UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No.

001-11596

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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.001 Par Value	PESI	NASDAQ Capital Market

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 ☒ 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, a smaller reporting company, or an emerging growth 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 ☐ Non-accelerated Filer ☒ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 13(a) of the Exchange Act ☐

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

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 November 1, 2023
	Common Stock, $.001 Par Value		13,613,334 shares

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

INDEX

			Page No.
PART I	FINANCIAL INFORMATION		1

	Item 1.	Condensed Consolidated Financial Statements

		Condensed Consolidated Balance Sheets -September 30, 2023 and December 31, 2022	1

		Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2023 and 2022	3

		Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Nine Months Ended September 30, 2023 and 2022	4

		Condensed Consolidated Statement of Stockholders’ Equity - Nine Months Ended September 30, 2023 and 2022	5

		Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2023 and 2022	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

	Item 4.	Controls and Procedures	34

PART II	OTHER INFORMATION		35

	Item 1.	Legal Proceedings	35

	Item 1A.	Risk Factors	35

	Item 6.	Exhibits	35

PART I - FINANCIAL INFORMATION

ITEM 1. – Financial Statements

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Balance Sheets

	September 30,
	2023			December 31,
(Amounts in Thousands, Except for Share and Per Share Amounts)	(Unaudited)			2022

ASSETS
Current assets:
Cash	$	1,988		$	1,866
Accounts receivable, net of allowance for credit losses of $42 and $57, respectively		15,342			9,364
Unbilled receivables		9,336			6,062
Inventories		1,030			814
Prepaid and other assets		4,506			5,405
Current assets related to discontinued operations		15			15
Total current assets		32,217			23,526

Property and equipment:
Buildings and land		24,103			24,021
Equipment		22,345			21,242
Vehicles		434			442
Leasehold improvements		8			23
Office furniture and equipment		1,129			1,299
Construction-in-progress		1,193			727
Total property and equipment		49,212			47,754
Less accumulated depreciation		(30,519	)		(28,797	)
Net property and equipment		18,693			18,957

Property and equipment related to discontinued operations		81			81

Operating lease right-of-use assets		2,094			1,971

Intangibles and other long term assets:
Permits		9,646			9,610
Other intangible assets - net		477			629
Finite risk sinking fund (restricted cash)		11,926			11,570
Deferred tax assets		3,987			4,116
Other assets		383			438
Total assets	$	79,504		$	70,898

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Balance Sheets, Continued

	September 30,
	2023			December 31,
(Amounts in Thousands, Except for Share and per Share Amounts)	(Unaudited)			2022

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,614		$	10,325
Accrued expenses		6,922			4,593
Disposal/transportation accrual		1,320			887
Deferred revenue		7,765			4,813
Accrued closure costs - current		94			682
Current portion of long - term debt		880			476
Current portion of operating lease liabilities		412			416
Current portion of finance lease liabilities		223			154
Current liabilities related to discontinued operations		239			362
Total current liabilities		27,469			22,708

Accrued closure costs		7,972			7,284
Long-term debt, less current portion		2,115			563
Long-term operating lease liabilities, less current portion		1,744			1,584
Long-term finance lease liabilities, less current portion		423			318
Long-term liabilities related to discontinued operations		950			908
Total long-term liabilities		13,204			10,657

Total liabilities		40,673			33,365

Commitments and Contingencies (Note 9)		-

Stockholders’ Equity:
Preferred Stock, $.001 par value; 2,000,000 shares authorized, no shares issued and outstanding		-			-
Common Stock, $.001 par value; 30,000,000 shares authorized; 13,588,933 and 13,332,398 shares issued, respectively; 13,581,291 and 13,324,756 shares outstanding, respectively		14			13
Additional paid-in capital		116,106			115,209
Accumulated deficit		(77,032	)		(77,436	)
Accumulated other comprehensive loss		(169	)		(165	)
Less Common Stock in treasury, at cost; 7,642 shares		(88	)		(88	)
Total stockholders’ equity		38,831			37,533

Total liabilities and stockholders’ equity	$	79,504		$	70,898

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Amounts in Thousands, Except for Per Share Amounts)	2023			2022			2023			2022

Net revenues	$	21,877		$	18,472		$	67,016		$	53,842
Cost of goods sold		17,328			15,402			54,942			46,252
Gross profit		4,549			3,070			12,074			7,590

Selling, general and administrative expenses		3,933			3,929			10,969			11,035
Research and development		120			69			340			245
Loss on disposal of property and equipment		-			-			-			1
Income (loss) from operations		496			(928	)		765			(3,691	)

Other income (expense):
Interest income		146			29			445			69
Interest expense		(89	)		(47	)		(189	)		(123	)
Interest expense-financing fees		(36	)		(16	)		(80	)		(44	)
Other		(17	)		1,965			(11	)		1,960
Income (loss) from continuing operations before taxes		500			1,003			930			(1,829	)
Income tax expense (benefit)		254			179			482			(147	)
Income (loss) from continuing operations, net of taxes		246			824			448			(1,682	)

Income (loss) from discontinued operations, net of taxes (Note 10)		95			(160	)		(44	)		(442	)
Net income (loss)	$	341		$	664		$	404		$	(2,124	)

Net income (loss) per common share - basic:
Continuing operations	$	.02		$	.06		$	.03		$	(.13	)
Discontinued operations		.01			(.01	)		-			(.03	)
Net income (loss) per common share	$	.03		$	.05		$	.03		$	(.16	)

Net income (loss) per common share - diluted:
Continuing operations	$	.02		$	.06		$	.03		$	(.13	)
Discontinued operations		-			(.01	)		-			(.03	)
Net income (loss) per common share	$	.02		$	.05		$	.03		$	(.16	)

Number of common shares used in computing net income (loss) per share:
Basic		13,568			13,297			13,468			13,265
Diluted		13,979			13,447			13,749			13,265

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Amounts in Thousands)	2023			2022			2023			2022

Net income (loss)	$	341		$	664		$	404		$	(2,124	)
Other comprehensive loss:
Foreign currency translation adjustment		(57	)		(135	)		(4	)		(176	)
Total other comprehensive loss		(57	)		(135	)		(4	)		(176	)

Comprehensive income (loss)	$	284		$	529		$	400		$	(2,300	)

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC

Condensed Consolidated Statement of Stockholders’ Equity

(Unaudited)

(Amounts in thousands, except for share amounts)


	Common Stock				Additional Paid-In		Common Stock Held In			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Treasury			Loss			Deficit			Equity

Balance at December 31, 2022		13,332,398	$	13	$	115,209	$	(88	)	$	(165	)	$	(77,436	)	$	37,533
Net loss		-		-		-		-			-			(411	)		(411	)
Foreign currency translation		-		-		-		-			7			-			7
Issuance of Common Stock for services		33,319		-		118		-			-			-			118
Issuance of Common Stock upon exercise of options		31,719		-		7		-			-			-			7
Stock-Based Compensation		-		-		118		-			-			-			118
Balance at March 31, 2023		13,397,436	$	13	$	115,452	$	(88	)	$	(158	)	$	(77,847	)	$	37,372
Net Income		-		-		-		-			-			474			474
Foreign currency translation		-		-		-		-			46			-			46
Issuance of Common Stock for services		10,171		-		119		-			-			-			119
Issuance of Common Stock upon exercise of options		155,136		1		93		-			-			-			94
Stock-Based Compensation		-		-		125		-			-			-			125
Balance at June 30, 2023		13,562,743	$	14	$	115,789	$	(88	)	$	(112	)	$	(77,373	)	$	38,230
Net Income		-		-		-		-			-			341			341
Foreign currency translation		-		-		-		-			(57	)		-			(57	)
Issuance of Common Stock for services		10,712		-		119		-			-			-			119
Issuance of Common Stock upon exercise of options		15,478		-		49		-			-			-			49
Stock-Based Compensation		-		-		149		-			-			-			149
Balance at September 30, 2023		13,588,933	$	14	$	116,106	$	(88	)	$	(169	)	$	(77,032	)	$	38,831

Balance at December 31, 2021		13,222,552	$	13	$	114,307	$	(88	)	$	(28	)	$	(73,620	)	$	40,584
Net loss		-		-		-		-			-			(1,343	)		(1,343	)
Foreign currency translation		-		-		-		-			26			-			26
Issuance of Common Stock for services		19,520		-		123		-			-			-			123
Stock-Based Compensation		-		-		102		-			-			-			102
Balance at March 31, 2022		13,242,072	$	13	$	114,532	$	(88	)	$	(2	)	$	(74,963	)	$	39,492
Net loss		-		-		-		-			-			(1,445	)		(1,445	)
Foreign currency translation		-		-		-		-			(67	)		-			(67	)
Issuance of Common Stock upon exercise of options (cashless)		16,526		-		-		-			-			-			-
Issuance of Common Stock for services		21,667		-		120		-			-			-			120
Stock-Based Compensation		-		-		103		-			-			-			103
Balance at June 30, 2022		13,280,265	$	13	$	114,755	$	(88	)	$	(69	)	$	(76,408	)	$	38,203
Balance		13,280,265	$	13	$	114,755	$	(88	)	$	(69	)	$	(76,408	)	$	38,203
Net Income		-		-		-		-			-			664			664
Net income (loss)		-		-		-		-			-			664			664
Foreign currency translation		-		-		-		-			(135	)		-			(135	)
Issuance of Common Stock upon exercise of options		2,400		-		13		-			-			-			13
Issuance of Common Stock for services		23,085		-		120		-			-			-			120
Stock-Based Compensation		-		-		105		-			-			-			105
Balance at September 30, 2022		13,305,750	$	13	$	114,993	$	(88	)	$	(204	)	$	(75,744	)	$	38,970
Balance		13,305,750	$	13	$	114,993	$	(88	)	$	(204	)	$	(75,744	)	$	38,970

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	September 30,
(Amounts in Thousands)	2023			2022
Cash flows from operating activities:
Net income (loss)	$	404		$	(2,124	)
Less: Loss from discontinued operations, net of taxes (Note 10)		(44	)		(442	)

Income (loss) from continuing operations, net of taxes		448			(1,682	)
Adjustments to reconcile income (loss) from continuing operations to cash provided by (used in) operating activities:
Depreciation and amortization		2,124			1,433
Amortization of debt issuance costs		80			44
Deferred tax expense (benefit)		482			(147	)
Provision for (recovery of) credit losses on accounts receivable		56			(47	)
Loss on disposal of property and equipment		-			1
Issuance of common stock for services		356			363
Stock-based compensation		392			310
Changes in operating assets and liabilities of continuing operations
Accounts receivable		(6,034	)		1,426
Unbilled receivables		(3,274	)		2,689
Prepaid expenses, inventories and other assets		3,647			829
Accounts payable, accrued expenses and unearned revenue		2,175			(5,553	)
Cash provided by (used in) continuing operations		452			(334	)
Cash used in discontinued operations		(478	)		(559	)
Cash used in operating activities		(26	)		(893	)

Cash flows from investing activities:
Purchases of property and equipment		(1,386	)		(947	)
Proceeds from sale of property and equipment		-			25
Cash used in investing activities of continuing operations		(1,386	)		(922	)

Cash flows from financing activities:
Repayments of revolving credit borrowings		(63,295	)		(54,414	)
Borrowing on revolving credit		63,295			54,414
Proceeds from long term debt		2,500			524
Principal repayments of finance lease liabilities		(135	)		(821	)
Principal repayments of long term debt		(450	)		(375	)
Payment of debt issuance costs		(175	)		(35	)
Proceeds from issuance of common stock upon exercise of options		150			13
Cash provided by (used in) financing activities of continuing operations		1,890			(694	)

Effect of exchange rate changes on cash		-			(4	)

Increase (decrease) in cash and finite risk sinking fund (restricted cash)		478			(2,513	)
Cash and finite risk sinking fund (restricted cash) at beginning of period		13,436			15,911
Cash and finite risk sinking fund (restricted cash) at end of period	$	13,914		$	13,398

Supplemental disclosure:
Interest paid	$	172		$	125
Income taxes paid		-			6
Non-cash financing activities:
Equipment purchase subject to finance lease		309			114

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

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Notes to Condensed Consolidated Financial Statements

September 30, 2023

(Unaudited)

1. Basis of Presentation

The condensed 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 (“the Commission”). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the nine months ended September 30, 2023, are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2023.

The Company suggests that these condensed 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, 2022.

The condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. The Company’s continuing operations also consisted of Perma-Fix ERRG, a variable interest entity (“VIE”) for which we were the primary beneficiary. During the fourth quarter of 2022, project work under the joint venture was completed.

2. Summary of Significant Accounting Policies

Our accounting policies are set forth in the notes to the December 31, 2022 consolidated financial statements referred to above.

Recently Issued Accounting Standards – Not Yet Adopted

In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05, “Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement.” ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis. ASU 2023-05 is currently not applicable to the Company; however, the Company will apply this guidance in future reporting periods after the guidance is effective to any future arrangements meeting this standard.

3. Revenue

Disaggregation of Revenue

In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of our services and provides meaningful disaggregation of each business segment’s results of operations. The nature of the Company’s performance obligations within our Treatment and Services Segments result in the recognition of our revenue primarily over time. The following tables present further disaggregation of our revenues by different categories for our Services and Treatment Segments:

Schedule of Disaggregation of Revenue


Revenue by Contract Type
(In thousands)	Three Months Ended						Three Months Ended
	September 30, 2023						September 30, 2022
	Treatment		Services		Total		Treatment		Services		Total
Fixed price	$	10,795	$	10,188	$	20,983	$	8,877	$	6,892	$	15,769
Time and materials		-		894		894		-		2,703		2,703
Total	$	10,795	$	11,082	$	21,877	$	8,877	$	9,595	$	18,472


Revenue by Contract Type
(In thousands)	Nine Months Ended						Nine Months Ended
	September 30, 2023						September 30, 2022
	Treatment		Services		Total		Treatment		Services		Total
Fixed price	$	33,223	$	29,995	$	63,218	$	24,749	$	20,569	$	45,318
Time and materials		-		3,798		3,798		-		8,524		8,524
Total	$	33,223	$	33,793	$	67,016	$	24,749	$	29,093	$	53,842
Revenue	$	33,223	$	33,793	$	67,016	$	24,749	$	29,093	$	53,842


Revenue by generator
(In thousands)	Three Months Ended						Three Months Ended
	September 30, 2023						September 30, 2022
	Treatment		Services		Total		Treatment		Services		Total
Domestic government	$	7,095	$	8,444	$	15,539	$	5,728	$	9,264	$	14,992
Domestic commercial		3,450		2,170		5,620		2,806		313		3,119
Foreign government		250		445		695		287		-		287
Foreign commercial		-		23		23		56		18		74
Total	$	10,795	$	11,082	$	21,877	$	8,877	$	9,595	$	18,472


Revenue by generator
(In thousands)	Nine Months Ended						Nine Months Ended
	September 30, 2023						September 30, 2022
	Treatment		Services		Total		Treatment		Services		Total
Domestic government	$	24,160	$	29,603	$	53,763	$	17,786	$	28,158	$	45,944
Domestic commercial		7,925		3,509		11,434		6,045		859		6,904
Foreign government		1,002		615		1,617		532		12		544
Foreign commercial		136		66		202		386		64		450
Total	$	33,223	$	33,793	$	67,016	$	24,749	$	29,093	$	53,842
Revenue	$	33,223	$	33,793	$	67,016	$	24,749	$	29,093	$	53,842

Contract Balances

The timing of revenue recognition and billings results in unbilled receivables (contract assets). The Company’s contract liabilities consist of deferred revenues which represent payment from customers in advance of the completion of our performance obligation. The following table represents changes in our contract assets and contract liabilities balances. Our deferred revenue balance at September 30, 2023 included a $2,500,000 invoice to a certain customer for a waste treatment project which is expected to commence and be completed in 2024.

Schedule of Contract Liabilities

					Year-to-date		Year-to-date
(In thousands)	September 30, 2023		December 31, 2022		Change ($)		Change (%)
Contract assets
Unbilled receivables - current	$	9,336	$	6,062	$	3,274		54.0	%

Contract liabilities
Deferred revenue	$	7,765	$	4,813	$	2,952		61.3	%

During the three and nine months ended September 30, 2023, the Company recognized revenue of $842,000 and $6,289,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of the year. During the three and nine months ended September 30, 2022, the Company recognized revenue of $494,000 and $6,138,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of the year. All revenue recognized in each period related to performance obligations satisfied within the respective period.

Remaining Performance Obligations

The Company applies the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

Within our Services Segment, there are service contracts which provide that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date. For those contracts, the Company has utilized the practical expedient in ASC 606-10-55-18, which allows the Company to recognize revenue in the amount for which we have the right to invoice; accordingly, the Company does not disclose the value of remaining performance obligations for those contracts.

The Company’s contracts and subcontracts relating to activities at governmental sites generally allow for termination for convenience at any time at the government’s option without payment of a substantial penalty. The Company does not disclose remaining performance obligations on these contracts.

4. Leases

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are then determined at the lease commencement date.

The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities include primarily leases for office and warehouse spaces used to conduct our business. The Company’s operating leases also include the lease of a building with land utilized for our waste treatment operations which includes a purchase option. Finance leases consist primarily of processing and transport equipment used by our facilities’ operations.

The components of lease cost for the Company’s leases for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands):

Schedule of Components of Lease Cost


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022

Operating Leases:
Lease cost	$	157	$	157	$	470	$	471

Finance Leases:
Amortization of ROU assets		39		42		115		133
Interest on lease liability		9		9		22		30
Finance lease		48		51		137		163

Short-term lease rent expense		-		-		1		7

Total lease cost	$	205	$	208	$	608	$	641

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at September 30, 2023 were:

Schedule of Weighted Average Lease

	Operating Leases			Finance Leases
Weighted average remaining lease terms (years)		5.7			3.2

Weighted average discount rate		7.5	%		7.0	%

The following table reconciles the undiscounted cash flows for the operating and finance leases at September 30, 2023 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

	Operating Leases			Finance Leases
2023 (remaining)	$	147		$	65
2024		519			260
2025		433			239
2026		415			85
2027		406			50
2028 and thereafter		749			28
Total undiscounted lease payments		2,669			727
Less: Imputed interest		(513	)		(81	)
Present value of lease payments	$	2,156		$	646

Current portion of operating lease obligations	$	412		$	-
Long-term operating lease obligations, less current portion	$	1,744		$	-
Current portion of finance lease obligations	$	-		$	223
Long-term finance lease obligations, less current portion	$	-		$	423

Supplemental cash flow and other information related to our leases were as follows for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow used in operating leases	$	145	$	144	$	435	$	430
Operating cash flow used in finance leases	$	9	$	9	$	22	$	30
Financing cash flow used in finance leases	$	54	$	103	$	135	$	821

ROU assets obtained in exchange for lease obligations for:
Finance liabilities	$	154	$	-	$	311	$	147
Operating liabilities	$	484		-	$	484	$	-

5. Intangible Assets

The following table summarizes information relating to the Company’s definite-lived intangible assets:

			September 30, 2023							December 31, 2022
	Weighted Average Amortization		Gross					Net		Gross					Net
	Period		Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	(Years)		Amount		Amortization			Amount		Amount		Amortization			Amount
Other Intangibles (amount in thousands)
Patent		8.3	$	703	$	(384	)	$	319	$	711	$	(374	)	$	337
Software		3		661		(515	)		146		640		(468	)		172
Customer relationships		10		3,370		(3,358	)		12		3,370		(3,250	)		120
Total			$	4,734	$	(4,257	)	$	477	$	4,721	$	(4,092	)	$	629

The intangible assets noted above are amortized on a straight-line basis over their useful lives with the exception of customer relationships which are being amortized using an accelerated method.

The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets:


	Amount
Year	(In thousands)

2023 (Remaining)	$	30
2024		62
2025		26
2026		25
2027		22

Amortization expense relating to the definite-lived intangible assets as discussed above was $55,000 and $165,000 for the three and nine months ended September 30, 2023, respectively, and $65,000 and $176,000 for the three and nine months ended September 30, 2022, respectively.

6. Capital Stock, Stock Plans and Stock-Based Compensation

The Company has certain stock option plans under which it may award incentive stock options (“ISOs”) and/or non-qualified stock options (“NQSOs”) to employees, officers, outside directors, and outside consultants.

On January 19, 2023, the Company granted ISOs to certain employees for the purchase, under the Company’s 2017 Stock Option Plan (the “2017 Plan”), of up to an aggregate 295,000 shares of the Company’s common stock, par value $.001 per share (the “Common Stock”). The total ISOs granted included an ISO for each of the Company’s executive officers for the purchase set forth in his respective ISO Agreement, as follows: 70,000 shares for the Chief Executive Officer (“CEO”); 40,000 shares for the Chief Financial Officer (“CFO”); 30,000 shares for the Executive Vice President (“EVP”) of Strategic Initiatives; 30,000 shares for the EVP of Waste Treatment Operations; and 30,000 shares for the EVP of Nuclear and Technical Services. Each of the ISOs granted has a contractual term of six years with one-fifth yearly vesting over a five-year period. The exercise price of each ISO is $3.95 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.

On July 20, 2023, the Company issued a NQSO to each of the Company’s seven reelected outside (non-management) directors for the purchase, under the Company’s 2003 Outside Directors Stock Plan (the “2003 Plan”), of up to 10,000 shares of the Company’s Common Stock. Dr. Louis Centofanti and Mark Duff, each an executive officer of the Company as well as a director, were not eligible to receive an option under the 2003 Plan. Each NQSO granted is for a contractual term of ten years with one-fourth vesting annually over a four-year period. The exercise price of each NQSO is $9.81 per share, which was equal to the fair market value of the Company’s Common Stock on the day preceding the grant date, in accordance with the 2003 Plan.

On July 27, 2017, the Company granted a NQSO from the Company’s 2017 Plan to Robert Ferguson, for the purchase of up to 100,000 shares of the Company’s Common Stock (“Ferguson Stock Option”), at an exercise price of $3.65 per share, which was the fair market value of the Company’s Common Stock on the date of grant. The Ferguson Stock Option was granted in connection with Mr. Ferguson’s work as a consultant to the Company’s Test Bed Initiative (“TBI”) at our Perma-Fix of Northwest Richland, Inc. facility. The term of the Ferguson Stock Option was seven years from the grant date, with vesting subject to the achievement of three separate milestones by certain dates, the achievement of which would entitle Mr. Ferguson to purchase, respectively, 10,000, 30,000, and 60,000 shares of the Company’s Common Stock issuable under the Ferguson Stock Option. Mr. Ferguson achieved the first milestone during the first vesting period, and was issued 10,000 shares of the Company’s Common Stock pursuant to his exercise of the vested portion of the stock option. Upon the death of Mr. Ferguson, the balance of the shares issuable under the Ferguson Stock Option was forfeited in accordance with the terms of the option.

The following table summarizes stock-based compensation recognized for the three and nine months ended September 30, 2023 and 2022 for our employee and director stock options.

	2023		2022		2023		2022
	Three Months Ended				Nine Months Ended
Stock Options	September 30,				September 30,
	2023		2022		2023		2022
Employee Stock Options	$	94,000	$	76,000	$	273,000	$	248,000
Director Stock Options		55,000		29,000		119,000		62,000
Total	$	149,000	$	105,000	$	392,000	$	310,000

At September 30, 2023, the Company had approximately $1,947,000 of total unrecognized compensation costs related to unvested options for employee and directors. The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately 3.4 years.

The summary of the Company’s stock option plans as of September 30, 2023 and September 30, 2022, and changes during the periods then ended, are presented below. The Company’s plans consist of the 2017 Plan and the 2003 Plan:

Schedule of Stock Options Roll Forward

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ⁽²⁾
Options outstanding January 1, 2023		1,018,400		$	5.02				-
Granted		365,000		$	3.19
Exercised		(282,400	)	$	3.70			$	2,118,892
Forfeited/expired/cancelled		(64,500	)	$	3.67
Options outstanding end of period ⁽¹⁾		1,036,500		$	5.48		5.1	$	5,146,126
Options exercisable at September 30, 2023⁽²⁾		302,300		$	4.91		3.9	$	1,675,604

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value ⁽⁴⁾
Options outstanding January 1, 2022		1,019,400		$	4.91				-
Granted		94,000		$	5.20
Exercised		(52,400	)	$	4.04			$	97,856
Forfeited/expired		(9,600	)	$	5.50
Options outstanding end of period ⁽³⁾		1,051,400		$	4.98		4.0	$	492,939
Options exercisable at September 30, 2022⁽³⁾		453,900		$	3.93		2.4	$	354,709

⁽¹⁾	Options with exercise prices ranging from $3.15 to $9.81
⁽²⁾	Options with exercise prices ranging from $3.15 to $7.50
⁽³⁾	Options with exercise prices ranging from $2.79 to $7.50
⁽⁴⁾	The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price.

During the nine months ended September 30, 2023, the Company issued a total of 54,202 shares of its Common Stock under the 2003 Plan to its outside directors as compensation for serving on our Board. The Company recorded approximately $359,000 in compensation expenses (included in selling, general and administration (“SG&A”) expenses) in connection with the issuance of shares of its Common Stock to outside directors.

During the nine months ended September 30, 2023, the Company issued an aggregate 163,933 shares of its Common Stock from cashless exercises of options for the purchases of 244,000 shares of the Company’s Common Stock, at exercise prices ranging from $3.60 per share to $7.005 per share. Additionally, the Company issued 38,400 shares of its Common Stock from the cash exercise of options for the purchase of 38,400 shares of the Company’s Common Stock, at exercise prices ranging from at $2.785 per share to $7.005 per share resulting in proceeds of approximately $150,000.

In connection with a $2,500,000 loan that the Company received from Mr. Robert Ferguson (the “Ferguson Loan”) on April 1, 2019, the Company issued a warrant to Mr. Ferguson for the purchase of up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share. The warrant expires on April 1, 2024 and remains outstanding at September 30, 2023. Upon Mr. Ferguson’s death, the warrant transferred to Mr. Ferguson’s heirs. The Ferguson Loan was paid in full in December 2020.

7. Income (Loss) Per Share

Basic income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted income (loss) per share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share. The following table reconciles the income (loss) and average share amounts used to compute both basic and diluted income (loss) per share:

Schedule of Earning Per Share

	2023		2022			2023			2022
	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Amounts in Thousands, Except for Per Share Amounts)	(Unaudited)					(Unaudited)
	2023		2022			2023			2022
Income (loss) per common share from continuing operations
Income (Loss) from continuing operations, net of taxes	$	246	$	824		$	448		$	(1,682	)
Basic income (loss) per share	$	.02	$	.06		$	.03		$	(.13	)
Diluted income (loss) per share	$	.02	$	.06		$	.03		$	(.13	)

Income (loss) per common share from discontinued operations, net of taxes
Income (loss) from discontinued operations, net of taxes	$	95	$	(160	)	$	(44	)	$	(442	)
Basic income (loss) per share	$	.01	$	(.01	)	$	-		$	(.03	)
Diluted loss per share	$	-	$	(.01	)	$	-		$	(.03	)

Net income (loss) per common share
Net income (loss)	$	341	$	664		$	404		$	(2,124	)
Basic income (loss) per share	$	.03	$	.05		$	.03		$	(.16	)
Diluted income (loss) per share	$	.02	$	.05		$	.03		$	(.16	)

Weighted average shares outstanding:
Basic weighted average shares outstanding		13,568		13,297			13,468			13,265
Add: dilutive effect of stock options		370		131			244			-
Add: dilutive effect of warrants		41		19			37			-
Diluted weighted average shares outstanding		13,979		13,447			13,749			13,265

Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:
Stock options		-		499			70			405
Warrant		-		-			-			-
Antidilutive Securities		-		-			-			-

8. Long Term Debt

Long-term debt consists of the following:

Schedule of Long Term Debt

(Amounts in Thousands)	September 30, 2023			December 31, 2022
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2027. Effective interest rate for first nine months of 2023 was 9.7%. ⁽¹⁾	$	-		$	-
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2027. Effective interest rate for first nine months of 2023 was 9.7%. ⁽¹⁾	$	-		$	-
Term Loan 1 dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2027. Effective interest rate for first nine months of 2023 was 9.1% ⁽¹⁾		320			640
Term Loan 2 dated July 31, 2023, payable in equal monthly installments of principal, balance due on May 15, 2027. Effective interest rate for first nine months of 2023 was 9.9% ⁽¹⁾		2,458			-
Capital Line dated May 4, 2021, payable in equal monthly installments of principal, balance due on May 15, 2027. Effective interest rate for first nine months of 2023 was 8.5% ⁽¹⁾		384			463
Debt Issuance Costs		(182	)(2)		(88	)(2)
Notes Payable to 2023 and 2025, annual interest rate of 5.6% and 9.1%.		15			24
Total debt		2,995			1,039
Less current portion of long-term debt		880			476
Long-term debt	$	2,115		$	563

⁽¹⁾	Our revolving credit facility is collateralized by our accounts receivable, and our term loans and capital line are collateralized by our property, plant, and equipment.

⁽²⁾	Aggregate unamortized debt issuance costs in connection with the Company’s credit facility, which consists of the Revolving Credit Facility, Term loan 1, Term loan 2 and Capital Line, as applicable.

Revolving Credit and Term Loan Agreement

The Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated May 8, 2020 (“Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Loan Agreement, as amended from time to time and including the March 21, 2023 and the July 31, 2023 amendments as discussed below), provides the Company with the following credit facility with a maturity date of May 15, 2027: (a) up to $12,500,000 revolving credit (“revolving credit”), with the maximum that the Company can borrow under the Revolving Credit based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that the Company’s lender may impose from time to time; (b) a term loan (“Term Loan 1”) of approximately $1,742,000, requiring monthly installments of $35,547; (c) a term loan (“Term Loan 2”) of $2,500,000, requiring monthly installments of $41,667; and (d) a capital expenditure line (“Capital line”) of up to $1,000,000 with advances on the line, subject to certain limitations, permitted for up to twelve months starting May 4, 2021 (the “Borrowing Period”), with interest only payable on advances during the Borrowing Period. Amounts advanced under the Capital Line at the end of the Borrowing Period totaled approximately $524,000, requiring monthly installments of principal of approximately $8,700 plus interest, commencing June 1, 2022.

On March 21, 2023, the Company entered into an amendment to its Loan Agreement, as amended, with its lender which provided, among other things, the following:

	●	removed the quarterly fixed charge coverage ratio (“FCCR”) testing requirement for the fourth quarter of 2022 and removed the FCCR testing requirement for the first quarter of 2023;
	●	reduced the maximum revolving credit line under the credit facility from $18,000,000 to $12,500,000;
	●	reinstated the quarterly FCCR testing requirement starting in the second quarter of 2023 using a trailing twelve-month period (with no change to the minimum 1.15:1 ratio requirement for each quarter); and
	●	required maintenance of a minimum of $3,000,000 in borrowing availability under the revolving credit until the minimum FCCR requirement for the quarter ended June 30, 2023 has been met and certified to the lender (the Company met its FCCR in the second quarter of 2023 which was certified to its lender and therefore, this requirement is no longer applicable under the Loan Agreement, as amended).

In connection with the March 2023 amendment, the Company paid its lender a fee of $25,000 which is being amortized over the remaining term of the Loan Agreement, as amended, as interest expense-financing fees.

On July 31, 2023, the Company entered into a further amendment of the Loan Agreement, as amended, which provided, among other things, the following:

	●	extended the maturity date of the Loan Agreement, as amended, to May 15, 2027, from May 15, 2024;
	●	an additional term loan (“Term Loan 2”) to the Company in the amount of $2,500,000, requiring monthly installments of approximately $41,667. The annual rate of interest due on Term Loan 2 is at prime plus 3.00% or Secured Overnight Finance Rate (“SOFR”) (as defined in the Loan Agreement, as amended) plus 4.00% plus an SOFR Adjustment applicable for an interest period selected by the Company. A SOFR Adjustment rate of 0.10% and 0.15% is applicable for a one-month interest period and three-month period, respectively, that may be selected by the Company;
	●	removed the minimum Tangible Adjusted Net Worth (as defined in the Loan Agreement) covenant requirement;
	●	placed an indefinite reduction in borrowing availability of $750,000; and
	●	allows for up to $2,500,000 in capital expenditure made in fiscal year 2023 and thereafter to be treated as financed capital expenditure in the Company’s quarterly FCCR covenant calculation requirement.

At maturity of the Loan Agreement, as amended, any unpaid principal balance plus interest, if any, will become due.

Pursuant to the amendment dated July 31, 2023 as discussed above, the Company has agreed to pay PNC 1.0% of the total financing under the Loan Agreement, as amended, in the event the Company pays off its obligations on or before July 31, 2024, and 0.5% of the total financing if the Company pays off its obligations after July 31, 2024, to and including July 31, 2025. No early termination fee shall apply if the Company pays off its obligations under the amended Loan Agreement after July 31, 2025.

In connection with the amendment dated July 31, 2023, the Company paid its lender a fee of $100,000 which is being amortized over the remaining term of the Loan Agreement, as amended, as interest expense-financing fees.

Pursuant to the Loan Agreement, as amended, the annual rate of interest due on the revolving credit is at prime (8.50% at September 30, 2023) plus 2% or SOFR plus 3.00% plus an SOFR Adjustment applicable for an interest period selected by the Company. The annual rate of interest due on Term Loan 1 and the Capital Line loan is at prime plus 2.50% or Term SOFR Rate plus 3.50% plus an SOFR Adjustment applicable for an interest period selected by the Company. SOFR Adjustment rates of 0.10% and 0.15% are applicable for a one-month interest period and three-month period, respectively, that may be selected by the Company. See payment of annual rate of interest due on Term Loan 2 as provided under the amendment dated July 31, 2023.

At September 30, 2023, the borrowing availability under the Company’s revolving credit was approximately $10,378,000 which included our cash and was based on our eligible receivables and is net of approximately $3,200,000 in outstanding standby letters of credit and net of the $750,000 indefinite reduction in borrowing availability imposed by the Company’s lender pursuant to the amendment dated July 31, 2023 as discussed above.

The Company’s credit facility under its Loan Agreement, as amended, with PNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by PNC, could result in a default under our credit facility allowing our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. The Company was not required to perform testing of the FCCR requirement in the first quarter of 2023 pursuant to the March 21, 2023 amendment as discussed above. It otherwise met all of its other financial covenant requirements. The Company met all of its covenant requirements in the second and third quarters of 2023.

9. Commitments and Contingencies

Hazardous Waste

In connection with our waste management services, the Company processes hazardous, non-hazardous, low-level radioactive and mixed (containing both hazardous and low-level radioactive) waste, which the Company transports to its own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required at the disposal site, the Company could be a potentially responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.

Legal Matters

In the normal course of conducting our business, the Company may be involved in various litigation. The Company is not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.

Tetra Tech EC, Inc. (“Tetra Tech”)

During July 2020, Tetra Tech EC, Inc. (“Tetra Tech”) filed a complaint in the United States District Court for the Northern District of California (the “Court”) against CH2M Hill, Inc. (“CH2M”) and four subcontractors of CH2M, including the Company (“Defendants”). The complaint alleges various claims, including a claim for negligence, negligent misrepresentation, equitable indemnification and related business claims against all Defendants related to alleged damages suffered by Tetra Tech in respect of certain draft reports prepared by Defendants at the request of the U.S. Navy as part of an investigation and review of certain whistleblower complaints about Tetra Tech’s environmental restoration at the Hunter’s Point Naval Shipyard in San Francisco.

CH2M was hired by the Navy in 2016 to review Tetra Tech’s work. CH2M subcontracted with environmental consulting and cleanup firms Battelle Memorial Institute, Cabrera Services, Inc., SC&A, Inc. and the Company to assist with the review, according to the complaint.

The Company’s insurance carrier is providing a defense on our behalf in connection with this lawsuit, subject to a $100,000 self-insured retention and the terms and limitations contained in the insurance policy.

The majority of Tetra Tech’s claims have been dismissed by the Court. Remaining claims include: (1) intentional interference with contractual relations; and (2) inducing a breach of contract. The Company continues to believe it has no liability exposure to Tetra Tech.

Perma-Fix Canada Inc. (“PF Canada”)

During the fourth quarter of 2021, PF Canada received a Notice of Termination (“NOT”) from Canadian Nuclear Laboratories, LTD. (“CNL”) on a Task Order Agreement (“TOA”) that PF Canada entered into with CNL in May 2019 for remediation work within Ontario, Canada (“Agreement”). The NOT was received after work under the TOA was substantially completed and work under the TOA has since been completed. CNL may terminate the TOA at any time for convenience. As of September 30, 2023, PF Canada has approximately $2,287,000 in unpaid receivables due from CNL as a result of work performed under the TOA. Additionally, CNL has approximately $1,056,000 in contractual holdback under the TOA that is payable to PF Canada. CNL and PF Canada have completed discussions and reached an agreement in principle to settle related matters under which, subject to execution of a written settlement agreement, the noted unpaid receivables and contractual holdback amounts will be paid to PF Canada.

Insurance

The Company has a 25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG Specialty Insurance Company (“AIG”), which provides financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure. The 2003 Closure Policy, as amended, provides for a maximum allowable coverage of $28,177,000 which includes available capacity to allow for annual inflation and other performance and surety bond requirements. Total coverage under the 2003 Closure Policy, as amended, was $22,461,000 at September 30, 2023. At September 30, 2023, and December 31, 2022, finite risk sinking funds contributed by the Company related to the 2003 Closure Policy, which is included in other long term assets on the accompanying Condensed Consolidated Balance Sheets, totaled $11,926,000 and $11,570,000, respectively, including interest earned of $2,455,000 and $2,099,000 on the finite risk sinking funds as of September 30, 2023, and December 31, 2022, respectively. Interest income for the three and nine months ended September 30, 2023, was approximately $146,000 and $356,000, respectively. Interest income for the three and nine months ended September 30, 2022, was approximately $29,000 and $69,000, respectively. If we so elect, AIG is obligated to pay the Company an amount equal to 100% of the finite risk sinking fund account balance in return for complete release of liability from both the Company and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.

Letter of Credits and Bonding Requirements

From time to time, the Company is required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. At September 30, 2023, the total amount of standby letters of credit outstanding was approximately $3,200,000 and the total amount of bonds outstanding was approximately $36,428,000.

10. Discontinued Operations

The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and earlier, as well as three previously closed locations.

The Company’s discontinued operations had net income of $95,000 and net loss of $160,000 for the three months ended September 30, 2023 and 2022, respectively (net of tax benefits of $234,000 and $46,000 for the three month ended September 30, 2023 and 2022, respectively) and net losses of $44,000 and $442,000 for the nine months ended September 30, 2023 and 2022, respectively, (net of tax benefits of $353,000 and $127,000 for the nine month ended September 30, 2023 and 2022, respectively). The income and losses (excluding the tax benefits) were primarily due to costs incurred in the administration and continued monitoring/evaluation of our discontinued operations. The Company’s discontinued operations had no revenues for any of the periods noted above.

The following table presents the major class of assets of discontinued operations as of September 30, 2023 and December 31, 2022. No assets and liabilities were held for sale at each of the periods noted.

	September 30,		December 31,
(Amounts in Thousands)	2023		2022
Current assets
Other assets	$	15	$	15
Total current assets		15		15
Long-term assets
Property, plant and equipment, net ⁽¹⁾		81		81
Total long-term assets		81		81
Total assets	$	96