by PDC to continue 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. On May 13, 2009, we paid the outstanding balance of approximately $2,225,000, which consists of interest only, on the PDC promissory note directly to the IRS which satisfied M&EC’s obligations to PDC in full.

In acquiring Perma-Fix Northwest, Inc. (“PFNW”- f/k/a Nuvotec) and Perma-Fix Northwest Richland, Inc. (“PFNWR” – f/k/a Pacific EcoSolutions, Inc. (“PEcoS”)), we agreed to pay former shareholders of Nuvotec who qualified as accredited investors pursuant to Rule 501 of Regulation D promulgated under the Securities Act of 1933 (which includes Mr. Robert L. Ferguson, a current member of our Board of Directors) $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. In June 2009, we paid the first principal installment of $833,333, along with accrued interest. As of June 30, 2009, interest paid totaled approximately $422,000, of which $206,000 was paid in the second quarter of 2009 and $216,000 was paid in the second quarter of 2008. See Note 11 - “Related Party Transaction” in this section for information regarding Mr. Robert L. Ferguson.

On May 8, 2009, the Company entered into a promissory note with William N. Lampson and Mr. Diehl Rettig (collectively, the “Lenders”) for $3,000,000. Mr. Lampson was formerly a major shareholder of Nuvotec USA, Inc. (n/k/a Perma-Fix Northwest, Inc. (“PFNW”)) 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. and its subsidiaries at the time of our acquisition and after our acquisition has continued to perform certain legal services for PFNWR. Both of the Lenders are also stockholders of the Company having received shares of our Common Stock in connection with our acquisition of PFNW and PFNWR. The proceeds of the loan were used primarily to pay off the promissory note, dated June 25, 2001, as amended on December 28, 2008, entered into by our M&EC subsidiary with PDC as mentioned above, with the remaining funds used for working capital purposes. The promissory note provides 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 at least 1.5%. Any unpaid principal balance along with accrued interest is due May 8, 2011. We paid approximately $22,000 in closing costs for the promissory note which will be amortized over the terms of the note. The promissory note may be prepaid at anytime by the Company without penalty. As consideration of the Company receiving this loan, we issued a Warrant to Mr. Lampson and a Warrant to Mr. Diehl to purchase up to 135,000 and 15,000 shares, respectively, of the Company’s Common Stock at an exercise price of $1.50 per share. The Warrants are exercisable six months from May 8, 2009 and expire two years from May 8, 2009. We estimated the fair value of the Warrants to be approximately $190,000 using the Black-Scholes option pricing model with the following assumption: 70.47% volatility, risk free interest rate of 1.0%, an expected life of two years and no dividends. We also issued an aggregate of 200,000 shares of the Company’s Common Stock with Mr. Lampson receiving 180,000 shares and Mr. Rettig receiving 20,000 shares of the Company’s Common Stock. We determined the fair value of the 200,000 shares of Common Stock to be $476,000 which was based on the closing price of the stock of $2.38 per share on May 8, 2009. The fair value of the Warrants and Common Stock was recorded as a debt discount and is being amortized over the term of the loan as interest expense – financing fees. Debt discount amortized as of June 30, 2009 totaled approximately $49,000.

The promissory note includes an embedded Put Option (“Put”) that can be exercised upon default. We have concluded that the Put should be bifurcated; however, the Put has nominal value as of June 30, 2009. We will continue to monitor the fair value of the Put on a quarterly basis.

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 Potentially 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 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. As of June 30, 2009, $18,000 of the accrued amount has been paid, of which $9,000 was paid in the fourth quarter of 2008 and $9,000 was paid in the second quarter of 2009. We anticipate paying the remaining $9,000 in the fourth quarter of 2009. 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. On May 18, 2009, ODEQ and PFTS finalized a settlement agreement which resulted in funding of a supplemental environmental project (“SEP”) in the amount of $5,000 in lieu of a civil penalty. 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 performed 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 have sued the buyer of the PFTS’ assets regarding certain liabilities which we believe the buyer assumed and agreed to pay under the Asset Purchase Agreement but which the buyer has refused to satisfy as of the date of this report.

Earn-Out Amount – Perma-Fix Northwest, Inc. (“PFNW”) 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 June 2007, we are required, if certain revenue targets are met, to pay to the former shareholders of Nuvotec an earn-out amount for each twelve months ending June 30, 2008, to June 30, 2011, with the aggregate of the full earn-out amount not to exceed $4,552,000, 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 for each such twelve month period are met by the Company’s consolidated Nuclear Segment. No earn-out amounts were required to be paid for the twelve month period ended June 30, 2008. For the twelve month period ended June 30, 2009, we have calculated that we are required to pay approximately $734,000 in earn-out amount, all of which is to be paid into the escrow account during the quarter ending September 30, 2009. The earn-out amount was recorded as an increase to goodwill for PFNWR. Any remaining earn-out amount earned after placing the first $1,000,000 into the escrow account will be allocated to the former shareholders of Nuvotec (which includes Mr. Robert L. Ferguson, a current member of our Board of Director). The first $1,000,000 in earn-out amount will remain in the escrow account to satisfy any indemnification obligations to us of Nuvotec, PEcoS, and the former shareholders of Nuvotec until the end of a two year period from the date the first full $1,000,000 is placed into the escrow account, at which time any remaining amount in the escrow account will be allocated to the former shareholders of Nuvotec. See Note 11 - “Related Party Transaction” in this section for information regarding Mr. Robert L. Ferguson.

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 enabled 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”). 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 June 30, 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 made on March 6, 2009, of which approximately $1,655,000 was 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.

As of June 30, 2009, we have recorded $9,607,000 in our sinking fund related to the policy noted above on the balance sheet, which includes interest earned of $773,000 on the sinking fund as of June 30, 2009. Interest income for the three and six months ended June 30, 2009 was $16,000 and $42,000, respectively. On the fourth and subsequent anniversaries of the contract inception, we may elect to terminate this contract. If we so elect, the Insurer 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 and two annual payments of $1,520,000, starting July 31, 2008 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 June 30, 2009, we have recorded $4,476,000 in our sinking fund related to this policy on the balance sheet, which includes interest earned of $121,000 on the sinking fund as of June 30, 2009. Interest income for the three months and six months ended June 30, 2009 totaled $24,000 and $50,000, respectively.

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. Proceeds received from the sale were used to pay down our term loan, with the remaining funds used to pay down our revolver. 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. 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 the 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. 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. We have sued the buyer of the PFTS’ assets regarding certain liabilities which we believe that the buyer assumed and agreed to pay under the Asset Purchase Agreement but which the buyer has refused to satisfy as of the date of this report.

The following table summarizes the results of discontinued operations for the three and six months ended June 30, 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						Six Months Ended
	June 30,						June 30,
(Amounts in Thousands)	2009			2008			2009			2008

Net revenues	$	—		$	808		$	—		$	3,195
Interest expense	$	(139	)	$	(32	)	$	(159	)	$	(72	)
Operating (loss) income from discontinued operations (1)	$	(237	)	$	(383	)	$	67		$	(1,060	)
Gain on disposal of discontinued operations (2)		—		$	108		$	—		$	2,216
Income (loss) from discontinued operations	$	(237	)	$	(275	)	$	67		$	1,156

(1) Net of taxes of $0 for all periods noted.

(2) Net of taxes of $0 and $43,000 for three and six months ended June 30, 2008, respectively.

Our “income from discontinued operations, net of taxes” on the Consolidated Statement of Operations for the six months ended June 30, 2009 included a recovery of approximately $400,000 in closure costs for PFTS recorded in the first quarter of 2009. In connection with the divestiture of PFTS above, the buyer of PFTS’s assets was required to replace our financial assurance bond with its own financial assurance mechanism for facility closures. Our financial assurance bond 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 for PFTS which resulted in this recovery of closure costs of approximately $400,000. In the second quarter of 2009, we recorded approximately $119,000 in interests related to a certain excise tax audit for fiscal years 1999 to 2005 for PFTS.

Assets and liabilities related to discontinued operations total $724,000 and $2,529,000 as of June 30, 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 June 30, 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:

	June 30,		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	$	—	$	—
Accrued expenses and other liabilities		44		5
Note payable		—		—
Environmental liabilities		—		—
Total liabilities held for sale	$	44	$	5

(1)

net of accumulated depreciation of $13 for as June 30, 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 June 30, 2009 and December 31, 2008:

	June 30,		December 31,
(Amounts in Thousands)	2009		2008

Other assets	$	73	$	88
Total assets of discontinued operations	$	73	$	88
Account payable	$	2	$	15
Accrued expenses and other liabilities		1,536		1,947
Deferred revenue		—		—
Environmental liabilities		947		1,027
Total liabilities of discontinued operations	$	2,485	$	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 $771,000 for closure costs since discontinuation of PFMI in October 2004, of which approximately $26,000 was spent during the six months ended June 30, 2009 and $26,000 was spent during 2008. We have $511,000 accrued for the closure, as of June 30, 2009, and we anticipate spending $3,000 in the remaining six 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 June 30, 2009, PFMI has a pension payable of $1,001,000. 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 and six months ended June 30, 2009 and 2008 (in thousands).

Segment Reporting for the Quarter Ended June 30, 2009

Nuclear

Industrial

Engineering

Segments