The consolidated condensed 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 consolidated condensed 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, 2014 are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2014.

The Company suggests that these consolidated condensed 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, 2013.

Going Concern

The accompanying financial statements have been prepared assuming we will continue as a going concern. Our former independent registered public accounting firm included in its report covering our 2013 audited consolidated financial statements an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. The Company’s financial position and operating results raised substantial doubt about the Company’s ability to continue as a going concern, as reflected by the accumulated deficit of $57,165,000 incurred through September 30, 2014. The accompanying financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. During the nine months ended September 30, 2014, we incurred a net loss of $2,087,000 (which included a gain on insurance settlement of approximately $3,530,000 from our Perma-Fix of South Georgia, Inc. subsidiary which suffered a fire on August 14, 2013 (See “Note 4 – Divestitures and Discontinued Operations for further details relating to this insurance settlement)). As of September 30, 2014, we have a deficit in working capital of $226,000. Revenues for the nine months ended September 30, 2014 were $40,106,000 and were below our expectations and internal forecasts primarily due to the reduced and inconsistent (seasonal) spending of government clients operating under reduced budgets, completion of contracts, and general adverse economic conditions. However, we have seen significant improvement in our business starting in the latter part of the second quarter of 2014 and into the third quarter of 2014 with a number of sizable projects awarded to us, which is reflected by our third quarter financial results. As of September 30, 2014, the Company’s backlog was approximately $10,681,000, which increased approximately $2,986,000 from the December 31, 2013 balance and increased approximately $4,604,000 from the June 30, 2014 balance.

Our cash flow requirements during the fiscal year 2013 were financed by cash on hand, operations, our credit facility, and debt financings. For the nine month ended September 30, 2014, we are in a positive cash flow position primarily as a result of the proceeds we received from the sale of our Schreiber, Yonley and Associates, Inc. (“SYA”) subsidiary and the insurance settlement proceeds that our lender authorized us to use for general working capital purposes (see “Note 4 – Divestitures and Discontinued Operations” for the divestiture of SYA and the insurance settlement proceeds received by the Company on June 30, 2014). We are continually reviewing operating costs and are committed to further reducing operating costs to bring them in line with revenue levels when deemed necessary.

Our ability to achieve and maintain profitability is dependent upon our ability to successfully increase revenues, continue to cut our cost (when deemed necessary), and continue to develop our business plans of expansion into both commercial and international markets (to help offset the uncertainties of government spending in the United States of America) that will generate profitable revenues. We continue to explore all sources of increasing revenue.

Reclassification 

To conform to our current year presentation, the Company included the $65,000 of loss on debt modification recorded during the three and nine months ended September 30, 2013 as interest expense. Approximately $37,000 of loss on debt modification was recorded in the second quarter of 2014 and included as interest expense. The amount recorded for loss on debt modification for each period noted above was not material and therefore, was included in interest expenses.