UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year endedDecember 31 2019, 2022

or

[  ]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.1-11596

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware58-1954497

State or other jurisdiction

of
incorporation or organization

(IRS Employer

Identification Number)

8302 Dunwoody Place, #250, Atlanta, GA30350
(Address of principal executive offices)(Zip Code)

 

(770)587-9898

(Registrant’s telephone number)

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

 

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

Title of each class Trading symbolSymbol Name of each exchange on which registered
Common Stock, $.001 Par Value PESI NASDAQ Capital Markets
Preferred Stock Purchase RightsNASDAQ Capital Markets

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

Yes [  ] No [X]

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒ No

Yes [  ] No [X]

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

Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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

Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ] Accelerated Filer [  ] Non-accelerated Filer [  ] ☒ Smaller reporting company [X] 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. 

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

Yes [  ] No [X]

The aggregate market value of the Registrant’s voting and non-voting common equity held by nonaffiliates of the Registrant computed by reference to the closing sale price of such stock as reported by NASDAQ as of the last business day of the most recently completed second fiscal quarter (June 30, 2019)2022), was approximately $44,338,864.$64,147,134). For the purposes of this calculation, all directors and executive officers of the Registrant (as indicated in Item 12) have been deemed to be affiliates. Such determination should not be deemed an admission that such directors and executive officers, are, in fact, affiliates of the Registrant. The Company’s Common Stock is listed on the NASDAQ Capital Markets.

As of February 18, 2020,14, 2023, there were 12,123,00613,358,075 shares of the registrant’s Common Stock, $.001 par value, outstanding.

Documents incorporated by reference: None

 

 

 

 
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

INDEX

Page No.
PART I
Item 1.Business1
Item 1A.Risk Factors7
Item 1B.Unresolved Staff Comments16
Item 2.Properties17
Item 2.3.PropertiesLegal Proceedings17
Item 3.4.Legal ProceedingsMine Safety Disclosure17
Item 4.PART IIMine Safety Disclosure17
PART II
Item 5.Market for Registrant’s Common Equity and Related Stockholder Matters1817
Item 6.Selected Financial Data18
Item 7.Management’s Discussion and Analysis of Financial Condition And Results of Operations18
Item 7A.Quantitative and Qualitative Disclosures About Market Risk3430
Special Note Regarding Forward-Looking Statements3430
Item 8.Financial Statements and Supplementary Data3733
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure7774
Item 9A.Controls and Procedures7774
Item 9B.Other Information7776
PART III
Item 10.Directors, Executive Officers and Corporate Governance7876
Item 11.Executive Compensation8687
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters110104
Item 13.Certain Relationships and Related Transactions, and Director Independence112107
Item 14.Principal Accountant Fees and Services114110
PART IV
Item 15.Exhibits and Financial Statement Schedules115110

 
 

PART I

ITEM 1. BUSINESS

 

ITEM

1.

BUSINESS

Company Overview and Principal Products and Services

 

Perma-Fix Environmental Services, Inc. (the Company, which may be referred to as we, us, or our), a Delaware corporation incorporated in December 1990, is an environmental and environmental technology know-how company.

We have grown through acquisitionsThe principal element of our business strategy consists of upgrading our facilities within our Treatment Segment to increase efficiency and internal growth. Our goal ismodernize and expand treatment capabilities to meet the changing markets associated with the waste management industry. Within our Services Segment, we continue to focusbid on projects, increase competitive procurement effectiveness and broaden the safemarket penetration within both the commercial and efficient operation of our three waste treatment facilities and on-site activities, identify and pursue strategic acquisitions to expand our market base, and conduct research and development (“R&D”) of innovative technologies to solve complex waste management challenges providing increased value to our clients.government sectors. The Company continues to focusremain focused on expansion into both commercial and international markets to supplement government spending in the United States of America (“USA”), from which a significant portion of the Company’s revenue is derived. This includes new services, new customers and increased market share in our current markets.

COVID-19 and Other Impacts

 

Our majority-owned subsidiary, Perma-Fix Medical S.A.2022 financial results continued to be impacted by COVID-19, among other things. Our Treatment Segment began to see steady improvements in waste receipts starting in the second quarter of 2022 from certain customers who had previously delayed waste shipments due, in part, from the impact of COVID-19. This positive trend was negatively impacted by occurrences of severe weather conditions which resulted in temporary delays in waste shipments from certain customers and its wholly-owned subsidiary, Perma-Fix Medical Corporation (“PFM Corporation”a temporary shortage in skilled production personnel which peaked through the fourth quarter of 2022 at one of our facilities. In early part of 2022, our Services Segment continued to experience delays/curtailments in project work by certain customers since the award of projects to us late in the second quarter of 2021 due to COVID-19 impact and/or administrative delays. However, starting in the second quarter of 2022, work under these projects had resumed/increased as the pandemic impacts began to subside and has since reached full operational status. In 2022, we continued to realize delays in procurement and planning on behalf of our government clients that saw easing through the second half of the year. Heading into 2023, we expect to see continued improvements in waste receipts and continued increases in project work from contracts recently won and bids submitted in both segments that are awaiting awards, subject to potential COVID-19 and economic impacts. (See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCOVID-19 and Other Impact” for a Delaware corporation) (together known as “PF Medical” or our “Medical Segment”), has not generated any revenue but continuesfull discussion of COVID-19 and other impacts on a limited basis to evaluate strategic options to commercialize its medical isotope production. These options require substantial capital to fund R&D requirements, in addition to start-up and production costs. As a result, the Medical Segment has substantially reduced its R&D activities and is attempting to raise the necessary capital or to partner with others willing to finance its activities (see “Medical Segment” below for further information in connection with this segment)Company’s results of operations).

Segment Information and Foreign and Domestic Operations and Sales

 

TheFor 2022, the Company has threetwo reportable segments. In accordance with Financial Accounting Standards Board (“FASB”) ASCAccounting Standards Codification (“ASC”) 280, “Segment Reporting”, 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 chief operating decision maker “(CODM”) to make decisions about resources to be allocated and assess its performance; and
for which discrete financial information is available.

TREATMENT SEGMENT reporting includes:

-nuclear, low-level radioactive, mixed (waste containing both hazardous and low-level radioactive waste), hazardous and non-hazardous waste treatment, processing and disposal services primarily through threefour uniquely licensed (Nuclear Regulatory Commission or state equivalent) and permitted (U.S. Environmental Protection Agency (“EPA”) or state equivalent) treatment and storage facilities held by the following subsidiaries:as follow: Perma-Fix of Florida, Inc. (“PFF”), Diversified Scientific Services, Inc., (“DSSI”), and Perma-Fix Northwest Richland, Inc. (“PFNWR”). The presence of nuclear and low-level radioactive constituents within the waste streams processed by this segment creates differentOak Ridge Environmental Waste Operations Center (“EWOC”); and unique operational, processing and permitting/licensing requirements; and
-Research & Development (“R&D&D”) activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.

The Company completed the closure and decommissioning activities of its East Tennessee Materials and Energy Corporation (“M&EC”) facility (within our Treatment Segment and in closure status) in accordance with M&EC’s license and permit requirements in 2019.

For 2019,2022, the Treatment Segment accounted for $40,364,000,$33,358,000, or 54.9%47.2%, of total revenue, as compared to $36,271,000,$32,992,000, or 73.2%45.7%, of total revenue for 2018.2021. See “Dependence Upon a Single or Few Customers” for further details and a discussion as to our Segments’ contracts with government clients (domestic and foreign) or with others as a subcontractor to government clients.

1

SERVICES SEGMENT, which includes:

-Technical services, which include:

 

professional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering;
health physics services including health physicists, radiological engineers, nuclear engineers and health physics technicians support to government and private radioactive materials licensees;
integrated Occupational Safety and Health services including industrial hygiene (“IH”) assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and Occupational Safety and Health Administration (“OSHA”) citation assistance;
global technical services providing consulting, engineering (civil, nuclear, mechanical, chemical, radiological and environmental), project management, waste management, environmental, and decontamination and decommissioning (“D&D”) field, technical, and management personnel and services to commercial and government customers; and
on-site waste management services to commercial and governmental customers.

-Nuclear services, which include:

technology-based servicesD&D of government and commercial facilities impacted with radioactive material and hazardous constituents including engineering, decontamination and decommissioning (“D&D”),technology applications, specialty services, logistics, transportation, processing and disposal; and
remediationlicense termination support of nuclearradioactive material licensed and federal facilities over the entire cycle of the termination process: project management, planning, characterization, waste stream identification and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, delineation, remediation/demolition, and planning; site restoration; logistics; transportation;final status survey, compliance demonstration, reporting, transportation, disposal and emergency response; andresponse.

-A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”) instrumentation.
-A company owned gamma spectroscopy laboratory for the analysis of oil and gas industry solids and liquids.

For 2019,2022, the Services Segment accounted for $33,095,000,$37,241,000, or 45.1%52.8%, of total revenue, as compared to $13,268,000,$39,199,000, or 26.8%54.3%, of total revenue for 2018.2021. See “Dependence Upon a Single or Few Customers” for further details and a discussion as to our Segments’ contracts with government clients (domestic and foreign) or with others as a subcontractor to government clients.

MEDICAL SEGMENT reporting includes: R&D costs for the new medical isotope production technology from our majority-owned Polish subsidiary, PF Medical, of which we own approximately 60.5% at December 31, 2019. The Medical Segment has not generated any revenue as it remains in the R&D stage. The Company continues to scale down R&D costs for this segment which consist primarily of third party fees and other administrative related costs associated with the segment. As previously disclosed, our Medical Segment has substantially reduced its R&D activities due to the need for capital to fund these activities. The Company anticipates that the Medical Segment will not resume full R&D activities until the necessary capital is obtained through its own credit facility or additional equity raise or obtains partners willing to provide funding for its R&D.

Our Treatment and Services Segments provide services to research institutions, commercial companies, public utilities, and governmental agencies (domestic and foreign), including the U.S. Department of Energy (“DOE”) and U.S. Department of Defense (“DOD”). The distribution channels for our services are through direct sales to customers or via intermediaries.

Our corporate office is located at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.

Foreign Revenue and Initiative

Our consolidated revenue for 20192022 and 20182021 included approximately $149,000,$406,000, or 0.2%0.6%, and $98,000,$9,277,000, or 0.2%, respectively, from United Kingdom customers (including revenues generated by our United Kingdom subsidiary, Perma-Fix UK Limited (“PF UK Limited”)).

Our consolidated revenue for 2019 and 2018 included approximately $5,488,000, or 7.5%, and $1,140,000, or 2.3%12.9%, respectively, from Canadian customers (includingcustomers.

2

During March 2022, we signed a joint venture term sheet addressing plans to partner with Springfields Fuels Limited (“SFL”), an affiliate of Westinghouse Electric Company LLC, to develop and manage a nuclear waste-materials treatment facility (the “Facility”) in the United Kingdom. The Facility is for the purpose of expanding the partners’ waste treatment capabilities for the European nuclear market. It is expected that upon finalization of a partnership agreement, SFL will have an ownership interest of fifty-five (55) percent and our interest will be forty-five (45) percent. The finalization, form and capitalization of this unpopulated partnership is subject to numerous conditions, including but not limited to, winning a certain contract, completion and execution of a definitive agreement and facility design, granting of required regulatory, lender or permitting approvals and updated cost and profitability analysis based on current and forecast future economic conditions. Upon finalization of this venture, we will be required to make an investment in this venture. The amount of our investment, the period of which it is to be made and the method of funding are to be determined.

Seasonal Factors of our Business

Our operations are generally subject to seasonal factors. See “Risk Factors – Risks Related to our Business and Operations – Our operations are subject to seasonal factors, which causes our revenues generated byto fluctuate” for a discussion of our Perma-Fix of Canada, Inc. (“PF Canada”) subsidiary).seasonal factors.

Permits and Licenses

Waste management service companies are subject to extensive, evolving and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state and local environmental laws and regulations govern our activities regarding the treatment, storage, processing, disposal and transportation of hazardous, non-hazardous and radioactive wastes, and require us to obtain and maintain permits, licenses and/or approvals in order to conduct our waste activities. We are dependent on our permits and licenses discussed below in order to operate our businesses. Failure to obtain and maintain our permits or approvals would have a material adverse effect on us, our operations, and financial condition. The permits and licenses have terms ranging from one to ten years, and provided that we maintain a reasonable level of compliance, renew with minimal effort, and cost. We believe that these permit and license requirements represent a potential barrier to entry for possible competitors.

 

PFF, located in Gainesville, Florida, operates its hazardous, mixed and low-level radioactive waste activities under a Resource Conservation and Recovery Act (“RCRA”) Part B permit, Toxic Substances Control Act (“TSCA”) authorization, Restricted RX Drug Distributor-Destruction license, biomedical, and a radioactive materials license issued by the State of Florida.

DSSI, located in Kingston, Tennessee, conducts mixed and low-level radioactive waste storage and treatment activities under RCRA Part B permits and a radioactive materials license issued by the State of Tennessee Department of Environment and Conservation.Conservation, Division of radiological health. Co-regulated TSCA Polychlorinated Biphenyl (“PCB”) wastes are also managed for PCB destruction under EPA Approval.

PFNWR, located in Richland, Washington, operates a low-level radioactive waste processing facility as well as a mixed waste processing facility. Radioactive material processing is authorized under radioactive materials licenses issued by the State of Washington and mixed waste processing is additionally authorized under a RCRA Part B permit with TSCA authorization issued jointly by the State of Washington and the EPA.

As previously discussed,EWOC, located in Oak Ridge, Tennessee, operates a low-level radioactive waste material processing facility. Radioactive material processing is authorized under radioactive material licenses issued by the Company completed the closureState of Tennessee Department of Environmental and decommissioning activitiesConservation, Division of its M&EC facility (within our Treatment Segment) in accordance with M&EC’s license and permit requirements in 2019. The Company had previously fully impaired the permit value for our M&EC facility. The permits at M&EC have been terminated.radiological health.

The combination of a RCRA Part B hazardous waste permit,permits, TSCA authorization,authorizations, and a radioactive materials license, asmaterial licenses held by the Company and its subsidiaries comprising our Treatment Segment areis very difficult to obtain for a single facility and make these facilitiesthis Segment unique.

We believe that the permitting and licensing requirements, and the cost to obtain such permits, are barriers to the entry of hazardous waste and radioactive and mixed waste activities as presently operated by our waste treatment subsidiaries. If the permit requirements for hazardous waste treatment, storage, and disposal (“TSD”) activities and/or the licensing requirements for the handling of low-level radioactive matters are eliminated or if such licenses or permits were made less rigorous to obtain, we believe such would allow companies to enter into these markets and provide greater competition.

Backlog

3

Number of Employees

The Treatment Segment of our Company maintains a backlog of stored waste, which represents waste that has not been processed. The backlog is principally a result of the timing and complexity of the waste being brought into the facilities and the selling price per container.

At December 31, 2019,2022, we employed approximately 296 employees, of whom 287 are full-time employees and 9 are part-time/temporary employees. None of our Treatment Segment hademployees are unionized.

Environmental, Social and Governance (“ESG”)

During 2022, we continued to improve our ESG performance. Our ESG subcommittee under our Corporate Governance and Nominating Committee continues to provide guidance on ESG management. Our executive team is responsible for the development of a backlogstrategic roadmap for ESG efforts with support from management from key functional areas. The key areas of approximately $8,506,000,focus under our ESG initiatives continue to be health and safety, environmental performance, DEI (diversity, equality and inclusion), talent retention and development, corporate governance and climate-forward service development that support our customers’ transition to low carbon economy. Our executive team is involved in policy planning and coordination of corporate-wide ESG efforts. See our website at https://www.perma-fix.com/esg.aspx for some highlights of our ESG initiatives as comparedwell as our policies under our ESG as we continue to approximately $11,104,000 at December 31, 2018. Additionally, the time it takes to process waste from the time it arrives may increase due to the types and complexitiesimprove our ESG initiatives. The information on our website is not part of, the waste we are currently receiving. We typically process our backlog during periods of low waste receipts, which historically has beenor incorporated by reference in the first or fourth quarters.this Form 10-K.

Dependence Upon a Single or Few Customers

Our Treatment and Services Segments have significant relationships with the U.SU.S. governmental authorities. Our Services Segment also had significant relationships with the Canadian government authorities. A significant amount of our revenues from our Treatment and Canadian governmentalServices Segments are generated indirectly as subcontractors for others who are prime contractors to government authorities, particularly the DOE and continue to enter into contracts,DOD, or directly as the prime contractor or indirectly for others as a subcontractor, to government authorities. The U.S Department of Energy (“DOE”) and U.S. Department of Defense (“DOD”) represent major customers for our Treatment and Services Segments which may be a direct contractor for these two major customers or indirectly as a subcontractor for others to these two major customers. The contracts that we are a party to with others as subcontractors to the U.S federal government or directly with others as a subcontractor to the U.S federal government generally provide that the government may terminate or renegotiate the contracts on 30 days’ notice,contract at any time for convenience at the government’s election.option. The contracts/task order agreements (“TOA”) that we are a party to with Canadian governmental authorities also generally provide that the government authorities may terminate the contracts/task order agreements at any time for any reason for convenience. Project work under TOAs with Canadian government authority has substantially been completed. A significant account receivable due to our Perma-Fix Canada, Inc. (“PF Canada”) is subject to continuing negotiations. See “Known Trends and Uncertainties – Perma-Fix Canada, Inc. (“PF Canada”)” in Part II – Item 7 – “Management’s Discussion and Analysis of financial Condition and Results of Operations” for additional discussion as to a terminated Canadian TOA. Our inability to continue under existing contracts that we have with the U.S federal government and Canadian government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition.

We performed services relating to waste generated by government clients (domestic and foreign (primarily Canadian)), either directly as a prime contractor or indirectly for others as a subcontractor to government entities or directly as a prime contractor to government entities, representing approximately $59,985,000,$60,030,000, or 81.7%85.0%, of our total revenue during 2019,2022, as compared to $35,944,000,$60,812,000, or 72.6%84.2%, of our total revenue during 2018.2021.

As ourOur revenues are project/event based where the completion of one contract with a specific customer may be replaced by another contract with a different customer from year to year, we do not believe the loss of one specific customer from one year to the next will generally have a material adverse effect on our operations and financial condition.year.

4

Competitive Conditions

The Treatment Segment’s largest competitor is EnergySolutions (“ES”) which operates treatment facilities in Oak Ridge, TN and Erwin, TN and treatment/disposal facilities for low level radioactive waste in Clive, UT and Barnwell, SC. Waste Control Specialists, (“WCS”), which has licensed treatment/disposal capabilities for low level radioactive waste in Andrews, TX, is also a competitor in the treatment market with increasing market share. These two competitors also provide us with options for disposal of our treated nuclear waste. The Treatment Segment treats and disposes of DOE generated wasteswaste largely at DOE owned sites. Our Treatment Segment currently solicits business primarily on a North America basis with both government and commercial clients; however, we continue to focus on emerging international markets for additional work.

Our Services Segment is engaged in highly competitive businesses in which a number of our government contracts and some of our commercial contracts are awarded through competitive bidding processes. The extent of such competition varies according to the industries and markets in which our customers operate as well as the geographic areas in which we operate. The degree and type of competition we face is also often influenced by the project specification being bid on and the different specialty skill sets of each bidder for which our Services Segment competes, especially projects subject to the governmental bid process. We also have the ability to prime federal government small business procurements (small business set asides). Based on past experience, we believe that large businesses are more willing to team with small businesses in order to be part of these often-substantial procurements. There are a number of qualified small businesses in our market that will provide intense competition that may provide a challenge to our ability to maintain strong growth rates and acceptable profit margins. For international business there are additional competitors, many from within the country the work is to be performed, making winning work in foreign countries more challenging. Our recently implemented strategic plan, which includes increasing our overall contract bid/win ratio and expansion into commercial and international markets, has thus far been successful. Since mid-2019, our wholly-owned subsidiary, PF Canada, entered into two Task Order Agreements (“TOA”) with the Canadian Nuclear Laboratories, LTD. (“CNL”), with an aggregate value of approximately $11,500,000 (U.S dollar), for remediation work at specific sites within Ontario, Canada. Work under these TOAs are expected to be completed by 2020. The TOAs with the Canadian government generally provide that the government may terminate a TOA at any time for convenience. If our Services Segment is unable to meet these competitive challenges, it could lose market share and experience an overall reduction in its profits.

Certain Environmental Expenditures and Potential Environmental Liabilities

Environmental Liabilities

We have three remediation projects, which are currently in progress atrelating to our Perma-Fix of Dayton, Inc. (“PFD”), Perma-Fix of Memphis, Inc. (“PFM”), and Perma-Fix South Georgia, Inc. (“PFSG”) subsidiaries, which are all included within our discontinued operations. These remediation projects principally entail the removal/remediation of contaminated soil and, in most cases, the remediation of surrounding ground water. These remediation activities are closely reviewed and monitored by the applicable state regulators.

At December 31, 2019,2022, we had total accrued environmental remediation liabilities of $927,000, an increase$861,000, a decrease of $40,000$15,000 from the December 31, 20182021 balance of $887,000.$876,000. The net increasedecrease represents an increase of approximately $50,000 made to the reserve at our PFM subsidiary due to reassessment of thepayments for remediation reserve and payments of approximately $10,000 on remediation projects for our PFD subsidiary.projects. At December 31, 2019, $817,0002022, $112,000 of the total accrued environmental remediation liabilities was recorded as current.

No insurance or third-party recovery was taken into account in determining our cost estimates or reserves.

The nature of our business exposes us to significant cost to comply with governmental environmental laws, rules and regulations and risk of liability for damages. Such potential liability could involve, for example, claims for cleanup costs, personal injury or damage to the environment in cases where we are held responsible for the release of hazardous materials; claims of employees, customers or third parties for personal injury or property damage occurring in the course of our operations; and claims alleging negligence or professional errors or omissions in the planning or performance of our services. In addition, we could be deemed a potentially responsible party (“PRP”) for the costs of required cleanup of properties, which may be contaminated by hazardous substances generated or transported by us to a site we selected, including properties owned or leased by us. We could also be subject to fines and civil penalties in connection with violations of regulatory requirements.

Research and Development (“R&D”)&D

Innovation and technical know-how by our operations is very important to the success of our business. Our goal is to discover, develop and bring to market innovative ways to process waste that address unmet environmental needs. We conduct research internally, and also through collaborations with other third parties. The majority of our research activities are performed as we receive new and unique waste to treat. Our competitors also devote resources to R&D and many such competitors have greater resources at their disposal than we do. As previously discussed, our Medical Segment has ceased a substantial portion of its R&D activities due to the needtotaled $336,000 and $746,000 for substantial capital to fund such activities. We continue to explore ways to raise this capital. We anticipate that our Medical Segment will not restart its full-scale R&D activities until it obtains the necessary funding or find a partner willing to fund its R&D activities. During 20192022 and 2018, we incurred approximately $750,000 and $1,370,000, respectively, in R&D activities, of which approximately $314,000 and $811,000, respectively, were spent by our Medical Segment.2021, respectively.

Number of Employees

In our service-driven business, our employees are vital to our success. We believe we have good relationships with our employees. At December 31, 2019, we employed approximately 325 employees, of whom 308 are full-time employees and 17 are part-time/temporary employees.

5
 

Governmental Regulation

Environmental companies, such as us, and their customers are subject to extensive and evolving environmental laws and regulations by a number of federal, state and local environmental, safety and health agencies, the principal of which being the EPA. These laws and regulations largely contribute to the demand for our services. Although our customers remain responsible by law for their environmental problems, we must also comply with the requirements of those laws applicable to our services. We cannot predict the extent to which our operations may be affected by future enforcement policies as applied to existing laws or by the enactment of new environmental laws and regulations. Moreover, any predictions regarding possible liability are further complicated by the fact that under current environmental laws we could be jointly and severally liable for certain activities of third parties over whom we have little or no control. Although we believe that we are currently in substantial compliance with applicable laws and regulations, we could be subject to fines, penalties or other liabilities or could be adversely affected by existing or subsequently enacted laws or regulations. The principal environmental laws affecting our customers and us are briefly discussed below.

The Resource Conservation and Recovery Act of 1976, as amended (“RCRA”)

RCRA and its associated regulations establish a strict and comprehensive permitting and regulatory program applicable to companies, such as us, that treat, store or dispose of hazardous waste. The EPA has promulgated regulations under RCRA for new and existing treatment, storage and disposal facilities including incinerators, storage and treatment tanks, storage containers, storage and treatment surface impoundments, waste piles and landfills. Every facility that treats, stores or disposes of hazardous waste must obtain a RCRA permit or must obtain interim status from the EPA, or a state agency, which has been authorized by the EPA to administer its program, and must comply with certain operating, financial responsibility and closure requirements.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA,” also referred to as the “Superfund Act”)

CERCLA governs the cleanup of sites at which hazardous substances are located or at which hazardous substances have been released or are threatened to be released into the environment. CERCLA authorizes the EPA to compel responsible parties to clean up sites and provides for punitive damages for noncompliance. CERCLA imposes joint and several liabilities for the costs of clean up and damages to natural resources.

Health and Safety Regulations

The operation of our environmental activities is subject to the requirements of the OSHA and comparable state laws. Regulations promulgated under OSHA by the Department of Labor require employers of persons in the transportation and environmental industries, including independent contractors, to implement hazard communications, work practices and personnel protection programs in order to protect employees from equipment safety hazards and exposure to hazardous chemicals.

Atomic Energy Act

The Atomic Energy Act of 1954 governs the safe handling and use of Source, Special Nuclear and Byproduct materials in the U.S. and its territories. This act authorized the Atomic Energy Commission (now the Nuclear Regulatory Commission “USNRC”) to enter into “Agreements with states to carry out those regulatory functions in those respective states except for Nuclear Power Plants and federal facilities like the VA hospitals and the DOE operations.” The State of Florida Department of Health (with the USNRC oversight), Office of Radiation Control, regulates the permittinglicensing and radiological program of the PFF facility, andfacility; the State of Tennessee (with the USNRC oversight), Tennessee DepartmentDivision of Radiological Health, regulates permittinglicensing and the radiological program of the DSSI facility. Thefacility and the EWOC facility; and the State of Washington (with the USNRC oversight) Department of Health, regulates permittinglicensing and the radiological operations of the PFNWR facility.

Other Laws

Our activities are subject to other federal environmental protection and similar laws, including, without limitation, the Clean Water Act, the Clean Air Act, the Hazardous Materials Transportation Act and the TSCA. Many states have also adopted laws for the protection of the environment which may affect us, including laws governing the generation, handling, transportation and disposition of hazardous substances and laws governing the investigation and cleanup of, and liability for, contaminated sites. Some of these state provisions are broader and more stringent than existing federal law and regulations. Our failure to conform our services to the requirements of any of these other applicable federal or state laws could subject us to substantial liabilities which could have a material adverse effect on us, our operations and financial condition. In addition to various federal, state and local environmental regulations, our hazardous waste transportation activities are regulated by the U.S. Department of Transportation, the Interstate Commerce Commission and transportation regulatory bodies in the states in which we operate. We cannot predict the extent to which we may be affected by any law or rule that may be enacted or enforced in the future, or any new or different interpretations of existing laws or rules.

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ITEM 1A.RISK FACTORS

The following are certain risk factors that could affect our business, financial performance, and results of operations. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Form 10-K, as the forward-looking statements are based on current expectations, and actual results and conditions could differ materially from the current expectations. Investing in our securities involves a high degree of risk, and before making an investment decision, you should carefully consider these risk factors as well as other information we include or incorporate by reference in the other reports we file with the Securities and Exchange Commission (the “Commission”).

Risks Relating to our Business and Operations

Failure to maintain our financial assurance coverage that we are required to have in order to operate our permitted treatment, storage and disposal facilities could have a material adverse effect on us.

We maintain finite risk insurance policies and bonding mechanisms which provide financial assurance to the applicable states for our permitted facilities in the event of unforeseen closure of those facilities. We are required to provide and to maintain financial assurance that guarantees to the state that in the event of closure, our permitted facilities will be closed in accordance with the regulations. In the event that we are unable to obtain or maintain our financial assurance coverage for any reason, this could materially impact our operations and our permits which we are required to have in order to operate our treatment, storage, and disposal facilities.

Natural disasters and/or public health events, including COVID-19 and their direct and indirect macroeconomic impacts, could continue to negatively impact our business and results of operations.

Public health threats and outbreaks such as COVID-19 and natural disasters such as hurricanes and severe weather conditions have negatively impacted our results of operations. The direct impacts of these such events resulted in delayed waste shipments from certain of our customers and delays in procurement, contract awards and planning on behalf of our government clients which negatively impacted our revenue. Residual and lingering macroeconomic effects from these such events could continue to impact supply chain, workforce availability, and/or increased costs which could have a downward effect on our business, financial condition and results of operations. We may attempt to increase our sales prices in order to maintain satisfactory margin; however, competitive pressures in our industry may have the effect of inhibiting our ability to reflect these increased costs in the prices of our services that we provide to our customers and therefore reduce our profitability.

If we cannot maintain adequate insurance coverage, we will be unable to continue certain operations.

Our business exposes us to various risks, including claims for causing damage to property and injuries to persons that may involve allegations of negligence or professional errors or omissions in the performance of our services. Such claims could be substantial. We believe that our insurance coverage is presently adequate and similar to, or greater than, the coverage maintained by other companies in the industry of our size. If we are unable to obtain adequate or required insurance coverage in the future, or if our insurance is not available at affordable rates, we would violate our permit conditions and other requirements of the environmental laws, rules, and regulations under which we operate. Such violations would render us unable to continue certain of our operations. These events would have a material adverse effect on our financial condition.

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The inability to maintain existing government contracts or win new government contracts over an extended period could have a material adverse effect on our operations and adversely affect our future revenues.

A material amount of our Treatment and Services Segments’ revenues are generated through various government contracts or subcontracts (domestic and foreign (primarily Canadian)).subcontracts. Our revenues from governmental contracts and subcontracts relating to governmental facilities within our segments were approximately $59,985,000,$60,030,000, or 81.7%85.0%, and $35,944,000,$60,812,000, or 72.6%84.2%, of our consolidated operating revenues for 20192022 and 2018,2021, respectively. Most of our government contracts or our subcontracts granted under government contracts are awarded through a regulated competitive bidding process. Some government contracts are awarded to multiple competitors, which increase overall competition and pricing pressure and may require us to make sustained post-award efforts to realize revenues under these government contracts. All contractsContracts with, or subcontracts involving, the U.S federal government are generally terminable or subject to renegotiation, by the applicable governmental agency on 30 days notice,for convenience at any time at the option of the governmental agency. The contracts/task order agreementsTOAs that we are a party to with Canadian governmental authorities also generally provide that the government authorities may terminate the contracts/task order agreementsTOAs at any time for any reason for convenience. If we fail to maintain or replace these relationships, or if a material contract is terminated or renegotiated in a manner that is materially adverse to us, our revenues and future operations could be materially adversely affected.

Our existing and future customers may reduce or halt their spending on hazardous waste and nuclear services with outside vendors, including us.

A variety of factors may cause our existing or future customers (including government clients) to reduce or halt their spending on hazardous waste and nuclear services from outside vendors, including us. These factors include, but are not limited to:

accidents, terrorism, natural disasters or other incidents occurring at nuclear facilities or involving shipments of nuclear materials;
failure of government to approve necessary budgets, or to reduce the amount of the budget necessary, to fund remediation sites, including DOE and DOD sites;
civic opposition to or changes in government policies regarding nuclear operations;
a reduction in demand for nuclear generating capacity; or
failure to perform under existing contracts, directly or indirectly, with the government.

These events could result in or cause government clients to terminate or cancel existing contracts involving us to treat, store or dispose of contaminated waste and/or to perform remediation projects, at one or more of government sites since all contracts with, or subcontracts involving, the federal government are terminable upon or subject to renegotiation at the option of the government on 30 days notice and contracts/task order agreements that we are a party to with Canadian governmental authorities generally provide that the government authorities may terminate the contracts/task order agreements at any time for any reason for convenience.sites. These events also could adversely affect us to the extent that they result in the reduction or elimination of contractual requirements, lower demand for nuclear services, burdensome regulation, disruptions of shipments or production, increased operational costs or difficulties or increased liability for actual or threatened property damage or personal injury.

Economic downturns, reductions in government funding or other events (including COVID-19) beyond our control (such as the impact of the Coronavirus) could have a material negative impact on our businesses.

Demand for our services has been, and we expect that demand will continue to be, subject to significant fluctuations due to a variety of factors beyond our control, including, without limitation, economic conditions, reductions in the budget for spending to remediate federal sites due to numerous reasons including, without limitation, the substantial deficits that the federal government has and is continuing to incur, and/or the impact resulting from the Coronavirus (or Covid-19).incur. During economic downturns, large budget deficits that the federal government and many states are experiencing, and other events beyond our control, including, but not limited to the Coronavirus,impact from COVID-19, the ability of private and government entities to spend on waste services, including nuclear services, may decline significantly. Our operations depend, in large part, upon governmental funding particularly funding levels at the DOE. Significant reductions in the level of governmental funding (for example, the annual budget of the DOE) or specifically mandated levels for different programs that are important to our business or the government declaring an emergency for reasons beyond our control (such as the Coronavirus), resulting in the delay or termination of remediation projects at federal or other sites or delay or termination of waste shipments from our customers to us could have a material adverse impact on our business, financial position, results of operations and cash flows. As a result of the Coronavirus, we have been informed that certain field projects for remediation work are being suspended until further notice due to precautions associated with the risk of potential virus spread among staff and client. Additionally, at this time, certain customers have delayed waste shipments to us into the second quarter of 2020 that were originally scheduled for the first quarter of 2020. Additional remediation projects we are working on and/or waste shipments to us from our customers could be further delayed/suspended due to the Coronavirus.flow.

The loss of one or a few customers could have an adverse effect on us.

One or a few governmental customers or governmental related customers have in the past, and may in the future, account for a significant portion of our revenue in any one year or over a period of several consecutive years. Because customers generally contract with us for specific projects, we may lose these significant customers from year to year as their projects with us are completed. Our inability to replace the business with other similar significant projects could have an adverse effect on our business and results of operations.

As a government contractor, we are subject to extensive government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.

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Our governmental contracts, which include significant amount from the DOE or subcontracts relating to DOE sites, are a significant part of our business. Allowable costs under U.S. government contracts are subject to audit by the U.S. government. If these audits result in determinations that costs claimed as reimbursable are not allowed costs or were not allocated in accordance with applicable regulations, we could be required to reimburse the U.S. government for amounts previously received.

Governmental contracts or subcontracts involving governmental facilities are often subject to specific procurement regulations, contract provisions and a variety of other requirements relating to the formation, administration, performance and accounting of these contracts. Many of these contracts include express or implied certifications of compliance with applicable regulations and contractual provisions. If we fail to comply with any regulations, requirements or statutes, our existing governmental contracts or subcontracts involving governmental facilities could be terminated or we could be suspended from government contracting or subcontracting. If one or more of our governmental contracts or subcontracts are terminated for any reason, or if we are suspended or debarred from government work, we could suffer a significant reduction in expected revenues and profits. Furthermore, as a result of our governmental contracts or subcontracts involving governmental facilities, claims for civil or criminal fraud may be brought by the government or violations of these regulations, requirements or statutes.

We are a holding company and depend, in large part, on receiving funds from our subsidiaries to fund our indebtedness.

Because we are a holding company and operations are conducted through our subsidiaries, our ability to meet our obligations depends, in large part, on the operating performance and cash flows of our subsidiaries.

Loss of certain key personnel could have a material adverse effect on us.

Our success depends on the contributions of our key management, environmental and engineering personnel. Our future success depends on our ability to retain and expand our staff of qualified personnel, including environmental specialists and technicians, sales personnel, and engineers. Without qualified personnel, we may incur delays in rendering our services or be unable to render certain services. We cannot be certain that we will be successful in our efforts to attract and retain qualified personnel as their availability is limited due to the demand for hazardous waste management services and the highly competitive nature of the hazardous waste management industry. We do not maintain key person insurance on any of our employees, officers, or directors.

Changes in environmental regulations and enforcement policies could subject us to additional liability and adversely affect our ability to continue certain operations.

We cannot predict the extent to which our operations may be affected by future governmental enforcement policies as applied to existing laws, by changes to current environmental laws and regulations, or by the enactment of new environmental laws and regulations. Any predictions regarding possible liability under such laws are complicated further by current environmental laws which provide that we could be liable, jointly and severally, for certain activities of third parties over whom we have limited or no control.

Our Treatment Segment has limited end disposal sites to utilize to dispose of its waste which could significantly impact our results of operations.

Our Treatment Segment has limited options available for disposal of itsour nuclear waste. Currently, there are only threefour commercial disposal sites each site having different owners, for our low-level radioactive waste and six commercial disposal sites for our very low-level activity waste we receive from non-governmental sites, allowing us to take advantage of the pricing competition between the threethese sites. If anyone or more of these commercial disposal sites ceases to accept waste or closes for any reason or refuses to accept the waste of our Treatment Segment, for any reason, we would have limited remaining site to dispose of our nuclear waste. With limited end disposal site to dispose of our waste, we could be subject to significantly increased costs which could negatively impact our results of operations.

Our businesses subject us to substantial potential environmental liability.

Our business of rendering services in connection with management of waste, including certain types of hazardous waste, low-level radioactive waste, and mixed waste (waste containing both hazardous and low-level radioactive waste), subjects us to risks of liability for damages. Such liability could involve, without limitation:

claims for clean-up costs, personal injury or damage to the environment in cases in which we are held responsible for the release of hazardous or radioactive materials;
claims of employees, customers, or third parties for personal injury or property damage occurring in the course of our operations; and
claims alleging negligence or professional errors or omissions in the planning or performance of our services.

Our operations are subject to numerous environmental laws and regulations. We have in the past, and could in the future, be subject to substantial fines, penalties, and sanctions for violations of environmental laws and substantial expenditures as a responsible party for the cost of remediating any property which may be contaminated by hazardous substances generated by us and disposed at such property, or transported by us to a site selected by us, including properties we own or lease.

As our operations expand, we may be subject to increased litigation, which could have a negative impact on our future financial results.

Our operations are highly regulated and we are subject to numerous laws and regulations regarding procedures for waste treatment, storage, recycling, transportation, and disposal activities, all of which may provide the basis for litigation against us. In recent years, the waste treatment industry has experienced a significant increase in so-called “toxic-tort” litigation as those injured by contamination seek to recover for personal injuries or property damage. We believe that, as our operations and activities expand, there will be a similar increase in the potential for litigation alleging that we have violated environmental laws or regulations or are responsible for contamination or pollution caused by our normal operations, negligence or other misconduct, or for accidents, which occur in the course of our business activities. Such litigation, if significant and not adequately insured against, could adversely affect our financial condition and our ability to fund our operations. Protracted litigation would likely cause us to spend significant amounts of our time, effort, and money. This could prevent our management from focusing on our operations and expansion.

Our operations are subject to seasonal factors, which cause our revenues to fluctuate.

We have historically experienced reduced revenues and losses during the first and fourth quarters of our fiscal years due to a seasonal slowdown in operations from poor weather conditions, overall reduced activities during these periods resulting from holiday periods, and finalization of government budgets during the fourth quarter of each year. During our second and third fiscal quarters there has historically been an increase in revenues and operating profits. If we do not continue to have increased revenues and profitability during the second and third fiscal quarters, this could have a material adverse effect on our results of operations and liquidity.

If environmental regulation or enforcement is relaxed, the demand for our services will decrease.

The demand for our services is substantially dependent upon the public’s concern with, and the continuation and proliferation of, the laws and regulations governing the treatment, storage, recycling, and disposal of hazardous, non-hazardous, and low-level radioactive waste. A decrease in the level of public concern, the repeal or modification of these laws, or any significant relaxation of regulations relating to the treatment, storage, recycling, and disposal of hazardous waste and low-level radioactive waste would significantly reduce the demand for our services and could have a material adverse effect on our operations and financial condition. We are not aware of any current federal or state government or agency efforts in which a moratorium or limitation has been, or will be, placed upon the creation of new hazardous or radioactive waste regulations that would have a material adverse effect on us; however, no assurance can be made that such a moratorium or limitation will not be implemented in the future.

We and our customers operate in a politically sensitive environment, and the public perception of nuclear power and radioactive materials can affect our customers and us.

We and our customers operate in a politically sensitive environment. Opposition by third parties to particular projects can limit the handling and disposal of radioactive materials. Adverse public reaction to developments in the disposal of radioactive materials, including any high-profile incident involving the discharge of radioactive materials, could directly affect our customers and indirectly affect our business. Adverse public reaction also could lead to increased regulation or outright prohibition, limitations on the activities of our customers, more onerous operating requirements or other conditions that could have a material adverse impact on our customers’ and our business.

We may be exposed to certain regulatory and financial risks related to climate change.

Climate change is receiving ever increasing attention from scientists and legislators alike. The debate is ongoing as to the extent to which our climate is changing, the potential causes of this change and its potential impacts. Some attribute global warming to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. Presently there are no federally mandated greenhouse gas reduction requirements in the United States. However, there are a number of legislative and regulatory proposals to address greenhouse gas emissions, which are in various phases of discussion or implementation. The outcome of federal and state actions to address global climate change could result in a variety of regulatory programs including potential new regulations. Any adoption by federal or state governments mandating a substantial reduction in greenhouse gas emissions could increase costs associated with our operations. Until the timing, scope and extent of any future regulation becomes known, we cannot predict the effect on our financial position, operating results and cash flows.

We may not be successful in winning new business mandates from our government and commercial customers or international customers.

We must be successful in winning mandates from our government, commercial customers and international customers to replace revenues from projects that we have completed or that are nearing completion and to increase our revenues. Our business and operating results can be adversely affected by the size and timing of a single material contract.

The elimination or any modification of the Price-Anderson Acts indemnification authority could have adverse consequences for our business.

The Atomic Energy Act of 1954, as amended, or the AEA, comprehensively regulates the manufacture, use, and storage of radioactive materials. The Price-Anderson Act (“PAA”) supports the nuclear services industry by offering broad indemnification to DOE contractors for liabilities arising out of nuclear incidents at DOE nuclear facilities. That indemnification protects DOE prime contractor, but also similar companies that work under contract or subcontract for a DOE prime contract or transporting radioactive material to or from a site. The indemnification authority of the DOE under the PAA was extended through 2025 by the Energy Policy Act of 2005.

Under certain conditions, the PAA’s indemnification provisions may not apply to our processing of radioactive waste at governmental facilities, and may not apply to liabilities that we might incur while performing services as a contractor for the DOE and the nuclear energy industry. If an incident or evacuation is not covered under PAA indemnification, we could be held liable for damages, regardless of fault, which could have an adverse effect on our results of operations and financial condition. If such indemnification authority is not applicable in the future, our business could be adversely affected if the owners and operators of new facilities fail to retain our services in the absence of commercial adequate insurance and indemnification.

We are engaged in highly competitive businesses and typically must bid against other competitors to obtain major contracts.

We are engaged in highly competitive business in which most of our government contracts and some of our commercial contracts are awarded through competitive bidding processes. We compete with national, international (primarily Canada currently)regional firms and regionalsome international firms with nuclear and/or hazardous waste services practices, as well as small or local contractors. Some of our competitors have greater financial and other resources than we do, which can give them a competitive advantage. In addition, even if we are qualified to work on a new government contract, we might not be awarded the contract because of existing government policies designed to protect certain types of businesses and under-represented minority contractors. Although we believe we have the ability to certify and bid government contract as a small business, there are a number of qualified small businesses in our market that will provide intense competition. For international business, which we continue to focus on, there are additional competitors, many from within the country the work is to be performed, making winning work in foreign countries more challenging. Competition places downward pressure on our contract prices and profit margins. If we are unable to meet these competitive challenges, we could lose market share and experience on overall reduction in our profits.

Our failure to maintain our safety record could have an adverse effect on our business.

Our safety record is critical to our reputation. In addition, many of our government and commercial customers require that we maintain certain specified safety record guidelines to be eligible to bid for contracts with these customers. Furthermore, contract terms may provide for automatic termination in the event that our safety record fails to adhere to agreed-upon guidelines during performance of the contract. As a result, our failure to maintain our safety record could have a material adverse effect on our business, financial condition and results of operations.

We may be unable to utilize loss carryforwards in the future.

We have approximately $20,548,000 and $57,809,000 in net operating loss carryforwards for federal and state income tax purposes, respectively, which will expire in various amounts starting in 2021 if not used against future federal and state income tax liabilities, respectively. Approximately $12,199,000 of our federal net operating loss carryforwards were generated after December 31, 2017 ad thus do not expire. Our net loss carryforwards are subject to various limitations. Our ability to use the net loss carryforwards depends on whether we are able to generate sufficient income in the future years. Further, our net loss carryforwards have not been audited or approved by the Internal Revenue Service.

If any of our permits, other intangible assets, and tangible assets becomes impaired, we may be required to record significant charges to earnings.

Under accounting principles generally accepted in the United States (“U.S. GAAP”), we review our intangible and tangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Our permits are tested for impairment at least annually. Factors that may be considered a change in circumstances, indicating that the carrying value of our permit, other intangible assets, and tangible assets may not be recoverable, include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry. We may be required, in the future, to record impairment charges in our financial statements, in which any impairment of our permit, other intangible assets, and tangible assets is determined. Such impairment charges could negatively impact our results of operations.

We bear the risk of cost overruns in fixed-price contracts. We may experience reduced profits or, in some cases, losses under these contracts if costs increase above our estimates.

Our revenues may be earned under contracts that are fixed-price or maximum price in nature. Fixed-price contracts expose us to a number of risks not inherent in cost-reimbursable contracts. Under fixed price and guaranteed maximum-price contracts, contract prices are established in part on cost and scheduling estimates which are based on a number of assumptions, including assumptions about future economic conditions, prices and availability of labor, equipment and materials, and other exigencies. If these estimates prove inaccurate, or if circumstances change such as unanticipated technical problems, difficulties in obtaining permits or approvals, changes in laws or labor conditions, continued supply chain interruptions, weather delays, cost of raw materials, our suppliers’ or subcontractors’ inability to perform, and/or other events beyond our control, such as the impact of the Coronavirus,COVID-19, cost overruns may occur and we could experience reduced profits or, in some cases, a loss for that project. Errors or ambiguities as to contract specifications can also lead to cost-overruns.

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Adequate bonding is necessary for us to win certain types of new work and support facility closure requirements.

We are often required to provide performance bonds to customers under certain of our contracts, primarily within our Services Segment. These surety instruments indemnify the customer if we fail to perform our obligations under the contract. If a bond is required for a particular project and we are unable to obtain it due to insufficient liquidity or other reasons, we may not be able to pursue that project. In addition, we provide bonds to support financial assurance in the event of facility closure pursuant to state requirements. We currently have a bonding facility but, the issuance of bonds under that facility is at the surety’s sole discretion. Moreover, due to events that affect the insurance and bonding markets generally, bonding may be more difficult to obtain in the future or may only be available at significant additional cost. There can be no assurance that bonds will continue to be available to us on reasonable terms. Our inability to obtain adequate bonding and, as a result, to bid on new work could have a material adverse effect on our business, financial condition and results of operations.

If we cannot maintain our governmental permits or cannot obtain required permits, we may not be able to continue or expand our operations.

We are a nuclear services and waste management company. Our business is subject to extensive, evolving, and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state, and local environmental laws and regulations govern our activities regarding the treatment, storage, recycling, disposal, and transportation of hazardous and non-hazardous waste and low-level radioactive waste. We must obtain and maintain permits or licenses to conduct these activities in compliance with such laws and regulations. Failure to obtain and maintain the required permits or licenses would have a material adverse effect on our operations and financial condition. If any of our facilities are unable to maintain currently held permits or licenses or obtain any additional permits or licenses which may be required to conduct its operations, we may not be able to continue those operations at these facilities, which could have a material adverse effect on us.

Risks Related to Laws and Regulations

As a government contractor, we are subject to extensive government regulation, and our failure to comply with applicable regulations could subject us to penalties that may restrict our ability to conduct our business.

Our governmental contracts or subcontracts relating to DOE sites, are a significant part of our business. Allowable costs under U.S. government contracts are subject to audit by the U.S. government. If these audits result in determinations that costs claimed as reimbursable are not allowed costs or were not allocated in accordance with applicable regulations, we could be required to reimburse the U.S. government for amounts previously received.

Governmental contracts or subcontracts involving governmental facilities are often subject to specific procurement regulations, contract provisions and a variety of other requirements relating to the formation, administration, performance and accounting of these contracts. Many of these contracts include express or implied certifications of compliance with applicable regulations and contractual provisions. If we fail to comply with any regulations, requirements or statutes, our existing governmental contracts or subcontracts involving governmental facilities could be terminated or we could be suspended from government contracting or subcontracting. If one or more of our governmental contracts or subcontracts are terminated for any reason, or if we are suspended or debarred from government work, we could suffer a significant reduction in expected revenues and profits. Furthermore, as a result of our governmental contracts or subcontracts involving governmental facilities, claims for civil or criminal fraud may be brought by the government or violations of these regulations, requirements or statutes.

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Changes in environmental regulations and enforcement policies could subject us to additional liability and adversely affect our ability to continue certain operations.

We cannot predict the extent to which our operations may be affected by future governmental enforcement policies as applied to existing environmental laws, by changes to current environmental laws and regulations, or by the enactment of new environmental laws and regulations. Any predictions regarding possible liability under such laws are complicated further by current environmental laws which provide that we could be liable, jointly and severally, for certain activities of third parties over whom we have limited or no control.

Our businesses subject us to substantial potential environmental liability.

Our business of rendering services in connection with management of waste, including certain types of hazardous waste, low-level radioactive waste, and mixed waste (waste containing both hazardous and low-level radioactive waste), subjects us to risks of liability for damages. Such liability could involve, without limitation:

claims for clean-up costs, personal injury or damage to the environment in cases in which we are held responsible for the release of hazardous or radioactive materials;
claims of employees, customers, or third parties for personal injury or property damage occurring in the course of our operations; and 
claims alleging negligence or professional errors or omissions in the planning or performance of our services.

Our operations are subject to numerous environmental laws and regulations. We have in the past, and could in the future, be subject to substantial fines, penalties, and sanctions for violations of environmental laws and substantial expenditures as a responsible party for the cost of remediating any property which may be contaminated by hazardous substances generated by us and disposed at such property, or transported by us to a site selected by us, including properties we own or lease.

As our operations expand, we may be subject to increased litigation, which could have a negative impact on our future financial results.

Our operations are highly regulated and we are subject to numerous laws and regulations regarding procedures for waste treatment, storage, recycling, transportation, and disposal activities, all of which may provide the basis for litigation against us. In recent years, the waste treatment industry has experienced a significant increase in so-called “toxic-tort” litigation as those injured by contamination seek to recover for personal injuries or property damage. We believe that, as our operations and activities expand, there will be a similar increase in the potential for litigation alleging that we have violated environmental laws or regulations or are responsible for contamination or pollution caused by our normal operations, negligence or other misconduct, or for accidents, which occur in the course of our business activities. Such litigation, if significant and not adequately insured against, could adversely affect our financial condition and our ability to fund our operations. Protracted litigation would likely cause us to spend significant amounts of our time, effort, and money. This could prevent our management from focusing on our operations and expansion.

If environmental regulation or enforcement is relaxed, the demand for our services could decrease.

The demand for our services is substantially dependent upon the public’s concern with, and the continuation and proliferation of, the laws and regulations governing the treatment, storage, recycling, and disposal of hazardous, non-hazardous, and low-level radioactive waste. A decrease in the level of public concern, the repeal or modification of these laws, or any significant relaxation of regulations relating to the treatment, storage, recycling, and disposal of hazardous waste and low-level radioactive waste could significantly reduce the demand for our services and could have a material adverse effect on our operations and financial condition. We are not aware of any current federal or state government or agency efforts in which a moratorium or limitation has been, or will be, placed upon the creation of new hazardous or radioactive waste regulations that would have a material adverse effect on us; however, no assurance can be made that such a moratorium or limitation will not be implemented in the future.

We and our customers operate in a politically sensitive environment, and the public perception of nuclear power and radioactive materials can affect our customers and us.

We and our customers operate in a politically sensitive environment. Opposition by third parties to particular projects can limit the handling and disposal of radioactive materials. Adverse public reaction to developments in the disposal of radioactive materials, including any high-profile incident involving the discharge of radioactive materials, could directly affect our customers and indirectly affect our business. Adverse public reaction also could lead to increased regulation or outright prohibition, limitations on the activities of our customers, more onerous operating requirements or other conditions that could have a material adverse impact on our customers’ and our business.

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The elimination or any modification of the Price-Anderson Acts indemnification authority could have adverse consequences for our business.

The Atomic Energy Act of 1954, as amended, or the AEA, comprehensively regulates the manufacture, use, and storage of radioactive materials. The Price-Anderson Act (“PAA”) supports the nuclear services industry by offering broad indemnification to DOE contractors for liabilities arising out of nuclear incidents at DOE nuclear facilities. That indemnification protects DOE prime contractor, but also similar companies that work under contract or subcontract for a DOE prime contract or transporting radioactive material to or from a site. The indemnification authority of the DOE under the PAA was extended through 2025 by the Energy Policy Act of 2005.

Under certain conditions, the PAA’s indemnification provisions may not apply to our processing of radioactive waste at governmental facilities, and may not apply to liabilities that we might incur while performing services as a contractor for the DOE and the nuclear energy industry. If an incident or evacuation is not covered under PAA indemnification, we could be held liable for damages, regardless of fault, which could have an adverse effect on our results of operations and financial condition. If such indemnification authority is not applicable in the future, our business could be adversely affected if the owners and operators of new facilities fail to retain our services in the absence of commercial adequate insurance and indemnification.

Risks Relating to our Financial Performance and Position and Need for Financing

We sustained a loss in 2022, and if we are unable to improve our results of operations in 2023, it could have a material adverse effect on the Company.

In 2022, we sustained a loss in our results of operations. We believe that we will be able to improve our results of operations in 2023. If we are unable to substantially improve our results in 2023, it could have a material adverse effect on the Company and our operations.

If any of our permits, other intangible assets, and tangible assets becomes impaired, we may be required to record significant charges to earnings.

Under accounting principles generally accepted in the United States (“U.S. GAAP”), we review our intangible and tangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Our permits are tested for impairment at least annually. Factors that may be considered a change in circumstances, indicating that the carrying value of our permit, other intangible assets, and tangible assets may not be recoverable, include a decline in stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in our industry. We may be required, in the future, to record impairment charges in our financial statements, in which any impairment of our permit, other intangible assets, and tangible assets is determined. Such impairment charges could negatively impact our results of operations.

Breach of any of the covenants in our credit facility could result in a default, triggering repayment of outstanding debt under the credit facility and the termination of our credit facility.

Our credit facility with our bank contains financial covenants. A breach of any of these covenants could result in a default under our credit facility triggering our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. We failed to meet our quarterly fixed charge coverage ratio (“FCCR”) requirement for the second quarter of 2022; however, our lender waived this non-compliance. We were not required to perform testing of our FCCR in the first and third quarters of 2022. As a result of a recent amendment that we entered into with our lender in March 2023, we were not required to perform testing our FCCR for the fourth quarter of 2022. Additionally, in the past, when we also failed to meet our minimum FCCR requirement in certain instances, our lender has either waived these instances of non-compliance or provided certain amendments to our FCCR requirements which enabled us to meet our quarterly FCCR requirements. Also, our lender has in the past waived our FCCR testing requirement in certain quarters. If we fail to meet any of our financial covenants going forward, including the minimum quarterly FCCR requirement, and our lender does not further waive the non-compliance or further revise our covenant requirement so that we are in compliance, our lender could accelerate the payment of our borrowings under our credit facility and terminate our credit facility. In such event, we may not have sufficient liquidity to repay our debt under our credit facility and other indebtedness and/or operate our business.

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Our debt and borrowing availability under our credit facility could adversely affect our operations.

At December 31, 2022, our aggregate consolidated debt was approximately $1,039,000. Our Second Amended and Restated Revolving Credit, Term Loan and Security Agreement dated May 8, 2020, as amended, provides for a total credit facility commitment consisting of a $18,000,000 revolving line of credit, a term loan balance of approximately $1,742,000 and a capital line of $1,000,000, with advances available through May 4, 2022. As a result of a recent amendment to our credit facility that we entered into with our lender in March 2023, the revolving line of credit was reduced to $12,500,000. The maximum we can borrow under the revolving part of the credit facility is based on a percentage of the amount of our eligible receivables outstanding at any one time reduced by outstanding standby letters of credit and any borrowing reduction that our lender has or may impose from time to time. At December 31, 2022, we had no borrowing under the revolving part of our credit facility and borrowing availability of up to an additional $4,290,000. The borrowing availability of $4,290,000 at December 31, 2022 included a requirement from our lender that we maintain a minimum of $3,000,000 in borrowing availability. As a result of the amendment to our credit facility that we entered into with our lender as discussed above, we are required to continue to maintain 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 our lender. A lack of positive operating results could have material adverse consequences on our ability to operate our business. Our ability to make principal and interest payments, to refinance indebtedness, and borrow under our credit facility will depend on both our and our subsidiaries’ future operating performance and cash flow. Prevailing economic conditions, interest rate levels, and financial, competitive, business, and other factors affect us. Many of these factors are beyond our control, including the impact of COVID-19.

Our indebtedness could limit our financial and operating activities, and adversely affect our ability to incur additional debt to fund future needs.

As a result of our indebtedness, we could, among other things, be:

required to dedicate a substantial portion of our cash flow to the payment of principal and interest, thereby reducing the funds available for operations and future business opportunities;
make it more difficult for us to satisfy our obligations;
limit our ability to borrow additional money if needed for other purposes, including working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes, on satisfactory terms or at all;
limit our ability to adjust to changing economic, business and competitive conditions;
place us at a competitive disadvantage with competitors who may have less indebtedness or greater access to financing;
make us more vulnerable to an increase in interest rates, a downturn in our operating performance or a decline in general economic conditions; and
make us more susceptible to changes in credit ratings, which could impact our ability to obtain financing in the future and increase the cost of such financing.

 

FailureAny of the foregoing could adversely impact our operating results, financial condition, and liquidity. Our ability to continue our operations depends on our ability to generate profitable operations or complete equity or debt financings to increase our capital.

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We may be unable to utilize loss carryforwards in the future.

We have approximately $25,413,000 and $78,400,000 in net operating loss carryforwards for federal and state income tax purposes, respectively and expires in various amounts starting in 2022 if not used against future federal and state income tax liabilities, respectively. Approximately $25,296,000 of our federal net operating loss carryforwards were generated after December 31, 2017 and thus do not expire. Our net loss carryforwards are subject to various limitations. Our ability to use the net loss carryforwards depends on whether we are able to generate sufficient income in the future years. Further, our net loss carryforwards have not been audited or approved by the Internal Revenue Service.

Risks Relating to our Common Stock

Issuance of substantial amounts of our common stock, par value $0.001 per share (the “Common Stock”) could depress our stock price or dilute the percentage ownership of our Common Stockholders.

Any sales of substantial amounts of our Common Stock in the public market could cause an adverse effect on the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. The issuance of our Common Stock will result in the dilution in the percentage membership interest of our stockholders and the dilution in ownership value. At December 31, 2022, we had 13,324,756 shares of Common Stock outstanding. In addition, at December 31, 2022, we had outstanding options to purchase 1,018,400 shares of our Common Stock at exercise prices ranging from $2.79 to $7.50 per share and an outstanding warrant to purchase 60,000 shares of our Common Stock at exercise price of $3.51 per share. Future sales of the shares issuable could also depress the market price of our Common Stock.

We do not intend to pay dividends on our Common Stock in the foreseeable future.

Since our inception, we have not paid cash dividends on our Common Stock, and we do not anticipate paying any cash dividends in the foreseeable future. Our credit facility prohibits us from paying cash dividends on our Common Stock without prior approval from our lender.

The price of our Common Stock may fluctuate significantly, which may make it difficult for our stockholders to resell our Common Stock when a stockholder wants or at prices a stockholder finds attractive.

The price of our Common Stock on the NASDAQ Capital Markets constantly changes. We expect that the market price of our Common Stock will continue to fluctuate. This may make it difficult for our stockholders to resell the Common Stock when a stockholder wants or at prices a stockholder finds attractive.

General Risk Factors

Loss of certain key personnel could have a material adverse effect on us.

Our success depends on the contributions of our key management, environmental and engineering personnel. Our future success depends on our ability to retain and expand our staff of qualified personnel, including environmental specialists and technicians, sales personnel, and engineers. Without qualified personnel, we may incur delays in rendering our services or be unable to render certain services. We cannot be certain that we will be successful in our efforts to attract and retain qualified personnel as their availability is limited (especially in the current labor market environment) due to the demand for hazardous waste management services and the highly competitive nature of the hazardous waste management industry. We do not maintain key person insurance on any of our employees, officers, or directors.

We may not be successful in winning new business mandates from our government and commercial customers or international customers.

We must be successful in winning mandates from our government, commercial customers and international customers to replace revenues from projects that we have completed or that are nearing completion and to increase our revenues. Our business and operating results can be adversely affected by the size and timing of a single material contract.

Our failure to maintain effective internal control over financial reporting orour safety record could have an adverse effect on our business.

Our safety record is critical to our reputation. In addition, many of our government and commercial customers require that we maintain certain specified safety record guidelines to be eligible to bid for contracts with these customers. Furthermore, contract terms may provide for automatic termination in the event that our safety record fails to adhere to agreed-upon guidelines during performance of the contract. As a result, our failure to remediate a material weakness in internal control over financial reportingmaintain our safety record could have a material adverse effect on our business, operating results, and stock price.

Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important in helping to prevent financial fraud. If we are unable to maintain adequate internal controls, our business and operating results could be harmed. We are required to satisfy the requirements of Section 404(a) of Sarbanes Oxley and the related rules of the Commission, which require, among other things, management to assess annually the effectiveness of our internal control over financial reporting. If we are unable to maintain adequate internal control over financial reporting or effectively remediate any material weakness identified in internal control over financial reporting, there is a reasonable possibility that a misstatement of our annual or interim financial statements will not be prevented or detected in a timely manner. If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our common stock could decline significantly, and our business, financial condition and reputation could be harmed.results of operations.

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Systems failures, interruptions or breaches of security and other cyber security risks could have an adverse effect on our financial condition and results of operations.

We are subject to certain operational risks to our information systems. Because of efforts on the part of computer hackers and cyberterrorists to breach data security of companies, we face risk associated with potential failures to adequately protect critical corporate, customer and employee data. As part of our business, we develop and retain confidential data about us and our customers, including the U.S. government. We also rely on the services of a variety of vendors to meet our data processing and communications needs.

Despite our implemented security measures and established policies, we cannot be certain that all of our systems are entirely free from vulnerability to attack or other technological difficulties or failures or failures on the part of our employees to follow our established security measures and policies. Information security risks have increased significantly. Our technologies, systems, and networks may become the target of cyber-attacks, computer viruses, malicious code, or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information and the disruption of our business operations. A security breach could adversely impact our customer relationships, reputation and operation and result in violations of applicable privacy and other laws, financial loss to us or to our customers or to our employees, and litigation exposure. While we maintain a system of internal controls and procedures, any breach, attack, or failure as discussed above could have a material adverse impact on our business, financial condition, and results of operations or liquidity.

There is also an increasing attention on the importance of cybersecurity relating to infrastructure. This creates the potential for future developments in regulations relating to cybersecurity that may adversely impact us, our customers and how we offer our services to our customers.

Risks RelatingWe may be exposed to certain regulatory and financial risks related to climate change.

Climate change is receiving ever increasing attention from scientists, legislators and the public. The debate is ongoing as to the extent to which our Intellectual Property

Ifclimate is changing, the potential causes of this change and its potential impacts. Some attribute global warming to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. Presently there are no federally mandated greenhouse gas reduction requirements in the United States. However, there are a number of legislative and regulatory proposals to address greenhouse gas emissions, which are in various phases of discussion or implementation. The outcome of federal and state actions to address global climate change could result in a variety of regulatory programs including potential new regulations. Any adoption by federal or state governments mandating a substantial reduction in greenhouse gas emissions could increase costs associated with our operations. Until the timing, scope and extent of any future regulation becomes known, we cannot maintain our governmental permits or cannot obtain required permits, we may not be able to continue or expand our operations.

We are a nuclear services and waste management company. Our business is subject to extensive, evolving, and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state, and local environmental laws and regulations govern our activities regardingpredict the treatment, storage, recycling, disposal, and transportation of hazardous and non-hazardous waste and low-level radioactive waste. We must obtain and maintain permits or licenses to conduct these activities in compliance with such laws and regulations. Failure to obtain and maintain the required permits or licenses would have a material adverse effect on our operationsfinancial position, operating results and financial condition. If any of our facilities are unable to maintain currently held permits or licenses or obtain any additional permits or licenses which may be required to conduct its operations, we may not be able to continue those operations at these facilities, which could have a material adverse effect on us.cash flows.

We believe our proprietary technology is important to us.

We believe that it is important that we maintain our proprietary technologies. There can be no assurance that the steps taken by us to protect our proprietary technologies will be adequate to prevent misappropriation of these technologies by third parties. Misappropriation of our proprietary technology could have an adverse effect on our operations and financial condition. Changes to current environmental laws and regulations also could limit the use of our proprietary technology.

Risks RelatingFailure to maintain effective internal control over financial reporting or failure to remediate a material weakness in internal control over financial reporting could have a material adverse effect on our Financial Positionbusiness, operating results, and Needstock price.

Maintaining effective internal control over financial reporting is necessary for Financing

Breach of any of the covenants in our credit facility could result in a default, triggering repayment of outstanding debt under the credit facility.

Our credit facility with our bank contains financial covenants. A breach of any of these covenants could result in a default under our credit facility triggering our lender to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit. In the past, when we failed to meet our minimum quarterly fixed charge coverage ratio (“FCCR”) requirement, our lender has either waived these instances of non-compliance or provided certain amendments to our FCCR requirements which enabled us to meet our quarterly FCCR requirements. Additionally, our lender hasproduce reliable financial reports and is important in the past waived our quarterly FCCR testing requirements.helping to prevent financial fraud. If we failare unable to meet any ofmaintain adequate internal controls, our financial covenants going forward, including the minimum quarterly FCCR requirement,business and our lender does not further waive the non-compliance or further revise our covenant requirement so that we are in compliance, our lender could accelerate the payment of our borrowings under our credit facility. In such event, we may not have sufficient liquidity to repay our debt under our credit facility and other indebtedness.

Our debt and borrowing availability under our credit facility could adversely affect our operations.

At December 31, 2019, our aggregate consolidated debt was approximately $3,880,000. Our Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011, as subsequently amended (“Revised Loan Agreement”) provides for a total credit facility commitment of approximately $18,100,000, consisting of a $12,000,000 revolving line of credit and a term loan of $6,100,000. The maximum we can borrow under the revolving part of the credit facility is based on a percentage of the amount of our eligible receivables outstanding at any one time reduced by outstanding standby letters of credit and any borrowing reduction that our lender may impose from time to time. At December 31, 2019, we had borrowings under the revolving part of our credit facility of approximately $321,000 and borrowing availability of up to an additional $8,714,000. A lack of positive operating results could have material adverse consequences on our abilitybe harmed. We are required to operate our business. Our ability to make principalsatisfy the requirements of Section 404 of Sarbanes Oxley and interest payments, to refinance indebtedness, and borrow under our credit facility will depend on both our and our subsidiaries’ future operating performance and cash flow. Prevailing economic conditions, interest rate levels, and financial, competitive, business, and other factors affect us. Manythe related rules of these factors are beyond our control.

Our indebtedness could limit our financial and operating activities, and adversely affect our ability to incur additional debt to fund future needs.

As a result of our indebtedness, we could,the Commission, which require, among other things, be:

required to dedicate a substantial portion of our cash flow to the payment of principal and interest, thereby reducing the funds available for operations and future business opportunities;

make it more difficult for us to satisfy our obligations;
limit our ability to borrow additional money if needed for other purposes, including working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes, on satisfactory terms or at all;
limit our ability to adjust to changing economic, business and competitive conditions;
place us at a competitive disadvantage with competitors who may have less indebtedness or greater access to financing;
make us more vulnerable to an increase in interest rates, a downturn in our operating performance or a decline in general economic conditions; and
make us more susceptible to changes in credit ratings, which could impact our ability to obtain financing in the future and increase the cost of such financing.

Anymanagement to assess annually the effectiveness of our internal control over financial reporting. For the foregoing could adversely impact our operating results,year ended December 31, 2021, management concluded that a material weakness existed in internal control over financial condition, and liquidity. Our ability to continue our operations depends on our ability to generate profitable operations or complete equity or debt financings to increase our capital.

Risks Relatingreporting related to our Common Stock

Issuanceapplication of substantial amountsASC 606, “Revenue from Contracts with Customers,” specifically to contracts that contain nonstandard terms and conditions. This material weakness has been remediated (see “Item 9A. Controls and Procedures” for a discussion of this material weakness and the remediation plan that were implemented). If we are unable to maintain adequate internal control over financial reporting at any time going forward, there is a reasonable possibility that a misstatement of our Common Stockannual or interim financial statements will not be prevented or detected in a timely manner. If we cannot produce reliable financial reports, investors could depresslose confidence in our stock price.

Any sales of substantial amounts of our Common Stock in the public market could cause an adverse effect onreported financial information, the market price of our Common Stockcommon stock could decline significantly, and our business, financial condition, and reputation could impair our ability to raise capital through the sale of additional equity securities. The issuance of our Common Stock will result in the dilution in the percentage membership interest of our stockholders and the dilution in ownership value. At December 31, 2019, we had 12,115,878 shares of Common Stock outstanding.be harmed.

In addition, at December 31, 2019, we had outstanding options to purchase 681,300 shares of our Common Stock at exercise prices ranging from $2.79 to $8.40 per share. Further, our preferred share rights plan, if triggered, could result in the issuance of a substantial amount of our Common Stock. The existence of this quantity of rights to purchase our Common Stock under the preferred share rights plan could result in a significant dilution in the percentage ownership interest of our stockholders and the dilution in ownership value. Future sales of the shares issuable could also depress the market price of our Common Stock.

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We do not intend to pay dividends on our Common Stock in the foreseeable future.

Since our inception, we have not paid cash dividends on our Common Stock, and we do not anticipate paying any cash dividends in the foreseeable future. Our credit facility prohibits us from paying cash dividends on our Common Stock without prior approval from our lender.

The price of our Common Stock may fluctuate significantly, which may make it difficult for our stockholders to resell our Common Stock when a stockholder wants or at prices a stockholder finds attractive.

The price of our Common Stock on the NASDAQ Capital Markets constantly changes. We expect that the market price of our Common Stock will continue to fluctuate. This may make it difficult for our stockholders to resell the Common Stock when a stockholder wants or at prices a stockholder finds attractive.

Future issuance of our Common Stock could adversely affect the price of our Common Stock, our ability to raise funds in new stock offerings and could dilute the percentage ownership of our common stockholders.

Future sales of substantial amounts of our Common Stock or equity-related securities in the public market, or the perception that such sales or conversions could occur, could adversely affect prevailing trading prices of our Common Stock and could dilute the value of Common Stock held by our existing stockholders. No prediction can be made as to the effect, if any, that future sales of shares of our Common Stock or the availability of shares of our Common Stock for future sale will have on the trading price of our Common Stock. Such future sales or conversions could also significantly reduce the percentage ownership of our common stockholders.

Delaware law, certain of our charter provisions, our stock option plans, outstanding warrants and our Preferred Stock may inhibit a change of control under circumstances that could give you an opportunity to realize a premium over prevailing market prices.

We are a Delaware corporation governed, in part, by the provisions of Section 203 of the General Corporation Law of Delaware, an anti-takeover law. In general, Section 203 prohibits a Delaware public corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. As a result of Section 203, potential acquirers may be discouraged from attempting to effect acquisition transactions with us, thereby possibly depriving our security holders of certain opportunities to sell, or otherwise dispose of, such securities at above-market prices pursuant to such transactions. Further, certain of our option plans provide for the immediate acceleration of, and removal of restrictions from, options and other awards under such plans upon a “change of control” (as defined in the respective plans). Such provisions may also have the result of discouraging acquisition of us.

We have authorized and unissued 17,135,18015,589,202 (which include shares issuable under outstanding options to purchase 681,3001,018,400 shares of our Common Stock and shares issuable under an outstanding warrant to purchase 60,000 shares of our Common Stock) shares of our Common Stock and 2,000,000 shares of our Preferred Stock as of December 31, 2019 (which includes 50,000 shares of our Preferred Stock reserved for issuance under our new preferred share rights plan discussed below).2022. These unissued shares could be used by our management to make it more difficult for, and thereby discourage, an attempt to acquire control of us.

Our Preferred Share Rights PlanThird party expectations relating to ESG factors may impose additional costs and expose us and our clients to new risks.

There is an increasing focus from certain investors and certain of our customers, and other stakeholders concerning corporate responsibility, specifically related to ESG factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us, or otherwise do business with us, if they believe our policies relating to corporate responsibility are inadequate or do not align with theirs. Third party providers of corporate responsibility ratings and reports on companies have increased in number, resulting in varied standards. In addition, the criteria by which companies’ corporate responsibility practices are assessed are evolving, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. Alternatively, if we elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider, some investors may conclude that our policies with respect to corporate responsibility are inadequate. We may face reputational damage in the event that our corporate responsibility procedures or standards do not meet the standards set by various constituencies. If we fail to satisfy the expectations of investors, our customers and other stakeholders or our initiatives are not executed as planned, our reputation and financial results could be adversely affected and our revenues, results of operations and ability to grow our business may be negatively impacted. Additionally, new legislative or regulatory initiatives related to ESG could adversely affect our stockholders.business.

In May 2018, the Company adopted a Preferred Share Purchase Rights Plan (“Rights Plan”). As part of the Rights Plan, the Company’s Board of Directors (“Board”) declared a dividend distribution of one Preferred Share Purchase Right (“Right”) on each outstanding share of the Company’s Common Stock to stockholders of record on May 12, 2018. The Rights Plan is designed to assure that all of the Company’s shareholders receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against partial tender abusive tactics to gain control of the Company. The Rights Plan, as amended, is to terminate the earliest of (1) close of business on May 2, 2021, (2) the time at which the Rights are redeemed, (3) the time at which the Rights are exchange, or (4) closing of any merger or acquisition of the Company which has been approved by the Board prior to any person becoming such an acquiring person.

In general, the Rights under the Rights Plan will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company’s Common Stock or announces a tender or exchange offer, the consummation of which would result in ownership by a person or group of 15% or more of the Common Stock (with certain exceptions). Each Right under the Rights Plan (other than the Rights owned by such acquiring person or members of such group which are void) will entitle shareholders to buy one one-thousandth of a share of a new series of participating preferred stock at an exercise price of $20.00. Each one one-thousandth of a share of such new preferred stock purchasable upon exercise of a Right has economic terms designed to approximate the value of one share of Common Stock. Shareholders who have beneficial ownership of 15% or more at the adoption of the new Rights Plan are grandfathered in, but may not acquire additional shares without triggering the new Rights Plan.

If the Company is acquired in a merger or other business combination transaction, each Right will entitle its holder (other than Rights owned by such acquiring person or members of such group which are void) to purchase, at the Right’s then current exercise price, a number of the acquiring company’s common shares having a market value at the time of twice the Right’s exercise price.

In addition, if a person or group (with certain exceptions) acquires 15% or more of the Company’s outstanding Common Stock, each Right will entitle its holder (other than the Rights owned by such acquiring person or members of such group which are void) to purchase, in lieu of preferred stock, at the Right’s then current exercise price, a number of shares of the Company’s Common Stock having a market value of twice the Right’s exercise price.

Following the acquisition by a person or group of beneficial ownership of 15% or more of the Company’s outstanding Common Stock (with certain exceptions), and prior to an acquisition of 50% or more of the Company’s Common Stock by such person or group, the Company’s Board may, at its option, exchange the Rights (other than Rights owned by such acquiring person or members of such group) in whole or in part, for shares of the Company’s Common Stock at an exchange ratio of one share of Common Stock (or one one-thousandth of a share of the new series of participating preferred stock) per Right.

Prior to the acquisition by a person or group of beneficial ownership of 15% or more of the Company’s Common Stock (with certain exceptions), the Rights are redeemable for $0.001 per Right at the option of the Board of Directors.

The Rights will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board. The Rights should not interfere with any merger or other business combination approved by our Board.

ITEM 1B.UNRESOLVED STAFF COMMENTS

 

Not Applicable.

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ITEM 2.PROPERTIES

 

Our principal executive office is in Atlanta, Georgia. Our Business Center is located in Oak Ridge, Tennessee. Our Treatment Segment facilities are located in Gainesville, Florida; Kingston, Tennessee; Richland, Washington; and Richland, Washington.Oak Ridge, Tennessee. All of the properties where these facilities operate on are pledged to our senior lender as collateral for our credit facility with the exception of the property at Oak Ridge, Tennessee which is leased. Our Services Segment maintains offices, as noted below, which are all leased properties. We maintain properties in Valdosta, Georgia and Memphis, Tennessee, which are all non-operational and are included within our discontinued operations.

The properties where three of our facilities operate on (Kingston, Tennessee; Gainesville, Florida; and Richland, Washington) are held by our senior lender as collateral for our credit facility. The Company currently leases properties in the following locations for operations and administrative functions within our Treatment and Services Segments, including our corporate office and Business Center:

Square Footage (SF)/
LocationAcreage (AC)Expiration of Lease
Oak Ridge, TN (Business Center)14,93216,319 SFMay 1, 2022April 30, 2026
Oak Ridge, TN (Services)5,000 SFSeptember 30, 20202023
Blaydon On Tyne, England (Services)1,000 SFMonthly
New Brighton, PA (Services)3,558 SFJune 30, 20222024
Newport, KY (Services)1,566 SFMonthly
Pembroke, Ontario, Canada (Services)800 SFMonthly
Atlanta, GA (Corporate)6,499 SFFebruary 28, 2021July 31, 2024
Oak Ridge, TN (Treatment)8.7 AC, including 17,400 SFOctober 1, 2021September 30, 2023

We believe that the above facilities currently provide adequate capacity for our operations and that additional facilities are readily available in the regions in which we operate, which could support and supplement our existing facilities.

ITEM 3.LEGAL PROCEEDINGS

 

In the normal courseSee “Part II – Item 8 - Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 16 – Commitments and Contingencies – Legal Matters” for a discussion of conducting our business, we may become involved in litigation or be subject to local, state and federal agency (government)legal proceedings. We are not a party to any litigation or governmental proceeding, which our management believes could result in any judgments or fines that would have a material adverse effect on our financial position, liquidity or results of future operations.

ITEM 4.MINE SAFETY DISCLOSURE

 

Not Applicable.

PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Common Stock is traded on the NASDAQ Capital Markets (“NASDAQ”) under the symbol “PESI.” The following table sets forth the high and low market trade prices quoted for the Common Stock during the periods shown. The source of such quotations and information is the NASDAQ online trading history reports.

  2019  2018 
  Low  High  Low  High 
Common Stock 1stQuarter $2.50  $3.94  $3.29  $4.26 
  2ndQuarter  3.40   4.46   4.10   

5.15

 
  3rdQuarter  3.10   4.77   4.05   5.00 
  4thQuarter  4.30   9.98   1.90   4.57 
  2022  2021 
  Low  High  Low  High 
Common Stock 1st Quarter $4.89  $6.52  $5.74  $7.99 
  2nd Quarter  4.91   6.09   6.70   7.95 
  3rd Quarter  4.26   5.93   5.53   7.56 
  4th Quarter  3.20   4.57   6.00   7.30 

At February 18, 2020,14, 2023, there were approximately 170128 stockholders of record of our Common Stock, including brokerage firms and/or clearing houses holding sharesStock. The actual number of our Common Stock for their clientele (with each brokerage house and/or clearing house being considered as one holder). However, we have been advised that the totalstockholders is greater than this number, ofand includes beneficial stockholders at February 18, 2020 was approximately 2,231.owners whose shares are held in “street name” by banks, brokers, and other nominees.

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Since our inception, we have not paid any cash dividends on our Common Stock and have no dividend policy. Our Revised Loan Agreementloan agreement dated May 8, 2020, as amended, prohibits us from paying any cash dividends on our Common Stock without prior approval from our lender. We do not anticipate paying cash dividends on our outstanding Common Stock in the foreseeable future.

There were no purchases made by us or on behalf of us or any of our affiliated members of shares of our Common Stock during 2019.2022.

We adopted a preferred share rights plan (the “Rights Plan”), as amended, which is designed to protect us against certain creeping acquisitions, open market purchases, and certain mergers and other combinations with acquiring companies. The Rights Plan is to terminate at the earliest of (1) close of business on May 2, 2021 (the “Final Expiration Date”), (2) the time at which the Rights are redeemed, (3) the time at which the Rights are exchange, or (4) closing of any merger or acquisition of the Company approved by the Board prior to any person becoming acquiring person.

See Item 1A.“Note 6 - Risk Factors – “Our Preferred Share Rights Plan may adversely affect our stockholders” as to further discussion relating to the terms of our Rights Plan in addition to its termination date.

See Note 6 “CapitalCapital Stock, Stock Plans, Warrants, and Stock Based Compensation” in Part II, Item 8, “Financial Statements and Supplementary Data” and “Equity Compensation Plan”Plans” in Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matter” for securities authorized for issuance under equity compensation plans which are incorporated herein by reference.

ITEM 6.

SELECTED FINANCIAL DATA

 

Not required under Regulation S-K for smaller reporting companies.

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained within this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) may be deemed “forward-looking statements” within the meaning of Section 27A of the Act, and Section 21E of the Securities Exchange Act of 1934, as amended (collectively, the “Private Securities Litigation Reform Act of 1995”). See “Special Note regarding Forward-Looking Statements” contained in this report.

Management’s discussion and analysis is based, among other things, upon our audited consolidated financial statements and includes our accounts, the accounts of our wholly-owned subsidiaries and the accountsaccount of our majority-owned Polish subsidiary, after elimination of all significant intercompany balances and transactions.a variable interest entity for which we were the primary beneficiary.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8 of this report.

ReviewCOVID-19 and Other Impacts

Revenue increased $23,920,000 or 48.3%Our 2022 financial results continued to $73,459,000 forbe impacted by COVID-19, among other things. Our Treatment Segment began to see steady improvements in waste receipts starting in the twelve months endedsecond quarter of 2022 from certain customers who had previously delayed waste shipments due, in part, from the impact of COVID-19 which is reflective of our Treatment Segment’s backlog of approximately $9,156,000 at December 31, 20192022, an increase of approximately $2,027,000 from $49,539,000 for the corresponding periodbalance of 2018. The revenue increase$7,129,000 at December 31, 2021. This positive trend was primarilynegatively impacted by occurrences of severe weather conditions which contributed to temporary delays in waste shipments from certain customers and a temporary shortage in skilled production personnel which peaked through the Services Segments where revenue increased approximately $19,827,000 or 149.4%. The increase in revenue withinfourth quarter of 2022 at one of our facilities. In early part of 2022, our Services Segment was primarilycontinued to experience delays/curtailments in project work by certain customers since the award of projects to us late in the second quarter of 2021 due to awardsCOVID-19 impact and/or administrative delays. However, starting in the second quarter of several contracts/task orders for2022, work under these projects had resumed/increased as the pandemic impacts began to subside and has since reached full operational status.

In 2022, we continued to realize delays in procurement and planning on behalf of our government clients that saw easing through the second half of the year. Heading into 2023, we expect to see continued improvements in waste receipts and continued increases in project work sincefrom contracts recently won and bids submitted in both segments that are awaiting awards, subject to potential impact of COVID-19 and economic impacts.

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Liquidity Overview

We believe we have sufficient liquidity on hand to continue business operations during the latter part of the first quarter of 2019, the result of successful implementation ofnext twelve months. At December 31, 2022, we had borrowing availability under our strategic plan in winning contract bids. Treatment Segment revenue increased $4,093,000 or 11.3%. Total gross profit increased $7,123,000 or 84.2%. Gross profit for the twelve months of 2019 and 2018 included closure costs recorded in the amountrevolving credit facility of approximately $330,000$4,290,000 which was based on a percentage of eligible receivables and $3,323,000, respectively, in connection with the closuresubject to certain reserves. Our borrowing availability of our East Tennessee Materials and Energy Corporation (“M&EC”) facility in 2019 which we have completed in accordance with M&EC’s license and permit requirements. SG&A expenses increased $1,121,000 or 10.4% for the twelve months ended$4,290,000 at December 31, 2019 as compared to the corresponding period2022 included a requirement from our lender that we maintain a minimum of 2018.

$3,000,000 in borrowing availability. As a result of the closurean amendment to our Loan Agreement that we entered into with our lender in March 2023, we are required to continue to maintain a minimum of our M&EC facility$3,000,000 in 2019 as discussed above, on July 22, 2019, we received a release of $5,000,000 of finite risk sinking funds held as collateralborrowing availability under our financial assurance closure policy datedrevolving credit until the minimum FCCR requirement for the quarter ended June 2003 from AIG Specialty Insurance Company (“AIG”)30, 2023 has been met and certified to our lender (see “Liquidity and Capital Resources – Insurance” within this MD&A for a discussion of the release of this finite risk sinking funds). Additionally, on April 1, 2019, we consummated a lending transaction with Mr. Robert Ferguson resulting in the receipt of $2,500,000 in loan proceeds (see “Liquidity and Capital Resources – Financing“Financing Activities” within this MD&A for a discussion of this loan transaction)amendment). BothWe continue to assess ways to improve our liquidity and the need in reducing operating costs during this volatile time. Reducing operating costs may include curtailing certain capital expenditures and eliminating non-essential expenditures. We continue to closely monitor any potential impact from the countries’ economic conditions and COVID-19 pandemic on all aspects of our business.

Although we believe we have sufficient liquidity to support our operations over the next twelve months, due to losses incurred in 2022 and our lender requiring us to maintain a minimum borrowing availability of $3,000,000 as discussed above, we are working toward improving our liquidity by either amending our existing lines of credit, obtaining new term loans or entering into equity transactions. There are no assurances that we will be successful in increasing our liquidity through these transactions, along with our operation, have significantly improved our working capital. Atefforts.

Review

Revenue decreased by $1,592,000 or 2.2% to $70,599,000 for the twelve-month ended December 31, 2019, we2022 from $72,191,000 for the corresponding period of 2021. The decrease was entirely within our Services Segment where revenue decreased by $1,958,000 or 5.0% to $37,241,000 from $39,199,000. As previously disclosed, work under certain of the new projects awarded to our Services Segment at the end of the second quarter of 2021 continued to be delayed/curtailed into most of the first quarter of 2022 due to COVID-19 impact and/or administrative delays experienced by certain customers. However, work under these projects resumed/increased starting in the second quarter of 2022 and has since reached full operational status. The lower revenue in 2022 was further exacerbated by the completion of a large project in the second quarter of 2021 which was not replaced with a similar size contract because of delays in contract awards and procurement from COVID-19 impact which continued into the first half of 2022 and eased through the second half of 2022. Our Treatment Segment revenue increased by $366,000 or 1.1% primarily due to overall higher waste volume which was offset by lower averaged price waste due to revenue mix. As disclosed above, our Treatment Segment began to see steady improvements in waste receipts starting in the second quarter of 2022 from certain customers who had working capitalpreviously delayed waste shipments due, in part, from the impact of COVID-19. This positive trend was negatively impacted by occurrences of severe weather conditions which resulted in temporary delays in waste shipments from certain customers and a temporary shortage in skilled production personnel which peaked through the fourth quarter of 2022 at one of our facilities.

Overall gross profit for 2022 increased $2,785,000 or 40.8%. The increase was entirely from our Services Segment due to higher margin projects. The decrease in Treatment Segment gross profit was impacted by overall lower averaged price waste from revenue mix and the impact of the increase in fixed costs. SG&A expenses increased by approximately $26,000$1,807,000 or 14.1% for the year ended December 31, 2022 as compared to working capital deficitthe corresponding period of $6,753,000 at December 31, 2018.2021.

During the third quarter of 2022, we recorded approximately $1,975,000 in other income and other receivables (within current assets in our Consolidated Balance Sheets), which represent an employee retention credit that we are eligible for under the Coronavirus Aid, Relief, and Economic Security Act, as amended (the “CARES Act”) as result of the COVID-19 pandemic (see “Employee Retention Credit (“ERC”)” within this MD&A for a discussion of this refund that we are expecting resulting from this tax credit).

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Business Environment

 

Business Environment and Outlook

Our Treatment and Services Segments’ business continues to be heavily dependent on services that we provide to governmental clients, primarily as subcontractors for others who are prime contractors to government entities or directly as the contractor or indirectly as a subcontractor.prime contractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including, without limitation, the economic conditions, the manner in which the applicable government will be required to spend funding to remediate various sites, and/or thepotential further impact resulting from the Coronavirus.COVID-19. In addition, our governmental contracts and subcontracts relating to activities at governmental sites in the United States are generally subject to termination or renegotiation on 30 days’ noticefor convenience at any time at the government’s option, and our governmental contracts/task ordersTOAs with the Canadian government authorities also allow the authorities to terminate the contract/task orders at any time for convenience. Work under all of our contracts/TOAs with Canadian government authorities has substantially been completed. A significant account receivable due to PF Canada is subject to continuing negotiations. See “Known Trends and Uncertainties – Perma-Fix Canada, Inc. (“PF Canada”)” within this MD&A for additional discussion as to a terminated Canadian TOA. Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flows. As previously disclosed, our Medical Segment continues to evaluate strategic options to commercialize its medical isotope production technology. These options generally require substantial capital to fund research and development (“R&D”) requirements, in addition to start-up and production costs. The Company’s Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund such activities. The Company anticipates that its Medical Segment will not resume full R&D activities until it obtains the necessary funding through obtaining its own credit facility or additional equity raise or obtaining new partners willing to fund its R&D activities. If the Medical Segment is unable to raise the necessary capital, the Medical Segment could be required to further reduce, delay or eliminate its R&D program.

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We are continually reviewing methods to raise additional capital to supplement our liquidity requirements, when needed, and reducing our operating costs. We are committedcontinue to further reducing operating costs to bring them in line with revenue levels, when needed. Further, our recently implemented strategic plan, which includes increasing our overall contract bid/win ratio and expansion into both commercial andaggressively bid on various contracts, including potential contracts within the international markets to increase revenues in our Treatment and Services Segments to offset the uncertaintiesmarkets.

Results of government spending in the United States, has thus far been successful. Since May 2019, our wholly-owned subsidiary, Perma-Fix Canada, Inc. (within our Services Segment) entered into two Task Order Agreements (“TOAs”) with the Canadian Nuclear Laboratories, LTD. (“CNL”), with a total value of approximately $11,500,000 (U.S dollar), for remediation work at specific sites within Ontario, Canada. Remediation work under these two TOAs are expected to be completed within 2020. We believe that the full implementation of our strategic plan should be accomplished over the next few years, and when fully implemented, we believe it should further improve our revenue and liquidity and increase our shareholder values.Operations

 

Results of Operations

The reporting of financial results and pertinent discussions are tailored to our threetwo reportable segments: The Treatment Segment (“Treatment”), and the Services Segment (“Services”), and. Our financial results for 2021 also included our Medical Segments. As previously disclosed, we made the strategic decision to cease all R&D activities under the Medical Segment and sold 100% of our interest in Perma-Fix Medical S.A. (“Medical”).PFM Poland” - which comprised the Medical Segment) in December 2021. Our Medical Segment hashad not generated any revenue and allwas involved in our medical isotope production technology. All costs previously incurred areby the Medical Segment were included within R&D:&D.

Summary - Years Ended December 31, 20192022 and 20182021

Below are the results of continuing operations for years ended December 31, 20192022 and 20182021 (amounts in thousands):

(Consolidated) 2019 % 2018 %  2022 % 2021 % 
Net revenues $73,459   100.0  $49,539   100.0  $70,599   100.0  $72,191   100.0 
Cost of goods sold  57,875   78.8   41,078   82.9   60,990   86.4   65,367   90.5 
Gross profit  15,584   21.2   8,461   17.1   9,609   13.6   6,824   9.5 
Selling, general and administrative  11,862   16.1   10,741   21.7   14,652   20.8   12,845   17.8 
Research and development  750   1.0   1,370   2.8   336   .4   746   1.0 
Loss (gain) on disposal of property and equipment  3    —   (46)  (.1)
Loss on disposal of property and equipment  18      2    
Loss from operations  2,969   4.0   (3,604)  (7.3)  (5,397)  (7.6)  (6,769)  (9.3)
Interest income  337   .5   295   .6   99   .1   26    — 
Interest expense  (432)  (.6)  (251)  (.5)  (175)  (.3)  (247)  (.3)
Interest expense – financing fees  (208)  (.3)  (38)  (.1)  (61)  (.1)  (41)  (.1)
Other  223   .3   (8)   
Net gain on exchange offer of Series B Preferred Stock        1,596   3.2 
Income (loss) from continuing operations before taxes  2,889   3.9   (2,010)  (4.1)
Income tax expense (benefit)  157   .2   (936)  (1.9)
Income (loss) from continuing operations $2,732   3.7  $(1,074)  (2.2)
Other income (expense)  1,945   2.8   (86)  (.1)
Gain on extinguishment of debt        5,381   7.4 
Loss on deconsolidation of subsidiary        (1,062)  (1.5)
Loss from continuing operations before taxes  (3,589)  (5.1)  (2,798)  (3.9)
Income tax benefit  (378)  (.6)  (3,890)  (5.4)
(Loss) income from continuing operations $(3,211)  (4.5) $1,092   1.5 

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Revenue

Consolidated revenues increased $23,920,000decreased $1,592,000 for the year ended December 31, 20192022 compared to the year ended December 31, 2018,2021, as follows:

(In thousands) 2019 % Revenue 2018 % Revenue Change % Change  2022 % Revenue 2021 % Revenue Change % Change 
Treatment                                                
Government waste $27,277   37.1  $23,701   47.8  $3,576   15.1  $21,946   31.1  $20,816   28.8  $1,130   5.4 
Hazardous/non-hazardous(1)  6,376   8.7   5,656   11.4   720   12.7   5,062   7.1   4,915   6.8   147   3.0 
Other nuclear waste  6,711   9.1   6,914   14.0   (203)  (2.9)  6,350   9.0   7,261   10.1   (911)  (12.5)
Total  40,364   54.9   36,271   73.2   4,093   11.3   33,358   47.2   32,992   45.7   366   1.1 
                                                
Services                                                
Nuclear  30,371   41.4   10,424   21.1   19,947   191.4   35,952   50.9   37,834   52.4   (1,882)  (5.0)
Technical  2,724   3.7   2,844   5.7   (120)  (4.2)  1,289   1.9   1,365   1.9   (76)  (5.6)
Total  33,095   45.1   13,268   26.8   19,827   149.4   37,241   52.8   39,199   54.3   (1,958)  (5.0)
                                                
Total $73,459   100.0  $49,539   100.0  $23,920   48.3  $70,599   100.0  $72,191   100.0  $(1,592)  (2.2)

1)Includes wastes generated by government clients of $2,422,000$2,380,000 and $1,594,000$2,299,000 for the twelve months ended December 31, 20192022 and 2018,2021, respectively.

Treatment Segment revenue increased $4,093,000by $366,000 or 11.3 %1.1% for the twelve months ended December 31, 20192022 over the same period in 2018.2021. The revenueoverall increase was primarily due to higher revenue generated from government clientswaste volume as certain customers who had previously delayed waste shipments due to higher averaged priceCOVID-19 resumed steady waste resulting from revenue mix. The increaseshipments starting in hazardous/non-hazardous waste revenue was also primarily due to higher revenue generated from higher averaged price waste. Services Segment revenue increased by $19,827,000 or 149.4% in the twelve months ended December 31, 2019 from the corresponding period of 2018. As previously discussed, the increase in our Services Segment revenue was primarily due to awards of several contracts/task orders for project work since the latter part of the second quarter. This positive trend was negatively impacted by occurrences of severe weather conditions which resulted in temporary delays in waste shipments from certain customers and a temporary shortage in skilled production personnel which peaked through the fourth quarter of 2022 at one of our facilities. The higher revenue from higher waste volume was offset by lower averaged price waste from revenue mix. Services Segment revenue decreased by approximately $1,958,000 or 5.0%. As previously disclosed, work under certain of the new projects awarded to our Services Segment at the end of the second quarter of 2021 continued to be delayed/curtailed into most of the first quarter of 2019 resulting2022 due to COVID-19 impact and/or administrative delays experienced by certain customers. However, since the second quarter of 2022, work under these projects had resumed/increased and has since reached full operational status. The lower revenue in 2022 was further exacerbated by the completion of a large project in the second quarter of 2021 which was not replaced with a similar size contract because of delays in contract awards and procurement from the success of our implemented strategic plan in winning contract bids.COVID-19. Our Services Segment revenues are project based; as such, the scope, duration and completion of each project vary. As a result, our Services Segment revenues are subject to differences relating to timing and project value. In 2022, our Segments continued to realize delays in procurement and planning on behalf of our government clients which did not ease until the second half of 2022.

Cost of Goods Sold

Cost of goods sold increased $16,797,000decreased $4,377,000 for the year ended December 31, 2019,2022, as compared to the year ended December 31, 2018,2021, as follows:

   %   %      %   %   
(In thousands) 2019 Revenue 2018 Revenue Change  2022 Revenue 2021 Revenue Change 
Treatment $28,116   69.7  $29,074   80.2  $(958) $28,115   84.3  $26,274   79.6  $1,841 
Services  29,759   89.9   12,004   90.5   17,755   32,875   88.3   39,093   99.7   (6,218)
Total $57,875   78.8  $41,078   82.9  $16,797  $60,990   86.4  $65,367   90.5  $(4,377)

Cost of goods sold for the Treatment Segment decreasedincreased by $958,000approximately $1,841,000 or approximately 3.3%7.0%. Treatment Segment costs of goods sold for the twelve months ended December 31, 2019 and 2018 included additional closure costs recorded in the amount of approximately $330,000 and $3,323,000, respectively, for our M&EC facility in connection with the closure of the facility. Excluding the closure costs recorded in both periods, Treatment Segment costs increased $2,035,000 or 7.9% due to higher revenue. Excluding the closure costs recorded, Treatment Segment’s variable costs increased by approximately $1,543,000 which included$607,000 primarily due to higher disposal, transportation and material and supplies, transportation, and outside services costs. Treatment SegmentSegment’s overall fixed costs were higher by approximately $492,000$1,234,000 resulting from the following: general expenses were higher by $483,000 primarily due to higher utility costs; depreciation expenses were higher by approximately $392,000 due to depreciation for asset retirement obligations in connection with our EWOC facility; regulatory expenses were higher by approximately $232,000 primarily due to additional closure costs recorded for our EWOC facility due to change in estimated costs; maintenance costs were higher by approximately $109,000; salaries and payroll related expenses were higher by approximately $1,029,000 resulting from higher headcount;$61,000; and travel expenses were higher by $66,000; depreciation expenses were higher by $62,000; general expenses were lower by approximately $505,000 in various categories; regulatory expenses were lower by $54,000; and maintenance expense was lower by approximately $106,000.$43,000. Services Segment cost of goods sold increased $17,755,000decreased $6,218,000 or 147.9%15.9% primarily due to higher revenue as discussed above.lower revenue. The increasedecrease in Services Segment’s cost of goods sold was primarily from the following: salaries and due to lower salaries/payroll related, expenses, travel, and outside services, expenses were higher by a total of approximately $16,726,000; material and supply expenses weresupplies and travel costs totaling approximately $6,863,000 which was offset by higher by $781,000; regulatory expenses were higher by approximately $441,000 primarily due to bonding requirements on certain projects;disposal, transportation and general expenses were higher by $191,000 in various categories; disposal/transportation expenses were lower by $245,000; and depreciation expenses were lower bytotaling approximately $139,000 as a number of assets became fully depreciated by end of 2018.$645,000. Included within cost of goods sold is depreciation and amortization expense of $1,301,000$2,027,000 and $1,378,000$1,654,000 for the twelve months ended December 31, 2019,2022, and 2018,2021, respectively.

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Gross Profit

Gross profit for the year ended December 31, 20192022 was $7,123,000$2,785,000 higher than 20182021 as follows:

   %   %      %   %   
(In thousands) 2019 Revenue 2018 Revenue Change  2022 Revenue 2021 Revenue Change 
Treatment $12,248   30.3  $7,197   19.8  $5,051  $5,243   15.7  $6,718   20.4  $(1,475)
Services  3,336   10.1   1,264   9.5   2,072   4,366   11.7   106   0.3   4,260 
Total $15,584   21.2  $8,461   17.1  $7,123  $9,609   13.6  $6,824   9.5  $2,785 

As discussed previously, Treatment Segment’s cost of goods sold forSegment gross profit decreased by $1,475,000 or approximately 22.0% and gross margin decreased to 15.7% from 20.4% primarily due to lower averaged price waste from revenue mix and the twelve months ended December 31, 2019 and 2018 included $330,000 and $3,323,000 in closure costs recorded in connection with the closureimpact of the M&EC facility, respectively. Excluding the closure costs recordedincrease in each of the periods, our Treatmentfixed costs. Services Segment had a gross profit increase of $2,058,000increased by $4,260,000 or 19.6%4,018.9% and gross margin increased to 31.2%11.7% from 29.0%0.3% primarily due to higher revenue, revenue mix and the reduction in the segment’s fixed costs. In the Services Segment, gross profit increased $2,072,000 or 163.9% and gross margin increased to 10.1% from 9.5% primarily due to the increase in revenue.projects. Our overall Services Segment gross margin is impacted by our current projects which are competitively bid on and will therefore, have varying margin structures.

SG&A

 

SG&A

SG&Aexpenses increased $1,121,000$1,807,000 for the year ended December 31, 20192022 as compared to the corresponding period for 20182021 as follows:

(In thousands) 2019 % Revenue 2018 % Revenue Change  2022 % Revenue 2021 % Revenue Change 
Administrative $5,395     $4,947     $448  $6,882     $5,751     $1,131 
Treatment  3,955   9.8   3,740   10.3   215   4,419   13.2   4,030   12.2   389 
Services  2,512   7.6   2,054   15.5   458   3,351   9.0   3,064   7.8   287 
Total $11,862   16.1  $10,741   21.7  $1,121  $14,652   20.8  $12,845   17.8  $1,807 

The increase in Administrative SG&A was primarily due to the following:salary/payroll related/healthcare costs were higher by approximately $398,000 which includedaccrual of approximately $332,000 related to the Company’s incentive plans (no accrual was recorded in the prior year);general expenses were higher by $113,000 in various categories; travel expenses were slightly higher by $9,000; depreciation expenses were lower by $23,000; and outside services costs were lower by approximately $49,000 from fewer consulting and business matters. Treatment SG&A was higher primarily due to the following: overall outside services expenses were higher by approximately $654,000 resulting from higher consulting/outside services/audit fees; travel expenses were higher by approximately $19,000; general expenses were higher by approximately $13,000 in various categories; and salaries and payroll related expenses were higher by approximately $185,000;$445,000 primarily due to higher stock-based compensation expenses from options granted to certain employees in October 2021 and higher 401(k) plan matching expenses as our payroll expenses in 2021 included more forfeitures of 401(k) plan matching funds contributed by us for former employees who failed to meet the 401(k) plan vesting requirements. Additionally, Administrative salaries and payroll related expenses were higher as in 2021, resources were allocated in supporting Medical Segment’s R&D/administrative functions. Treatment Segment SG&A expenses were higher primarily due to the following: outside services expense were higher by $120,000 due to more consulting/business matters (including our ESG initiatives); salaries and payroll related expenses were higher by $46,000; travel expenses were higher by approximately $63,000; bad debt$59,000; and general expenses were higher by $10,000;$164,000 which included higher tradeshow expenses and various other categories. The increase in SG&A expenses within our Services Segment was primarily due to the following: travel expenses were higher by $32,000; general expenses were higher by approximately $42,000 in$107,000 which included higher tradeshow expenses and various other categories; salaries/payroll related and outside services expenses were lower by approximately $85,000 resulting from fewer consulting/subcontract matters. Services Segment SG&A increased by $458,000 primarily due to the following: generalconsulting expenses were higher by approximately $132,000 in various categories; bad debt expenses were higher by $314,000 resulting primarily from the additional bad debt$202,000, and credit loss expense of $241,000 that we recorded in the fourth quarter of 2019 as a certain accounton accounts receivable was determined not to be collectible at December 31, 2019; outside services expenses were higher by approximately $99,000 resulting from more consulting matters; and salaries and payroll related expenses were lower by approximately $87,000. Services Segment’s general expenses for the year ended 2018 included a reduction in rent expense recorded in the second quarter of 2018 resulting from the end of our lease term for our business center office in Knoxville, Tennessee (which was not renewed with the same lessor).$54,000. Included in SG&A expenses is depreciation and amortization expense of $41,000$82,000 and $77,000$33,000 for the twelve months ended December 31, 20192022 and 2018,2021, respectively.

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R&D

R&D expenses decreased $620,000$410,000 for the year ended December 31, 20192022 as compared to the corresponding period of 20182021 as follows:

(In thousands) 2019 2018 Change  2022 2021 Change 
Administrative $23  $76  $(53) $67  $40  $27 
Treatment  401   483   (82)  246   221   25 
Services  12      12   23   71   (48)
PF Medical  314   811   (497)     414   (414)
Total $750  $1,370  $(620) $336  $746  $(410)

Research and developmentR&D costs consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development of new technologies and technological enhancement of new potential waste treatment processes. The decrease in R&D costs for 2019 as compared to 2018 was primarily due to reduced R&D costs within our PF Medical Segment. The Company continues to scale down its R&D costs for this segmentthe result of the sale of PFM Poland in December 2021 which consist primarilycomprised of third party fees and other administrative related costs associated with the segment. As discussed previously, our Medical Segment has ceased a substantial portionand which previously was involved in the R&D of its R&D costs and activities due to the need for substantial capital to fund such activities and we anticipate that our Medical Segment will not resume any substantial R&D activities until it obtains the necessary funding.medical isotope technology.

Interest Income

 

Interest Income

Interest income increased $42,000by approximately $73,000 for the twelve months ended December 31 20192022 as compared to the corresponding period of 20182021 primarily due to higher interest earned on thefrom our finite risk sinking funds resulting from higher interest rates; however, the higher interest income earned from higher interest rates was partially reduced by the lower finite risk sinking fund balance resulting from the release of $5,000,000 in finite risk sinking funds in July 2019 in connection with the M&EC facility closure.fund.

Interest Expense

 

Interest Expense

Interest expense increaseddecreased by approximately $181,000$72,000 for the twelve months ended December 31, 20192022 as compared to the corresponding period of 20182021 primarily due to lower interest on new finance leasesexpense from our declining term loan balance outstanding. Also, interest expense for the first six months of 2021 included interest accrued for our Paycheck Protection Program (“PPP”) Loan which we entered into in 2019 andwas forgiven by the U.S. Small Business Administration (“SBA”) effective June 15, 2021. The overall lower interest expense was offset by monthly interest incurred starting in June of 2022 from the April 1, 2019 loan that we entered into with Robert Ferguson in the amount of $2,500,000 (see “Liquidity and Capital Resources – Financing Activities” for further information of this loan).capital line under our credit facility.

Income Taxes

 

Interest Expense- Financing Fees

Interest expense-financing fees increased approximately $170,000We had income tax benefits of $378,000 and $3,890,000 for continuing operations for the twelve months ended December 31, 2019 as compared to the corresponding period of 2018. The increase was primarily due to debt discount/debt issuance costs amortized as financing fees in connection with the issuance of our Common Stock2022 and a purchase Warrant as consideration for the Company receiving the $2,500,000 loan from Robert Ferguson (See“Liquidity and Capital Resources – Financing Activities” for further information of this debt discount).

Income Taxes

We had income tax expense of $157,000 and income tax benefit of $936,000 for continuing operations for the years ended December 31, 2019 and 2018,2021, respectively. The Company’sOur effective tax rates were approximately 5.4%10.5% and 46.6%139.0% for the twelve months ended December 31, 20192022 and 2018,2021, respectively. Our effective tax benefitrates for 2018 included athe twelve months ended December 31, 2022 were impacted by non-deductible expenses and state taxes. Our effective tax benefit of approximately $1,235,000 recorded in 2018 resulting fromrate for the twelve months ended December 31, 2021 was substantially impacted by the release of a portion of theour valuation allowance on deferred tax assets primarily related to indefinite-lived net operating losses generatedU.S. Federal income taxes during the third quarter of 2021 of approximately $2,351,000. For the twelve months ended December 31, 2021, the primary reasons for the differences between our effective tax rate and statutory tax rate were due to the closurerelease of valuation allowance and the forgiveness of our M&EC facility.PPP Loan which was included in our Consolidated Statement of Operations as “Gain on extinguishment of debt” but is exempt from income taxes.

Backlog

Our Treatment Segment maintains a backlog of stored waste, which represents waste that has not been processed. The tax expense for 2019 was comprisedbacklog is principally a result of state tax expense for separate company filing statesthe timing and complexity of the waste being brought into the facilities and the selling price per container. At December 31, 2022, our Treatment Segment had a backlog of approximately $9,156,000, as compared to approximately $7,129,000 at December 31, 2021. Additionally, the time it takes to process waste from the time it arrives may increase due to the types and complexities of the waste we are currently receiving. We typically process our backlog during periods of low waste receipts, which historically has been in the deferred tax liability related to the amortization of indefinite lived intangible assets.first or fourth quarters.

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Discontinued Operations and Environmental Contingencies

Our discontinued operations consist of all our subsidiaries included in our Industrial Segment which wereencompasses subsidiaries divested in 2011 and prior and three previously closed locations, and our Perma-Fix of South Georgia, Inc. (“PFSG”) facility which is in closure status, which final closure is subject to regulatory approval of necessary plans and permits.locations.

Our discontinued operations had no revenue for the twelve months ended December 31, 20192022 and 2018.2021. We incurred net losses of $541,000$605,000 (net of tax benefit of $199,000) and $667,000$421,000 (net of tax benefit of $139,000) for our discontinued operations for the twelve months ended December 31, 20192022 and 2018, respectively (net of taxes of $0 for each period). Our2021, respectively. The increase in net loss for the year ended December 31, 2019 and 2018 included an increase of approximately $50,000losses in each period in remediation reserve for our Perma-Fix of Memphis (“PFM”) and Perma-Fix of Dayton (“PFD”) subsidiaries, respectively, due2022 as compared to reassessment of the remediation reserve, with the remaining loss incurred2021 was primarily due to costs incurred in the administrationconnection with management of administrative and continued monitoring ofregulatory matters within our discontinued operations. We have three environmental remediation projects, all within our discontinued operations, which principally entail the removal/remediation of contaminated soil, and, in most cases, the remediation of surrounding ground water.

Liquidity and Capital Resources

Our cash flow requirements during 2019the twelve months ended December 31, 2022 were primarily financed by our operations, cash on hand and credit facility availability, loan proceeds of $2,500,000 from a loan that we consummated on April 1, 2019 (see “Financing Activities” below for further information of the agreementavailability. Subject to COVID-19 and note), and the receipt of the $5,000,000 in finite risk sinking funds in July 2019 from AIG resulting from the closure ofother impacts as discussed above, our M&EC facility (see a discussion of this finite risk sinking in “Insurance” below). Our cash flow requirements for the next twelve months will consist primarily of general working capital needs, scheduled principal payments on our debt obligations, remediation projects, and planned capital expenditures. We plan to fund these requirements from our operations, credit facility availability, and cash on hand.hand and a refund that we expect to receive under the ERC program under the CARES Act (see a discussion of this expected refund below – “Employee Retention Credit (“ERC”)”). We continue to explore all sources of increasing our capital to supplement ourand/or liquidity requirements, when needed, and to improve our revenue and working capital.capital (see our discussion contained in this “MD&A – Liquidity Overview” above for further discussion as to liquidity. We are continually reviewing operating costs and are committed toreviewing the possibility of further reducing operating costs and non-essential expenditures to bring them in line with revenue levels, when necessary. Although there are no assurances,At this time, we believe that our cash flows from operations, our available liquidity from our credit facility, and our cash on hand and the expected refund from the ERC program should be sufficient to fund our operations for the next twelve months. As previously discussed, our recently implemented strategic plan, which includes expansion into international markets and increasing our contract bid/win ratio, has thus far been successful, which we believe will continue to help improve our results and liquidity. We further anticipate that over the next few years, we should be able to fully implement our strategic plan. As previously disclosed, our Medical Segment substantially reduced its R&D costs and activitiesHowever, due to the need for capital to funduncertainty of the countries’ current economic environment and the COVID-19 as disclosed in “COVID-19 and Other Impacts” within this MD&A, there are no assurances such activities. We continue to seek various sources of potential funding for our Medical Segment. We anticipate that our Medical Segment will not resume full R&D activities until it obtainsbe the necessary funding through obtaining its own credit facility or additional equity raise or obtaining new partners willing to fund its R&D activities. If the Medical Segment is unable to raise the necessary capital, the Medical Segment could be required to further reduce, delay or eliminate its R&D program.case.

The following table reflects the cash flow activity for the year ended December 31, 20192022 and the corresponding period of 2018:2021:

(In thousands) 2019 2018  2022 2021 
Cash (used in) provided by operating activities of continuing operations $(4,023) $2,578 
Cash provided by (used in) operating activities of continuing operations $164  $(6,316)
Cash used in operating activities of discontinued operations  (660)  (618)  (717)  (521)
Cash used in investing activities of continuing operations  (1,533)  (1,385)  (997)  (1,564)
Cash provided by investing activities of discontinued operations  121   67 
Cash provided by (used in) financing activities of continuing operations  992   (580)
Cash (used in) provided by financing activities of continuing operations  (921)  4,943 
Effect of exchange rate changes on cash  19   (20)  (4)  (1)
(Decrease) increase in cash and finite risk sinking fund (restricted cash) $(5,084) $42 
Decrease in cash and finite risk sinking fund (restricted cash) $(2,475) $(3,459)

At December 31, 2019,2022, we were in a net borrowingpositive cash position (revolving credit) of approximately $321,000.with no revolving credit balance. At December 31, 2019,2022, we had cash on hand of approximately $390,000, which reflects primarily account balances of our foreign subsidiaries totaling approximately $388,000. At December 31, 2019, we have finite risk sinking funds (restricted cash) of approximately $11,307,000, which represents cash held as collateral under the Company’s financial assurance policy (see “Insurance” below for a discussion of this restricted cash).$1,866,000.

Operating Activities

Accounts receivable, net of allowances for doubtful accounts,credit losses, totaled $13,178,000$9,364,000 at December 31, 2019, an increase2022, a decrease of $5,443,000$2,008,000 from the December 31, 20182021 balance of $7,735,000.$11,372,000. The increasedecrease was primarily dueattributed to higher revenue and the timing of invoicing and timing of accounts receivable collection. We provide a variety ofOur contracts with our customers are subject to various payment terms toand conditions. Additionally, our customers; therefore,contracts with our customers may sometimes result in modifications which can cause delays in collections. Our accounts receivable are impacted by these terms and the related timing of accounts receivable collections.

Accounts payable, totaled $9,277,000 at December 31, 2019, an increase2022 include invoices for work performed which previously was in our unbilled account for a certain Canadian project that remain outstanding and subject to negotiations (see unbilled receivables discussion below). See discussion under “Known Trends and Uncertainties – Perma-Fix Canada, Inc. (“PF Canada”)” for a discussion as to this certain account receivable.

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Unbilled receivables totaled $6,062,000 at December 31, 2022, a decrease of $3,780,000$2,933,000 from the December 31, 20182021 balance of $5,497,000.$8,995,000. The increasedecrease in accounts payableunbilled receivables was attributed to an increase in costsprimarily within our Services Segment resultingdue to invoicing in connection with our Canadian projects.

Accounts payable, totaled $10,325,000 at December 31, 2022, a decrease of $1,650,000 from the significant increase in revenue. Additionally, ourDecember 31, 2021 balance of $11,975,000. Our accounts payable are impacted by the timing of payments as we are continually managing payment terms with our vendors to maximize our cash position throughout all segments.

We had working capital of $26,000$818,000 (which included working capital of our discontinued operations) at December 31, 2019,2022, as compared to working capital deficit of $6,753,000$4,060,000 at December 31, 2018. The improvement in our working capital was primarily the result of the receipt of $5,000,000 of finite risk sinking funds on July 22, 2019 previously held as collateral under our 2003 Closure Policy resulting from the closure of our M&EC facility (see “Liquidity and Capital Resources – Insurance” below for a discussion of this finite risk sinking funds) and the $2,500,000 loan proceeds received from the consummation of the Robert Ferguson loan on April 1, 2019 (see “Financing Activities” below for a discussion of this loan). Also, the increases in our unbilled and accounts receivables resulting from the significant increase in our revenue have positively impacted our working capital. Additionally, the reduction in the monthly principal term loan payment from approximately $101,600 to $35,547 resulting from an amendment that we entered into with our lender on June 20, 2019 has improved our working capital (Liquidity and Capital Resources – Financing Activities” below for a discussion of this amendment to our loan agreement).2021. Our working capital was negatively impacted primarily by the reclassificationour results of approximately $726,000 in remediation reserves for our PFSG subsidiaryoperations which were heavily impacted from long-term to currentCOVID-19 and an increase in current remediation reserves recordedother delays as discussed previously, especially in the fourthfirst quarter of 2019 for our PFM subsidiary within our discontinued operations for anticipated spending within the next twelve months. Additionally, our2022. Our working capital was negativelypositively impacted by the employee retention credit in the amount of approximately $1,975,000 recorded as current portionreceivables (within “Prepaid and other assets” on our Consolidated Balance Sheets. See a discussion of principal payments due within the next twelve months on the Robert Ferguson loan.this credit below “Employee Retention Credit (“ERC”)”).

Investing Activities

During 2019,2022, our purchases of capital equipment totaled approximately $1,928,000,$1,137,000, of which $393,000$114,000 was financed,subject to financing, with the remaining funded from cash from operations and our credit facility. These expenditures were made primarily for our Treatment Segment. We have budgeted approximately $2,000,000 for 20202023 capital expenditures primarily for our Treatment and Services Segments to maintain operations and regulatory compliance requirements and support revenue growth. Certain of these budgeted projects may either be delayed until later years or deferred altogether. We plan to fund our capital expenditures from cash from operations and/or financing. The initiation and timing of projects are also determined by financing alternatives or funds available for such capital projects.

During March 2022, we signed a joint venture term sheet addressing plans to partner with Springfields Fuels Limited (“SFL”), an affiliate of Westinghouse Electric Company LLC, to develop and manage a nuclear waste-materials treatment facility (the “Facility”) in the United Kingdom. The Facility is for the purpose of expanding the partners’ waste treatment capabilities for the European nuclear market. It is expected that upon finalization of a partnership agreement, SFL will have an ownership interest of fifty-five (55) percent and our interest will be forty-five (45) percent. The finalization, form and capitalization of this unpopulated partnership is subject to numerous conditions, including but not limited to, winning a certain contract, completion and execution of a definitive agreement and facility design, granting of required regulatory, lender or permitting approvals and updated cost and profitability analysis based on current and forecast future economic conditions. Upon finalization of this venture, we will be required to make an investment in this venture. The amount of our investment, the period of which it is to be made and the method of funding are to be determined.

Financing Activities

We entered into ana Second Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011 (“Amended LoanMay 8, 2020, (the “Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Amended Loan Agreement as subsequently amended (“Revised Loan Agreement”), provides us with the following credit facility with a maturity date of March 24, 2021:15, 2024: (a) up to $12,000,000$18,000,000 revolving credit (“revolving credit”) (see discussion below as to an amendment dated March 21, 2023 which reduced the revolving credit to $12,500,000) and (b) a term loan (“term loan”) of approximately $6,100,000, which requires$1,742,000, requiring monthly installments of approximately $101,600 (based on a seven-year amortization).$35,547. The maximum that we can borrow under the revolving credit is based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from time to time. Our Loan Agreement, as amended (the “Amended Loan Agreement”), also provides a capital expenditure 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”). Only interest is payable on advances during the Borrowing Period. At the end of the Borrowing Period, the total amount advanced under the line will amortize equally based on a five-year amortization schedule with principal payment due monthly plus interest. At the maturity date of the Amended Loan Agreement, any unpaid principal balance plus interest, if any, will become due. At the end of the Borrowing Period, advance on the capital line totaled approximately $524,000. We are required to make monthly principal installment payment of approximately $8,700 starting June 1, 2022 plus interest. At December 31, 2022, balance on the capital line was approximately $463,000. The advance made on the capital line was used to purchase the underlying asset under a previous finance lease.

On March 29, 2019,

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During 2022, we entered into an amendmentfurther amendments to our RevisedAmended Loan Agreement with our lender, under the credit facility which provided the following:following, among other things (with the amended terms set forth in a Revised Loan Agreement):

waived our failure to meet the minimum quarterly fixed charge coverage ratio (“FCCR”) requirement for the fourth quarter of 2018;2021 and second quarter of 2022;
waivedremoved the quarterly FCCR testing requirement for the first and third quarters of 2022;
reinstated the quarterly FCCR testing requirement starting for the fourth quarter of 2019;
2022 and revised the methodology in calculating the FCCR for the quarter ended December 31, 2022 and the methodology to be used in calculating the FCCR in each offor the second and third quarters of 2019quarter ending March 31, 2023 (with continued requirementno change to maintain athe minimum 1.15:1 ratio requirement for each quarter);
required maintenance of a minimum of $3,000,000 in each ofborrowing availability under the quarters);
revised the minimum Tangible Adjusted Net Worth requirement (as defined in the Revised Loan Agreement) from $26,000,000 to $25,000,000;
eliminated the London Inter Bank Offer Rate (“LIBOR”) interest payment option of paying annual rate of interest due on our term loan and revolving credit until we become compliant with ourthe minimum FCCR requirement again. Prior to this amendment, we hadfor the option of paying annual rate of interest due on the revolving credit at prime (4.75% atquarter ended December 31, 2019) plus 2% or LIBOR plus 3%2022 has been met and certified to the term loan at prime plus 2.5% or LIBOR plus 3.5%;lender;
provided consent for the $2,500,000 loan that we entered into with Robert Ferguson as discussed below. No principal prepayment on this loan was allowed until we received the restricted finite risk sinking funds of approximately $5,000,000 held as collateral by AIG under our financial assurance policy (see “Insurance” below for a discussion of the receipt of this $5,000,000 finite risk sinking funds below); and
revised the annual rate used to calculate the Facility Fee (as defined in the Loan Agreement) on the revolving credit, with addition of the capital expenditure line, from 0.375% to 0.500%. Upon meeting the minimum FCCR requirement of 1.15:1 on a twelve-month trailing basis, the Facility Fee rate of 0.375% will be reinstated;
added certain additional anti-terrorism provisions to the covenants; and
replaced the London InterBank Offer Rate (“LIBOR”) based interest rate benchmark with the Secured Overnight Finance Rate (“SOFR”). As a result of this new provision, payment of annual rate of interest due on the revolving credit is at prime (7.50% at December 31, 2022) plus 2% or Term SOFR Rate (as defined in the Revised Loan Agreement) (unused revolving credit line fee) from 0.250% to 0.375%.

On June 20, 2019, we entered into another amendment to our Revised Loan Agreement with our lender under the credit facility which provided the following, among other things:

removalplus 3.00% plus an SOFR Adjustment applicable for an interest period selected by us and payment of the FCCR calculation requirement for the second, third and fourth quarterannual rate of 2019. Starting in the first quarter of 2020, we will again be required to maintain a minimum FCCR of not less than 1.15 to 1.0 for the four quarter period ending March 31, 2020 and for each fiscal quarter thereafter;
requires us to maintain a minimum Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA” as defined in the Amendment) of at least (i) $475,000 for the one quarter period ending June 30, 2019; (ii) $2,350,000 for the two quarter period ending September 30, 2019; and (iii) $3,750,000 for the three quarter period ending December 31, 2019;
immediate release of $450,000 of the $1,000,000 indefinite reduction in borrowing availability that PNC had previously imposed; the release of another $300,000 of the remaining $550,000 reduction in borrowing availability if we meet our minimum Adjusted EBITDA requirement for the quarter ending September 30, 2019 as discussed above (which our lender released in November 2019), in addition to us having received no less than $4,000,000 of the restricted finite risk sinking funds held as collateral by AIG under our financial assurance policy (see “Insurance” below for a discussion of the receipt of this finite risk sinking funds below); and the release of the final $250,000 reduction in borrowing availability if we meet our Adjusted EBITDA requirement for the three quarter period ending December 31, 2019; and
reduceinterest due on the term loan monthly principal payment starting July 1, 2019 from $101,600 to approximately $35,547, withand the remaining balancecapital expenditure line is at prime plus 2.50% or Term SOFR Rate plus 3.50% plus an SOFR Adjustment applicable for an interest period selected by us. A SOFR Adjustment rates of the term loan due at the maturity of the Revised Loan Agreement which is March 24, 2021.0.10% and 0.15% are applicable for a one-month interest period and three-month period, respectively, that may be selected by us

Most ofIn connection with the other termsamendments, we paid our lender fees totaling $30,000 which is being amortized over the remaining term of the Revised Loan Agreement as amended, remain principally unchanged. In connection with amendment dated March 29, 2019 and June 20, 2019, we paidinterest expense-financing fees.

Our credit facility under our lender a fee of $20,000 and $50,000, respectively.

Pursuant to the Revised Loan Agreement as amended, we may terminate the Revised Loan Agreement, as amended, upon 90 days’ prior written notice upon payment in full of its obligations under the Revised Loan Agreement, as amended. No early termination fee shall apply if we pay off our obligations after March 23, 2019.

At December 31, 2019, the borrowing availability under our revolving credit was approximately $8,714,000, based on our eligible receivables and includes an indefinite reduction of borrowing availability of $250,000 that our lender has imposed. This $8,714,000 in borrowing availability under our revolving credit also included a reduction in borrowing availability of approximately $2,639,000 from outstanding standby letters of credit.

Our credit facility with our lenderPNC contains certain financial covenants, along with customary representations and warranties. A breach of any of these financial covenants, unless waived by our lender,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. As discussed above,We were not required to perform testing of the FCCR requirement in the first and third quarters of 2022 pursuant to the amendments that we entered with our lender waived/removedin 2022 as discussed above. Based on an amendment that we entered into with our FCCRlender on March 21, 2023 as discussed below, we were not required to perform testing requirement for each of the quartersFCCR requirement in 2019.the fourth quarter of 2022. We metfailed to meet our “Adjusted EBITDA” minimumFCCR requirement in the second third and fourth quartersquarter of 20192022; however, this non-compliance was waived by our lender pursuant to an amendment that we entered into with our lender in accordance to the amendment dated June 20, 20192022 as discussed above. Additionally,Other than the above discussion pertaining to our FCCR requirements, we met all of our remainingother financial covenant requirements in each of the quarters of 2019. As a result of us meeting the “Adjusted EBITDA” minimum requirement for the fourth quarter of 2019, our lender is expected to release the remaining $250,000 reduction in borrowing availability subsequent to the filing of our 2019 Form 10-K.2022. We expect to meet our quarterly financial covenant requirements infor the next twelve months; however, ifmonths under our Amended Loan Agreement.

On March 21, 2023, we failentered into an amendment to meet any of our financial covenant requirements andRevised Loan Agreement with our lender does not further waivewhich provides, among other things, the non-compliance or revise our covenant so that we are in compliance, our lender could accelerate the repayment of borrowings under our credit facility. In the event that our lender accelerates the payment of our borrowings, we may not have sufficient liquidity to repay our debt under our credit facility and other indebtedness.following:

removed the quarterly FCCR testing requirement for the fourth quarter of 2022 and removes the FCCR testing requirement the first quarter of 2023;

 

reduced the maximum revolving credit line under the credit facility from $18,000,000 to $12,500,000;
reinstates the quarterly FCCR testing requirement starting in the second quarter of 2023 using a trailing twelve months period (with no change to the minimum 1.15:1 ratio requirement for each quarter); and
requires 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.

On April 1, 2019, we completed a lending transaction with Robert Ferguson (the “Lender”), whereby we borrowed from the Lender the sum of $2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lender is a shareholder of the Company. The Lender also currently serves as a consultant to the Company in connection with the Test Bed Initiatives at our Perma-Fix Northwest Richland, Inc. facility. The proceeds from the Loan were used for general working capital purposes. The Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00% per annum. The Loan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due May 1, 2019 and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second year of the Loan. The Loan also provides for prepayment of principal payments over the term of the Loan without penalty with such prepayment of principal payments to be applied to the second year of the loan payments at our discretion. In 2019, we made total prepayments in principal of $520,000.

In connection with the aboveamendment, the Company paid its lender a fee of $25,000.

From this point on, we may terminate our Revised Loan the Lender agreed under the terms of the Loan and a Subordination Agreement with our credit facility lender, to subordinateupon 90 days’ prior written notice upon payment under the Loan, and agreed that the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding by us. In connection with this capital raise transaction described above and consideration for us receiving the Loan, we issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share, which was the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Loan and Warrant. The Warrant is exercisable six months from April 1, 2019 and expires on April 1, 2024 and remains outstanding at December 31, 2019. The fair value of the Warrant was estimated to be approximately $93,000 using the Black-Scholes option pricing model with the following assumptions: 50.76% volatility, risk free interest rate of 2.31%, an expected life of five years and no dividends. As further consideration for this capital raise transaction relating to the Loan, we also issued 75,000 shares of our Common Stock to the Lender. We determined the fair value of the 75,000 shares of Common Stock to be approximately $263,000 which was based on the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Loan, pursuant to the Loan and Securities Purchase Agreement. The fair value of the Warrant and Common Stock and the related closing fees incurred totaling approximately $398,000 from the transaction was recorded as debt discount/debt issuance costs, which is being amortized over the term of the loan as interest expense – financing fees. The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased under the Warrant were and will be issued in a private placement that was and will be exempt from registration under Rule 506 and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend against resale except in a transaction registered under the Act or in a transaction exempt from registration thereunder.

Upon default, the Lender will have the right to elect to receive in full and complete satisfaction of our obligations under the Revised Loan either: (a)Agreement with no early termination fees.

Employee Retention Credit (“ERC”)

The CARES Act, which was enacted on March 27, 2020, provides an ERC for qualifying businesses keeping employees on their payroll during the cash amountCOVID-19 pandemic. The ERC was subsequently amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, the Consolidated Appropriation Act of 2021, and the American Rescue Plan Act of 2021, all of which amended and extended the ERC availability and guidelines under the CARES Act. Following these amendments, we determined that we were eligible for the ERC, and as a result of the foregoing legislations, are eligible to claim a refundable tax credit against our share of certain payroll taxes equal to the sum70% of the unpaid principal balance owing under the loanqualified wages paid to employees between July 1, 2021 and all accrued and unpaid interest thereon (the “Payoff Amount”) or (b) upon meeting certain conditions, the number of whole shares of our Common Stock (the “Payoff Shares”) determined by dividing the Payoff Amount by the dollar amount equalSeptember 30, 2021. Qualified wages are limited to the closing bid price of our Common Stock on the date immediately prior to the date of default, as reported or quoted on the primary nationally recognized exchange or automated quotation system on which our Common Stock is listed; provided however, that the dollar amount of such closing bid price shall not be less than $3.51, the closing bid price for our Common Stock as disclosed on NASDAQ.com immediately preceding the signing of this loan agreement.

If issued, the Payoff Shares will not be registered and the Lender will not be entitled to registration rights with respect to the Payoff Shares. The aggregate number of shares, warrant shares, and Payoff Shares that are or will be issued to the Lender pursuant to the Loan, together with the aggregate shares of our Common Stock and other voting securities owned by the Lender or which may be acquired by the Lender as of the date of issuance of the Payoff Shares, shall not exceed the number of shares of our Common Stock equal to 14.9% of the number of shares of our Common Stock issued and outstanding as of the date immediately prior to the default, less the number of shares of our Common Stock owned by the Lender immediately prior to the date of such default plus the number of shares of our Common Stock that may be acquired by the Lender under warrants and/or options outstanding immediately prior to the date of such default.

On May 13, 2019, we filed a shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the “Commission”), which was declared effective by the Commission on May 22, 2019 at 4:00 p.m. The shelf registration statement gives us the ability to sell up to 2,500,000 shares of our Common Stock from time to time and through one or more methods of distribution, subject to market conditions and the Company’s capital needs at that time. The terms of any offering under the registration statement will be established at the time of the offering and be set forth$10,000 per employee per calendar quarter in an accompanying prospectus or prospectus supplement relating to the offering. At this time, the Company does not have any immediate plans or current commitments to issue shares under the registration statement. This is not an offer to sell or a solicitation of an offer to buy, nor shall there be a sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

Insurance

We have a 25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with 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, provided2021 for a maximum allowable coverageERC per employee of $39,000,000 which included available capacity$7,000 per calendar quarter in 2021. For purposes of the amended ERC, an eligible employer is defined as having experienced a significant (20% or more) decline in gross receipts during one or more of the first three 2021 calendar quarters when compared to allow2019.

During the third quarter of 2022, we determined we were eligible for annual inflationthe ERC and amended our third quarter 2021 employer payroll tax filings claiming a refund from the U.S. Treasury in the amount of approximately $1,975,000. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, we account for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it has reasonable assurance for receipt of the ERC and recorded the expected refund as other income (within “Other income (expense)”) on our Consolidated Statements of Operations and other performancereceivables (within “Prepaid and surety bond requirements. As a resultother assets”) on our Consolidated Balance Sheets.

Payment of Deferred Employment Tax Deposits

The CARES Act provided employers the option to defer the payment of an employer’s share of social security taxes beginning on March 27, 2020 through December 31, 2020, with 50% of the closureamount of the Company’s M&EC facility,social security taxes deferred to become due on July 22, 2019, AIG released $5,000,000 of the finite risk sinking funds held as collateral under the 2003 Closure Policy to us. The finite risk sinking funds received by us are to be used for general working capital needs. In conjunctionDecember 31, 2021 with the release of the finite risk sinking funds by AIG, total coverage under the 2003 Closure Policy was amended from $30,549,000 to $19,314,000. Additionally, the maximum allowable coverage under the 2003 Closure Policy was amended from $39,000,000 to approximately $28,177,000 which includes available capacity to allow for annual inflation and other performance and surety bond requirements. Atremaining 50% due on December 31, 2019 and2022. Our deferment of such taxes totaled approximately $1,252,000 of which approximately $626,000 was paid in December 31, 2018, finite risk sinking funds contributed by us to2021 with the 2003 Closure Policy which isremaining paid in December 2022 (previously included in other long term assets on the accompanying“Accrued expenses” within current liabilities in our Consolidated Balance Sheets totaled $11,307,000 and $15,971,000, respectively, which included interest earned of $1,836,000 and $1,500,000 on the finite risk sinking funds as of December 31, 2019 and December 31, 2018, respectively. Interest income for the years ended 2019 and 2018 was approximately $336,000 and $295,000, respectively. If we so elect, AIG is obligated to pay us an amount equal to 100% of the finite risk sinking fund account balance in return for complete release of liability from both us and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.Sheets).

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Off Balance Sheet Arrangements

From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. At December 30, 2019,31, 2022, the total amount of standby letters of credit outstanding wastotaled approximately $2,639,000$3,016,000 and the total amount of bonds outstanding wastotaled approximately $28,937,000.$35,432,000. We also provide closure and post-closure requirements through a financial assurance policy for certain of our Treatment Segment facilities through AIG (See a discussion of this financial assurance policy above)American International Group, Inc. (“AIG”). At December 31, 2022, the closure and post-closure requirements for these facilities were approximately $21,175,000.

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Critical Accounting Policies and Estimates

In preparing theOur consolidated financial statements in conformity with accounting principles generally accepted inare prepared based upon the United Statesselection and application of America (“US GAAP”), management makesGAAP, which may require us to make estimates, judgments and assumptions that affect theamounts reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of thein our financial statements as well as, the reported amounts of revenues and expenses during the reporting period. We believe the following criticalaccompanying notes. The accounting policies below are those we believe affect the more significant estimates and judgments used in preparation of our financial statements. Our other accounting policies are described in the accompanying notes to our consolidated financial statements:statements of this Form 10-K (see “Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – “Note 2 – Summary of Significant Accounting Policies”):

Revenue Recognition Estimates.In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers” followed by a series of related accounting standard updates (collectively referred to as “Topic 606”). Topic 606 provides a single, comprehensive revenue recognition model for all contracts with customers. Under Topic 606, a five-step process is utilized in order to determine revenue recognition, depicting the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Under Topic 606, a performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract transaction price is allocated to each distinct performance obligation and recognized as revenues as the performance obligation is satisfied.

Treatment Segment Revenues:

Contracts in our Treatment Segment have a single performance obligation as the promise to receive, treat and dispose of waste is not separately identifiable in the contract and, therefore, not distinct. Performance obligations are generally satisfied over time using the input method. Under the input method, the Company uses a measure of progress divided into major phases which include receipt (generally ranging from 9.0% to 33%), treatment/processing (generally ranging from 15% to 79%) and shipment/final disposal (generally ranging from 9% to 52%). As major processing phases are completed and the costs are incurred, the proportional percentage of revenue is recognized. Transaction price for Treatment Segment contracts are determined by the stated fixed rate per unit price as stipulated in the contract.

Services Segment Revenues:

Revenues for our Services Segment are generated from time and materials, cost reimbursement or fixed price arrangements:

Our primary obligation to customers in time and materials contracts relate to the provision of services to the customer at the direction of the customer. This provision of services at the request of the customer is the performance obligation, which is satisfied over time. Revenue earned from time and materials contracts is determined using the input method and is based on contractually defined billing rates applied to services performed and materials delivered.

Our primary performance obligation to customers in cost reimbursement contracts is to complete certain tasks and work streams. Each specified work stream or task within the contract is considered to be a separate performance obligation. The transaction price is calculated using an estimated cost to complete the various scope items to achieve the performance obligation as stipulated in the contract. An estimate is prepared for each individual scope item in the contract and the transaction price is allocated on a time and materials basis as services are provided. Revenue from cost reimbursement contracts is recognized over time using the input method based on costs incurred, plus a proportionate amount of fee earned.

Under fixed price contracts, the objective of the project is not attained unless all scope items within the contract are completed and all of the services promised within fixed fee contracts constitute a single performance obligation. Transaction price is estimated based upon the estimated cost to complete the overall project. Revenue from fixed price contracts is recognized over time using the output or input method. For the output method, revenue is recognized based on milestone attained on the project. For the input method, revenue is recognized based on costs incurred on the project relative to the total estimated costs of the project.

Allowance for Doubtful Accounts. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, which is a valuation allowance that reflects management’s best estimate of the amounts that are uncollectible. We regularly review all accounts receivable balances that exceed 60 days from the invoice date and, based on an assessment of current credit worthiness, estimate the portion, if any, of the balances that are uncollectible. Specific accounts that are deemed to be uncollectible are reserved at 100% of their outstanding balance. The remaining balances aged over 60 days have a percentage applied by aging category (5% for balances 61-90 days, 20% for balances 91-120 days and 40% for balances over 120 days aged), based on a historical collection patterns, that allows us to calculate the total allowance required. This analysis excludes government related receivables due to our past successful experience in their collectability. Our allowance for doubtful accounts at December 31, 2019 was approximately 0.7% of revenue for 2019 and 3.6% of accounts receivable at December 31, 2019. Additionally, our allowance for doubtful accounts at December 31, 2018 was approximately 0.2% of revenue for 2018 and 1.3% of accounts receivable at December 31, 2018.

Intangible Assets. Intangible assets consist primarily of the recognized value of the permits required to operate our business. We continually monitor the propriety of the carrying amount of our permits to determine whether current events and circumstances warrant adjustments to the carrying value.

Indefinite-lived intangible assets are not amortized but are reviewed for impairment annually as of October 1, or when events or changes in the business environment indicate that the carrying value may be impaired. If the fair value of the asset is less than the carrying amount, we perform a quantitative test to determine the fair value. The impairment loss, if any, is measured as the excess of the carrying value of the asset over its fair value. Significant judgments are inherent in these analyses and include assumptions for, among other factors, forecasted revenue, gross margin, growth rate, operating income, timing of expected future cash flows, and the determination of appropriate long-term discount rates.

Impairment testing of our permits related to our Treatment reporting unit as of October 1, 20192022 and 20182021 resulted in no impairment charges.

Intangible assets that have definite useful lives are amortized using the straight-line method over the estimated useful lives (with the exception of customer relationships which are amortized using an accelerated method) and are excluded from our annual intangible asset valuation review as of October 1. We had one definite-lived permit which was excluded from our annual impairment review as noted above. This definite-lived permit which had a net carrying value of approximately $7,000 at December 31, 2018 was fully amortized in the first quarter of 2019. Intangible assets with definite useful lives are also tested for impairment whenever events or changes in circumstances indicate that the asset’s carrying value may not be recoverable.

Our future cash flow assumptions and conclusions with respect to asset impairments could be impacted by changes arising from (i) a sustained period of economic and industrial slowdowns (ii) inability to scale our operations and implement cost reduction efforts during reduced demand and/or (iii) a significant decline in our share price for a sustained period of time. These factors, among others, could significantly impact the impairment analysis and may result in future asset impairment charges that, if incurred, could have a material adverse effect on our financial condition and results of operations. We believe that the assumptions and estimates utilized for the reporting periods are appropriate based on the information available to management.

Accrued Closure Costs and Asset Retirement Obligations (“ARO”). Accrued closure costs represent our estimated environmental liability to clean up our facilities as required by our permits, in the event of closure. ASC 410, “Asset Retirement and Environmental Obligations” requires that the discounted fair value of a liability for an ARO be recognized in the period in which it is incurred with the associated ARO capitalized as part of the carrying cost of the asset. The recognition of an ARO requires that management make numerous estimates, assumptions and judgments regarding such factors as estimated probabilities, timing of settlements, material and service costs, current technology, laws and regulations, and credit adjusted risk-free rate to be used. We develop estimates for the cost of these activities based on our evaluation of site-specific facts and circumstances, such as the existence of structures and other improvements that would need to be dismantled and the length of the post-closure period as determined by the applicable regulatory agency, among other things. Included in our cost estimates are our interpretation of current regulatory requirements and any proposed regulatory changes. These cost estimates may change in the future due to various circumstances including, but not limited to, permit modifications, changes in legislation or regulations, technological changes and results of environmental studies. Our cost estimates are calculated using internal sources as well as input from third-party experts. This estimate is inflated, using an inflation rate, to the expected time at which the closure will occur, and then discounted back, using a credit adjusted risk free rate, to the present value. ARO’s are included within buildings as part of property and equipment and are depreciated over the estimated useful life of the property. In periods subsequent to initial measurement of the ARO, we must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flow. Increases in the ARO liability due to passage of time impact net income as accretion expense and are included in cost of goods sold in the Consolidated Statements of Operations. Changes in the estimated future cash flows costs underlying the obligations (resulting from changes or expansion at the facilities) require adjustment to the ARO liability calculated and are capitalized and charged as depreciation expense, in accordance with our depreciation policy.

Accrued Environmental Liabilities. We have three remediation projects in progress (all within discontinued operations). The current and long-term accrual amounts for the projects are our best estimates based on proposed or approved processes for clean-up. The circumstances that could affect the outcome range from new technologies that are being developed every day to reduce our overall costs, to increased contamination levels that could arise as we complete remediation which could increase our costs, neither of which we anticipate at this time. In addition, significant changes in regulations could adversely or favorably affect our costs to remediate existing sites or potential future sites, which cannot be reasonably quantified (See “Environmental Contingencies” below for further information of these liabilities).

Disposal/Transportation Costs. We accrue for waste disposal based upon a physical count of the waste at each facility at the end of each accounting period. Current market prices for transportation and disposal costs are applied to the end of period waste inventories to calculate the disposal accrual. Costs are calculated using current costs for disposal, but economic trends could materially affect our actual costs for disposal. As there are limited disposal sites available to us, a change in the number of available sites or an increase or decrease in demand for the existing disposal areas could significantly affect the actual disposal costs either positively or negatively.

Stock-Based Compensation.We account for stock-based compensation granted to employees in accordance with ASC 718, “Compensation – Stock Compensation.” Stock-based payment transactions for acquiring goods and services from nonemployees (consultants) are also accounted for under ASC 718 resulting from the adoption of ASU No. 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” by the Company effective January 1, 2019. ASC 718 requires stock-based payments to employees and nonemployees, including grant of options, to be recognized in the Statement of Operations based on their fair values. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards which requires subjective assumptions. Assumptions used to estimate the fair value of stock-based awards include the exercise price of the award, the expected term, the expected volatility of our stock over the stock-based award’s expected term, the risk-free interest rate over the award’s expected term, and the expected annual dividend yield. The Company accounts for forfeitures when they occur.

Income Taxes.The provision for income tax is determined in accordance with ASC 740, “Income Taxes.” WeAs part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. We record this amount as a provision or benefit for taxes. This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, and assessing temporary differences resulting from different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities.

We assess the likelihood that ourregularly review deferred  tax assets by jurisdiction to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be recovered fromrealized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of  tax planning strategies. A change in these assumptions could cause an increase or decrease to the extentvaluation allowance which could materially impact our results of operations. 

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Recent Accounting Pronouncements

See “Item 8 – Financial Statements and Supplementary Data” – Notes to Consolidated Financial Statements” – Note 2 – Summary of Significant Accounting Policies” for the recent accounting pronouncements that we believe recovery is not likely, we establish a valuation allowance.

As ofhave been adopted during the year ended December 31, 2019, we had net deferred tax assets of approximately $9,106,000 (which excludes a deferred tax liability relating to goodwill and indefinite lived intangible assets) which were primarily related to federal and state net NOL carryforwards, impairment charges, and closure costs. As of December 31, 2019, we concluded that it was more likely than not that $9,106,000 of our deferred income tax assets would not2022, or will be realized, and as such, a full valuation allowance was applied against those deferred income tax assets. Our net operating losses are subject to audit by the Internal Revenue Services, and, as a result, the amounts could be reduced.adopted in future periods.

As of December 31, 2019, we have approximately $20,548,000 and $57,809,000 in NOL carryforwards for federal and state income tax purposes, respectively, which will expire in various amounts starting in 2021 if not used against future federal and state income tax liabilities, respectively. Approximately $12,199,000 of our federal NOL carryforwards were generated after December 31, 2017 and thus do not expire. Our net loss carryforwards are subject to various limitations. Our ability to use the net loss carryforwards depends on whether we are able to generate sufficient income in the future years.

Known Trends and Uncertainties

 

Economic Conditions.Our business continues to be heavily dependent on services that we provide to governmental clients, (includingprimarily as subcontractors for others who are prime contractors to government authorities (particularly the U.S. Department of Energy (“DOE”)DOE and U.S. Department of Defense (“DOD”))DOD) or directly as the prime contractor or indirectly for others as a subcontractor to government authorities.contractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including without limitation, the economic conditions, and the manner in which the government entity will be required to spend funding to remediate various sites.sites, and potential COVID-19 impact. In addition, our U.S. governmental contracts and subcontracts relating to activities at governmental sites are generally subject to termination or renegotiation on 30 days noticefor convenience at any time at the government’s option. Theoption of the government. Our TOAs with the Canadian government generally providealso provided that the government may terminate a TOA at any time for convenience. Significant reductions in the level of governmental funding or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flows.

Significant Customers. Our Treatment and Services Segments have significant relationships with the U.S and Canadian governmental authorities and continue to enterthrough contracts entered into contracts,indirectly as subcontractors for others who are prime contractors or directly as the prime contractor or indirectly for others as a subcontractor to government authorities. We also had significant relationships with Canadian government authorities primarily through TOAs entered into with Canadian government authorities. Project work under TOAs with Canadian government authorities has substantially been completed. Our inability to continue under existing contracts that we have with the U.S federal government and Canadian government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition.

We performed services relating to waste generated by government clients (domestic and foreign (primarily Canadian)), either directly as a prime contractor or indirectly for others as a subcontractor to government entities, representing approximately $59,985,000,$60,030,000, or 81.7%85.0%, of our total revenue during 2019,2022, as compared to $35,944,000,$60,812,000, or 72.6%84.2%, of our total revenue during 2018.2021.

As ourOur revenues are project/event based where the completion of one contract with a specific customer may be replaced by another contract with a different customer from year to year, we do not believeyear.

Perma-Fix Canada, Inc. (“PF Canada”)

During the lossfourth quarter of one specific customer2021, PF Canada received a Notice of Termination (“NOT”) from one year toCanadian 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 next will generally have a material adverse effect on our operationsTOA was substantially completed and financial condition.

Coronavirus Impact.work under the TOA has since been completed. CNL may terminate the TOA at any time for convenience. As of December 31, 2022, PF Canada has approximately $1,853,000 in unpaid receivables due from CNL as a result of work performed under the Coronavirus, we have been informedTOA. Additionally, CNL has approximately $1,060,000 in contractual holdback under the TOA that is payable to PF Canada. CNL also established a bond securing approximately $1,900,000 (CAD) to cover certain field projectsissues raised in connection with the TOA. Under the TOA, CNL may be entitled to set off certain costs and expenses incurred by CNL in connection with the termination of the TOA, including the bond as discussed above, against amounts owed to PF Canada for remediation work are being suspended until further noticeperformed by PF Canada or its subcontractors. PF Canada continues to be in discussions with CNL to finalize the amounts due to precautions associated withPF Canada under the riskTOA and continues to believe these amounts are due and payable to PF Canada.

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Supply Chain. We use various commercially available materials and supplies which include among other things chemicals, containers/drums and PPE in our operations. We generally source these items from various suppliers in order to take advantage of potential virus spreadcompetitive pricing.

We also utilize various types of equipment, which include among staffother things trucks, flatbeds, lab equipment, heavy machineries, in carrying out our business operations. Our equipment may be obtained through direct purchase, rental option or leases. Due to some of our specialized waste treatment processes, certain equipment that we utilize are designed and client. Additionally, at this time, certain customers have delayedbuilt to our specifications. We rely on various commercial equipment suppliers for the construction of these equipment. Due to supply chain challenges, we previously experienced a delay in the delivery of a new waste shipmentsprocessing unit to us intoby our supplier due to shortage of parts required for the second quarterconstruction of 2020 that were originally scheduledthe unit, among other things, This supply chain interruption delayed deployment of our new technology which negatively impacted our revenue for 2021 and the first quarter of 2020. In2022 as associated revenue was not able to be generated. Deployment of this unit commenced in mid-May of 2022. Continued increases in pricing and/or potential delays in procurements of material and supplies and equipment required for our operations resulting from further tightening supply chain could further adversely affect our operations and profitability.

Inflation and Cost Increases. Continued increases in any of our operating costs, including further changes in fuel prices, wage rates, supplies, and utility costs, may further increase our overall cost of goods sold or operating expenses. Some of these cost increases have been the eventresult of inflationary pressures that work is suspended or halted oncould further remediation projects and/or waste shipments fromreduce profitability. We may attempt to increase our clients are further suspended or halted, such impact couldsales prices in order to maintain satisfactory margin; however, competitive pressures in our industry may have a material impactthe effect of inhibiting our ability to reflect these increased costs in the prices of our services that we provide to our results of operation. Additionally, the Company may, among other things, temporarily cease/limit waste treatment operations and/or temporarily cease/limit field project operations duecustomers and therefore reduce our profitability.

Liquidity. See above discussion contained herein as to the Coronavirus.issues relating to “Liqudity” and efforts to improve our liquidity

Recent Accounting Pronouncements

Related Party Transactions

See “Note 2 – Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” for the recent accounting pronouncements that have been adopted during the year ended December 31, 2019, or will be adopted in future periods.

Environmental Contingencies

We are engaged in the waste management services segmenta discussion of the pollution control industry. As a participantCompany’s related party transactions in the on-site treatment, storage“Item 8 – Financial Statements and disposal market and the off-site treatment and services market, we are subjectSupplementary Data – Notes to rigorous federal, state and local regulations. These regulations mandate strict compliance and therefore are a cost and concern to us. Because of their integral role in providing quality environmental services, we make every reasonable attempt to maintain complete compliance with these regulations; however, even with a diligent commitment, we, along with many of our competitors, may be required to pay fines for violations or investigate and potentially remediate our waste management facilities.

We routinely use third party disposal companies, who ultimately destroy or secure landfill residual materials generated at our facilities or at a client’s site. In the past, numerous third-party disposal sites have improperly managed waste and consequently require remedial action; consequently, any party utilizing these sites may be liable for some or all of the remedial costs. Despite our aggressive compliance and auditing procedures for disposal of wastes, we could further be notified, in the future, that we are a potentially responsible party (“PRP”) at a remedial action site, which could have a material adverse effect.

We have three remediation projects, which are currently in progress at our PFD, PFM (closed location), and PFSG (in closure status) subsidiaries. We divested PFD in 2008; however, the environmental liability of PFD was retained by us upon the divestiture of PFD. These remediation projects principally entail the removal/remediation of contaminated soil and, in most cases, the remediation of surrounding ground water. The remediation activities are closely reviewed and monitored by the applicable state regulators. While no assurances can be made that we will be able to do so, we expect to fund the expenses to remediate these sites from funds generated internally.

At December 31, 2019, we had total accrued environmental remediation liabilities of $927,000, an increase of $40,000 from the December 31, 2018 balance of $887,000. The net increase represents an increase of approximately $50,000 made to the reserve at our PFM subsidiary due to reassessment of the remediation reserve and payments of approximately $10,000 on remediation projects for our PFD subsidiary. At December 31, 2019, $817,000 of the total accrued environmental liabilities was recorded as current.

Consolidate Financial Statements – Note 18 – Related Party Transactions and Note 20 – Subsequent Events – Executive Compensation - MIPs.”

David Centofanti

David Centofanti serves as our Vice President of Information Systems. For such position, he received annual compensation of $177,000 and $173,000 for 2019 and 2018, respectively. David Centofanti is the son of Dr. Louis Centofanti, our Executive Vice President (“EVP”) of Strategic Initiatives and a Board of Director (“Board”) member. We believe the compensation received by David Centofanti for his technical expertise which he provides to us is competitive and comparable to compensation we would have to pay to an unaffiliated third party with the same technical expertise.

Employment Agreements

We entered into employment agreements with each of Mark Duff (President and Chief Executive Officer (“CEO”)), Ben Naccarato (Chief Financial Officer (“CFO”)), and Dr. Louis Centofanti, (EVP of Strategic Initiatives), with each employment dated September 8, 2017. Each of the employment agreements is effective for three years from September 8, 2017 (the “Initial Term”) unless earlier terminated by us or by the executive officer. At the end of the Initial Term of each employment agreement, each employment agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, we or the executive officer provides written notice not to extend the terms of the employment agreement. Each employment agreement provides for annual base salaries, performance bonuses (as provided in the Management Incentive Plan (“MIP”) as approved by our Board, and other benefits commonly found in such agreements. In addition, each employment agreement provides that in the event the executive officer terminates his employment for “good reason” (as defined in the agreements) or is terminated by us without cause (including the executive officer terminating his employment for “good reason” or is terminated by us without cause within 24 months after a Change in Control (as defined in the agreement)), we will pay the executive officer the following: (a) a sum equal to any unpaid base salary; (b) accrued unused vacation time and any employee benefits accrued as of termination but not yet been paid (“Accrued Amounts”); (c) two years of full base salary; and (d) two times the performance compensation (under the MIP) earned with respect to the fiscal year immediately preceding the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the date of termination has not been paid. If performance compensation earned with respect to the fiscal year immediately preceding the date of termination has been made to the executive officer, the executive officer will be paid an additional year performance compensation earned with respect to the fiscal year immediately preceding the date of termination. If the executive terminates his employment for a reason other than for good reason, we will pay to the executive the amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP.

If there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase our Common Stock held by the executive officer will immediately become exercisable in full commencing on the date of termination through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase our Common Stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event of an executive officer terminating his employment for “good reason” or is terminated by us without cause, all outstanding stock options to purchase our Common Stock held by the executive officer will immediately become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’s date of termination.

MIPs

On January 17, 2019, our Board and the Compensation and Stock Option Committee (the “Compensation Committee”) approved individual MIP for the CEO, CFO, and EVP of Strategic Initiatives. Each MIP is effective January 1, 2019 and applicable for the year ended December 31, 2019. Each MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the executive’s annual 2019 base salary on the approval date of the MIP. The potential target performance compensation ranges from 5% to 150% of the 2019 base salary for the CEO ($14,350 to $430,500), 5% to 100% of the 2019 base salary for the CFO ($11,762 to $235,231), and 5% to 100% of the 2019 base salary for the EVP of Strategic Initiatives ($11,449 to $228,985). The amount payable under the 2019 MIP was approximately $110,700, $81,100, and $78,900, for the CEO, CFO, and EVP of Strategic Initiatives, respectively, which we anticipate will be paid in April 2020.

On January 16, 2020, our Board and the Compensation Committee approved individual MIP for each Mark Duff, CEO and President, Ben Naccarato, CFO, and Dr. Louis Centofanti, EVP of Strategic Initiatives. Additionally, the Board and the Compensation Committee approved a MIP for Andy Lombardo, who was elected EVP of Nuclear and Technical Services and an executive officer of the Company. Mr. Lombardo previously held the position of Senior Vice President (“SVP”) of Nuclear and Technical Services. The MIPs are effective January 1, 2020 and applicable for year ended December 31, 2020. Each MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the executive’s 2020 annual base salary (see below for salary of each executive officers for 2020). The potential target performance compensation ranges from 5% to 150% of the base salary for the CEO ($17,220 to $516,600), 5% to 100% of the base salary for the CFO ($14,000 to $280,000), 5% to 100% of the base salary for the EVP of Strategic Initiatives ($11,667 to $233,336) and 5% to 100% of the base salary for the EVP of Nuclear and Technical Services ($14,000 to $280,000).

Salary

On January 16, 2020, the Board, with the approval of the Compensation Committee approved the following salary increase for the Company’s NEO effective January 1, 2020:

Annual base salary for Mark Duff, CEO and President, was increased to $344,400 from $287,000.
Annual base salary for Ben Naccarato, who was promoted to EVP and CFO from VP and CFO, was increased to $280,000 from $235,231; and
Annual base salary for Andy Lombardo, who was elected to EVP of Nuclear and Technical Services as discussed above, was increased to $280,000 from $258,662, which was the annual base salary that Mr. Lombardo was paid as SVP of Nuclear and Technical Services and prior to his election as an executive officer of the Company by the Board.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required under Regulation S-K for smaller reporting companies.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking Statements

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

demand for our services;
continue to focus on expansion into both commercialreductions and international markets to increase revenues;
Improve revenue and liquidity and increase shareholder values
reductionsimprovement in the level of government funding in future years;

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reducing operating costs and non-essential expenditures;
ability to meet loan agreement quarterly financial covenant requirements;
funding of cash flow requirements;
Canadian receivables;
sufficient liquidity to continue business;
future results of operations and liquidity;
R&D activity of our Medical Segment;increasing liquidity;
reducing operating costs;
full implementation of our strategic plan;
expect to meet our financial covenant requirements in the next twelve months;
cash flow requirements;
release of remaining $250,000 reduction in borrowing availability by lender;
government funding for our services;
implementation of strategic plan to help improve our results and liquidity;
may not have liquidity to repay debt if our lender accelerates payment of our borrowings;
our cash flows from operations, our available liquidity from our credit facility, and cash on hand are sufficient to service our operations;
manner in which the applicable government will be required to spend funding to remediate federalvarious sites;
audit by the Internal Revenue Services of our net operating losses;funding operations;
capital expenditures;continued increases in pricing and/or further tightening supply chain;
fund capital expenditures from cash from operations and/or financing;
fund remediation expenditures for sitesimpact from funds generated internally;COVID-19 and economic conditions;
continue improvement in waste receipts and project work;
submitted bid;
ownership percentage interest upon finalization of partnership agreement;
investment requirement upon finalization of joint venture;
positive trends;
compliance with environmental laws, rules and regulations;
future environmental policies affecting operations;
potential effect of being a PRP;
subject to fines and civil penalties in connection with violations of regulatory requirements;
large businesses are more willing to team with small businesses;
permit and license requirements represent a potential barrier to entry for possible competitors;
process backlog during periods of low waste receipts,which historically has been in the first and fourth quarters;
potential sites for violations of environmental laws and remediation of our facilities;
ERC refund;
future price increases;
sales prices; and
continuation of contracts with government authorities;
loss of contracts;
net loss carryforwards;
temporarily cease/limit waste treatment operations and/or field project operations due to the Coronavirus;
suspend project work and wate shipments by clients;
necessary capital for Medical Segment; and
disposal of our waste;federal government.

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

general economic conditions;
contract bids, including international markets;
material reduction in revenues;
inability to meet PNC covenant requirements;
inability to collect in a timely manner a material amount of receivables;
increased competitive pressures;
inability to maintain and obtain required permits and approvals to conduct operations;
public not accepting our new technology;
inability to develop new and existing technologies in the conduct of operations;

inability to maintain and obtain closure and operating insurance requirements;
inability to retain or renew certain required permits;
discovery of additional contamination or expanded contamination at any of the sites or facilities leased or owned by us or our subsidiaries which would result in a material increase in remediation expenditures;
delays at our third-party disposal site can extend collection of our receivables greater than twelve months;
refusal of third-party disposal sites to accept our waste;
changes in federal, state and local laws and regulations, especially environmental laws and regulations, or in interpretation of such;
requirements to obtain permits for TSD activities or licensing requirements to handle low level radioactive materials are limited or lessened;

31

potential increases in equipment, maintenance, operating or labor costs;
management retention and development;
financial valuation of intangible assets is substantially more/less than expected;
the requirement to use internally generated funds for purposes not presently anticipated;
inability to continue to be profitable on an annualized basis;
inability of the Company to maintain the listing of its Common Stock on the NASDAQ;
terminations of contracts with government agencies (domestic and foreign) or subcontracts involving government agencies (domestic or foreign), or reduction in amount of waste delivered to the Company under the contracts or subcontracts;
renegotiation of contracts involving government agencies (domestic and foreign);agencies;
federal government’s inability or failure to provide necessary funding to remediate contaminated federal sites;
disposal expense accrual could prove to be inadequate in the event the waste requires re-treatment;
inability to raise capital on commercially reasonable terms;
inability to increase profitable revenue;
impact of the Coronavirus;COVID-19 and economic uncertainties;
new governmental regulations;
lender refuses to waive non-compliance or revise our covenant so that we are in compliance; and
continued supply chain interruptions;
continued inflationary pressures;
recession;
challenge by regulatory authorities of our claim to the ERC; and
risk factors contained in Item 1A of this report.

3632
 


ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

 

Consolidated Financial StatementsPage No.
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)3834
Consolidated Balance Sheets as of December 31, 20192022 and 201820213936
Consolidated Statements of Operations for the years ended December 31, 20192022 and 201820214138
Consolidated Statements of Comprehensive (Loss) Income (Loss) for the years ended December 31, 20192022 and 201820214239
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 20192022 and 201820214340
Consolidated Statements of Cash Flows for the years ended December 31, 20192022 and 201820214441
Notes to Consolidated Financial Statements4542

 

Financial Statement Schedules

 

In accordance with the rules of Regulation S-X, schedules are not submitted because they are not applicable to or required by the Company.

33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Perma-Fix Environmental Services, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Perma-Fix Environmental Services, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 20192022 and 2018,2021, the related consolidated statements of operations, comprehensive (loss) income, (loss), stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20192022 and 2018,2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in accounting principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019, due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition for certain revenue contracts

As described further in note 2 to the financial statements, the Company has certain fixed price contracts that are long term in nature with non-standard terms. These terms and contract modifications impact revenue recognition and require significant effort and judgement by management. We have identified revenue recognition for these contracts as a critical audit matter.

The principal considerations for our determination that revenue recognition for these contracts is a critical audit matter are that there is a considerable auditor effort and judgement required to analyze and evaluate contracts for the types of terms and conditions that impact revenue recognition.

34

Our audit procedures related to the revenue recognition for these contracts included the following, among others.

We obtained and inspected a selection of long-term, non-standard contracts and modifications and amendments to understand the terms and conditions and the related impact on revenue recognition, specifically the identification of:
contract term,
performance obligations, and
determination of the measure of progress.
We obtained the detail of underlying costs for each project and tested the underlying accuracy of the data by agreeing to supporting documentation.
We utilized the cost data to recalculate management’s measure of completion for selected projects under the input method.
We performed a retrospective review using contracts, which were tested through prior year procedures and completed during the current year, to evaluate management’s ability to accurately budget for input method contracts.
We evaluated the appropriateness of the recording of revenue for both billed and unbilled amounts related to these contracts.

Realizability of deferred tax assets

As described further in note 14 to the financial statements, deferred tax assets are reduced by a valuation allowance if, based on the evaluation of positive and negative evidence, in management’s judgment it is more likely than not that some portion or all, of the deferred tax assets will not be realized. During the year ended December 31, 2022, management concluded that sufficient positive evidence exists to ensure the realizability of the US federal deferred tax assets.

The principal considerations for our determination that the realizability of US federal deferred tax assets is a critical audit matter are that the projected financial information related to the profitability of the Company which is reliant on the ability to predict future revenue is subject to significant management judgments in determining whether the net deferred tax assets are more likely than not to be realized in the future, which in turn led to a high degree of auditor judgement and effort in performing procedures and evaluating audit evidence related to management’s assessment of the realization of deferred tax assets.

Our audit procedures related to the realizability of US federal deferred tax assets included the following, among others.

We evaluated the positive and negative evidence available to support management’s assessment of the realizability of the assets
We tested the completeness and accuracy of the underlying data used in management’s assessment
We evaluated the prospective financial information related to future profitability including consideration of:
the current and past performance of the Company
the consistency with external market and industry data
the consistency with evidence obtained in other areas.

 

/s/GRANT THORNTON LLP

 

We have served as the Company’s auditor since 2014.

Atlanta, Georgia

March 20, 202023, 2023

3835
 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

As of December 31,

 

 2022 2021 
(Amounts in Thousands, Except for Share and Per Share Amounts) 2019 2018  2022 2021 
          
ASSETS               
Current assets:               
Cash $390  $810  $1,866  $4,440 
Accounts receivable, net of allowance for doubtful accounts of $487 and $105, respectively  13,178  7,735 
Accounts receivable, net of allowance for credit losses of $57 and $85, respectively  9,364   11,372 
Unbilled receivables  7,984  3,105   6,062   8,995 
Inventories  487  449   814   680 
Prepaid and other assets  2,983  2,552   5,405   4,472 
Current assets related to discontinued operations  104   107   15   15 
Total current assets  25,126  14,758   23,526   29,974 
               
Property and equipment:               
Buildings and land  19,967  19,782   24,021   20,631 
Equipment  20,068  19,157   21,242   22,131 
Vehicles  410  369   442   443 
Leasehold improvements  23  23   23   23 
Office furniture and equipment  1,418  1,551   1,299   1,316 
Construction-in-progress  1,609   1,389   727   2,997 
Total property and equipment  43,495  42,271   47,754   47,541 
Less accumulated depreciation  (26,919)  (26,532)  (28,797)  (28,932)
Net property and equipment  16,576  15,739   18,957   18,609 
               
Property and equipment related to discontinued operations  81  81   81   81 
               
Operating lease right-of-use assets  2,545   —   1,971   2,460 
               
Intangibles and other long term assets:               
Permits  8,790  8,443   9,610   9,476 
Other intangible assets - net  1,065  1,278   629   894 
Finite risk sinking fund (restricted cash)  11,307  15,971   11,570   11,471 
Deferred tax assets  4,116   3,527 
Other assets  989  1,054   438   809 
Other assets related to discontinued operations  36   118 
Total assets $66,515  $57,442  $70,898  $77,301 

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

3936
 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS, CONTINUED

As of December 31,

 

(Amounts in Thousands, Except for Share and per Share Amounts) 2019 2018  2022 2021 
          
LIABILITIES AND STOCKHOLDERS’ EQUITY             
Current liabilities:             
Accounts payable $9,277  $5,497  $10,325  $11,975 
Accrued expenses 6,118 5,014   4,593   5,078 
Disposal/transportation accrual 1,156 1,542   887   1,065 
Deferred revenue 5,456 6,595   4,813   5,580 
Accrued closure costs - current 84 1,142   682   578 
Current portion of long-term debt 1,300 1,184   476   393 
Current portion of operating lease liabilities 244  —   416   406 
Current portion of finance lease liabilities 471 181   154   333 
Current liabilities related to discontinued operations  994   356   362   506 
Total current liabilities 25,100 21,511   22,708   25,914 
             
Accrued closure costs 5,957 5,608   7,284   6,613 
Other long-term liabilities  255 
Deferred tax liabilities 590 586 
Long-term debt, less current portion 2,580 2,118   563   600 
Long-term operating lease liabilities, less current portion 2,342    1,584   2,029 
Long-term finance lease liabilities, less current portion 466 268   318   884 
Long-term liabilities related to discontinued operations  244   963   908   677 
Total long-term liabilities  12,179   9,798   10,657   10,803 
             
Total liabilities 37,279 31,309   33,365   36,717 
             
Commitments and Contingencies (Note 14)     
Commitments and Contingencies (Note 16)  -   - 
             
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; 12,123,520 and 11,944,215 shares issued, respectively; 12,115,878 and 11,936,573 shares outstanding, respectively 12 12 
        
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; 13,332,398 and 13,222,552 shares issued, respectively; 13,324,756 and 13,214,910 shares outstanding, respectively  13   13 
Additional paid-in capital 108,457 107,548   115,209   114,307 
Accumulated deficit (77,315) (79,630)  (77,436)  (73,620)
Accumulated other comprehensive loss (211) (214)  (165)  (28)
Less Common Stock in treasury, at cost; 7,642 shares  (88)  (88)  (88)  (88)
Total Perma-Fix Environmental Services, Inc. stockholders’ equity 30,855 27,628 
Non-controlling interest  (1,619)  (1,495)
Total stockholders’ equity  29,236   26,133   37,533   40,584 
             
Total liabilities and stockholders’ equity $66,515  $57,442  $70,898  $77,301 

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

4037
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31,

 

  2022 2021 
(Amounts in Thousands, Except for Per Share Amounts) 2019 2018  2022 2021 
          
Net revenues $73,459  $49,539  $70,599  $72,191 
Cost of goods sold  57,875   41,078   60,990   65,367 
Gross profit 15,584 8,461   9,609   6,824 
             
Selling, general and administrative expenses 11,862 10,741   14,652   12,845 
Research and development 750 1,370   336   746 
Loss (gain) on disposal of property and equipment  3   (46)
Income (loss) from operations 2,969 (3,604)
Loss on disposal of property and equipment  18   2 
Loss from operations  (5,397)  (6,769)
             
Other income (expense):             
Interest income 337 295   99   26 
Interest expense (432) (251)  (175)  (247)
Interest expense-financing fees (208) (38)  (61)  (41)
Other 223 (8)
Net gain on exchange offer of Series B Preferred Stock of subsidiary (Note 8)   —   1,596 
Income (loss) from continuing operations before taxes 2,889 (2,010)
Income tax expense (benefit)  157   (936)
Income (loss) from continuing operations, net of taxes 2,732 (1,074)
Other (Note 11)  1,945   (86)
Gain on extinguishment of debt (Note 11)     5,381 
Loss on deconsolidation of subsidiary (Note 15)     (1,062)
Loss from continuing operations before taxes  (3,589)  (2,798)
Income tax benefit  (378)  (3,890)
(Loss) income from continuing operations, net of taxes  (3,211)  1,092 
             
Loss from discontinued operations, net of taxes of $0  (541)  (667)
Net income (loss) 2,191 (1,741)
Loss from discontinued operations (Note 9)  (605)  (421)
Net (loss) income  (3,816)  671 
             
Net loss attributable to non-controlling interest  (124)  (320)     (164)
             
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders $2,315  $(1,421)
Net (loss) income attributable to Perma-Fix Environmental Services, Inc. common stockholders $(3,816) $835 
             
Net income (loss) per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic and diluted:     
Net (loss) income per common share attributable to Perma-Fix Environmental Services, Inc. stockholders - basic and diluted:        
Continuing operations $.24 $(.06) $(.24) $.10 
Discontinued operations  (.05)  (.06)  (.05)  (.03)
Net income (loss) per common share $.19  $(.12)
Net (loss) income per common share $(.29) $.07 
             
Number of common shares used in computing net income (loss) per share:     
Number of common shares used in computing net (loss) income per share:        
Basic 12,046 11,855   13,280   12,433 
Diluted 12,060 11,855   13,280   12,673 

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

4138
 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (LOSS)

For the years ended December 31,

       
(Amounts in Thousands) 2019  2018 
       
Net Income (loss) $2,191  $(1,741)
Other comprehensive income (loss):        
Foreign currency translation adjustments  3   (102)
Total other comprehensive income (loss)  3   (102)
         
Comprehensive income (loss)  2,194   (1,843)
Comprehensive loss attributable to non-controlling interest  (124)  (320)
Comprehensive income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders $2,318  $(1,523)
(Amounts in Thousands) 2022  2021 
(Amounts in Thousands) 2022  2021 
       
Net (loss) income $(3,816) $671 
Other comprehensive (loss) income:        
         
Foreign currency translation reclass to loss on deconsolidation of subsidiary (Note 15)     148 
Foreign currency translation adjustments  (137)  31 
Total other comprehensive (loss) income  (137)  179 
Comprehensive (loss) income  (3,953)  850 
Comprehensive loss attributable to non-controlling interest     (164)
Comprehensive (loss) income attributable to Perma-Fix Environmental Services, Inc. common stockholders $(3,953) $1,014 

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

 

4239
 

PERMA-FIX ENVIRONMENTAL SERVICES, INCINC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the years ended December 31,

(Amounts in Thousands, Except for Share Amounts)

 

  Common Stock  Additional Paid-  Common Stock Held In  Accumulated Other Comprehensive  Non-controlling Interest in  Accumulated  Total Stockholders’ 
  Shares  Amount  In Capital  Treasury  Loss  Subsidiary  Deficit  Equity 
                         
Balance at December 31, 2017  11,738,623  $12  $106,417  $(88) $(112) $(1,175) $(77,893) $27,161 
Adoption of accounting standards                    (316)  (316)
Net income (loss)                 (320)  (1,421)  (1,741)
Foreign currency translation              (102)        (102)
Issuance of Common Stock upon exercise of options  10,000      36               36 
Issuance of Common Stock from exchange offer of Series B Preferred Stock of subsidiary  134,994      648               648 
Issuance of Common Stock for services  60,598      249               249 
Stock-Based Compensation        198               198 
Balance at December 31, 2018  11,944,215  $12  $107,548  $(88) $(214) $(1,495) $(79,630) $26,133 
Net income (loss)                 (124)  2,315   2,191 
Foreign currency translation              3         3 
Issuance of Common Stock for services  71,905      241               241 
Stock-Based Compensation        179               179 
Issuance of Common Stock with debt  75,000      263               263 
Issuance of warrant with debt        93               93 
Issuance of Common Stock upon exercise of options  32,400      133               133 
Balance at December 31, 2019  12,123,520  $12  $108,457  $(88) $(211) $(1,619) $(77,315) $29,236 
  Shares  Amount  Capital  Treasury  Income  Subsidiary  Deficit  Equity 
  Common Stock  Additional
Paid-In
  Common Stock Held In  Accumulated
Other
Comprehensive
  Non-controlling
Interest in
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Capital  Treasury  Income  Subsidiary  Deficit  Equity 
Balance at December 31, 2020  12,161,539  $12  $108,931  $(88) $(207) $(1,742) $(74,455) $32,451 
Net (loss) income                     (164)  835   671 
Foreign currency translation              31         31 
Deconsolidation of subsidiary (Note 15)        (1,004)     148   1,906      1,050 
Issuance of Common Stock for services  60,723      427               427 
Stock-Based Compensation        250               250 
Issuance of Common Stock upon exercise of options  290                      
Sale of Common Stock, net of  offering costs (Note 7)  1,000,000   1   5,703               5,704 
Balance at December 31, 2021  13,222,552  $13  $114,307  $(88) $(28) $   (73,620) $40,584 
Net loss                    (3,816)  (3,816)
Foreign currency translation              (137)        (137)
Issuance of Common Stock for services  90,920      481               481 
Stock-Based Compensation        408               408 
Issuance of Common Stock upon exercise of options  18,926      13               13 
Balance at December 31, 2022  13,332,398  $13  $115,209  $(88) $(165) $  $(77,436) $37,533 

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

 

43

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

(Amounts in Thousands) 2019  2018 
Cash flows from operating activities:        
Net income (loss) $2,191  $(1,741)
Less: loss on discontinued operations, net of taxes of $0 (Note 9)  (541)  (667)
         
Income (loss) from continuing operations  2,732   (1,074)
Adjustments to reconcile net income (loss) from continuing operations to cash provided by operating activities:        
Depreciation and amortization  1,342   1,455 
Interest on finance lease with purchase option  3    ── 
Amortization of debt issuance/debt discount costs  208   35 
Deferred tax expense (benefit)  4   (1,108)
Provision for bad debt reserves  386   66 
Loss (gain) on disposal of property and equipment  3   (46)
Gain on exchange offer of Series B Preferred Stock of subsidiary (Note 8)   ──   (1,659)
Issuance of common stock for services  241   249 
Stock-based compensation  179   198 
Changes in operating assets and liabilities of continuing operations:        
Accounts receivable  (5,829)  139 
Unbilled receivables  (4,879)  1,626 
Prepaid expenses, inventories and other assets  923   1,932 
Accounts payable, accrued expenses and unearned revenue  664   765 
Cash (used in) provided by continuing operations  (4,023)  2,578 
Cash used in discontinued operations  (660)  (618)
Cash (used in) provided by operating activities  (4,683)  1,960 
         
Cash flows from investing activities:        
Purchases of property and equipment  (1,535)  (1,432)
Proceeds from sale of property and equipment  2   47 
Cash used in investing activities of continuing operations  (1,533)  (1,385)
Cash provided by investing activities of discontinued operations  121   67 
Cash used in investing activities  (1,412)  (1,318)
         
Cash flows from financing activities:        
Borrowing on revolving credit  59,333   54,714 
Repayments of revolving credit borrowings  (59,651)  (54,075)
Proceeds from issuance of long-term debt  2,500   ── 
Proceeds from finance leases  405   ── 
Principal repayment of finance lease liabilities  (272)  (36)
Principal repayments of long term debt  (1,344)  (1,219)
Payment of debt issuance costs  (112)  ── 
Proceeds from issuance of common stock upon exercise of options  133   36 
Cash provided by (used in) financing activities of continuing operations  992   (580)
         
Effect of exchange rate changes on cash  19   (20)
         
(Decrease) increase in cash and finite risk sinking fund (restricted cash) (Note 2)  (5,084)  42 
Cash and finite risk sinking fund (restricted cash) at beginning of period (Note 2)  16,781   16,739 
Cash and finite risk sinking fund (restricted cash) at end of period (Note 2) $11,697  $16,781 
         
Supplemental disclosure:        
Interest paid $422  $248 
Income taxes paid  245   160 
Non-cash investing and financing activities:        
Purchase of equipment through finance lease obligation  393   545 
Common stock issued in exchange offer of Series B Preferred Stock of subsidiary (Note 8)  ──   648 
Issuance of Common Stock with debt  263   ── 
Issuance of Warrant with debt  93   ── 

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

 

4440
 

 

PERMA-FIX ENVIRONMENTAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

(Amounts in Thousands) 2022  2021 
(Amounts in Thousands) 2022  2021 
Cash flows from operating activities:        
Net (loss) income $(3,816) $671 
Less: loss on discontinued operations (Note 9)  (605)  (421)
         
(Loss) income from continuing operations  (3,211)  1,092 
Adjustments to reconcile net (loss) income from continuing operations to cash provided by (used in) operating activities:        
Depreciation and amortization  2,109   1,687 
Interest on finance lease with purchase option     7 
Loss on deconsolidation of subsidiary (Note 15)     1,062 
Gain on extinguishment of debt (Note 11)     (5,381)
Amortization of debt issuance costs  60   40 
Deferred tax benefit  (390)  (3,860)
(Recovery of) provision for credit losses on accounts receivable  (20)  26 
Loss on disposal of property and equipment  18   2 
Issuance of common stock for services  481   427 
Stock-based compensation  408   250 
Changes in operating assets and liabilities of continuing operations:        
Accounts receivable  2,028   (1,739)
Unbilled receivables  2,933   5,458 
Prepaid expenses, inventories and other assets  2,018   1,165 
Accounts payable, accrued expenses and unearned revenue  (6,270)  (6,552)
Cash provided by (used in) provided by continuing operations  164   (6,316)
Cash used in discontinued operations  (717)  (521)
Cash used in operating activities  (553)  (6,837)
         
Cash flows from investing activities:        
Purchases of property and equipment (net)  (1,023)  (1,577)
Proceeds from sale of property and equipment  26   17 
Deconsolidation of subsidiary - cash     (4)
Cash used in investing activities of continuing operations  (997)  (1,564)
         
Cash flows from financing activities:        
Borrowing on revolving credit  73,322   74,987 
Repayments of revolving credit borrowings  (73,322)  (74,987)
Proceeds from capital line  524    
Principal repayment of finance lease liabilities  (860)  (334)
Principal repayments of long term debt  (502)  (440)
Payment of debt issuance costs  (35)  (48)
(Offering costs paid)/ proceeds from sale of Common Stock, net of offering costs paid (Note 7)  (61)  5,765 
Proceeds from issuance of Common Stock upon exercise of options  13    
Cash (used in) provided by financing activities of continuing operations  (921)  4,943 
         
Effect of exchange rate changes on cash  (4)  (1)
         
Decrease in cash and finite risk sinking fund (restricted cash) (Note 2)  (2,475)  (3,459)
Cash and finite risk sinking fund (restricted cash) at beginning of period (Note 2)  15,911   19,370 
Cash and finite risk sinking fund (restricted cash) at end of period (Note 2) $13,436  $15,911 
         
Supplemental disclosure:        
Interest paid $173  $230 
Income taxes paid  6   47 
Non-cash investing and financing activities:        
Equipment purchase subject to finance lease  114   556 
Equipment purchase subject to financing     29 

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

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PERMA-FIX ENVIRONMENTAL SERVICES, INC.

Notes to Consolidated Financial Statements

December 31, 20192022 and 20182021

NOTE 1

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Perma-Fix Environmental Services, Inc. (the Company, which may be referred to as we, us, or our), an environmental and technology know-how company, is a Delaware corporation, engaged through its subsidiaries, in three reportable segments:

TREATMENT SEGMENT, which includes:

--nuclear, low-level radioactive, mixed waste (containing both hazardous and low-level radioactive constituents), hazardous and non-hazardous waste treatment, processing and disposal services primarily through threefour uniquely licensed and permitted treatment and storage facilities; and
--Research and Development (“R&D”)&D activities to identify, develop and implement innovative waste processing techniques for problematic waste streams.

SERVICES SEGMENT, which includes:

--Technical services, which include:

 

 oprofessional radiological measurement and site survey of large government and commercial installations using advanced methods, technology and engineering;
 ointegrated Occupational Safety and Health services including industrial hygiene (“IH”)IH assessments; hazardous materials surveys, e.g., exposure monitoring; lead and asbestos management/abatement oversight; indoor air quality evaluations; health risk and exposure assessments; health & safety plan/program development, compliance auditing and training services; and Occupational Safety and Health Administration (“OSHA”)OSHA citation assistance;
 oglobal technical services providing consulting, engineering, project management, waste management, environmental, and decontamination and decommissioningD&D field, technical, and management personnel and services to commercial and government customers; and
 oon-site waste management services to commercial and governmental customers.

 

-Nuclear services, which include:

 

 otechnology-based services including engineering, decontamination and decommissioning (“D&D”),&D, specialty services and construction, logistics, transportation, processing and disposal;
 oremediation of nuclear licensed and federal facilities and the remediation cleanup of nuclear legacy sites. Such services capability includes: project investigation; radiological engineering; partial and total plant D&D; facility decontamination, dismantling, demolition, and planning; site restoration; logistics; transportation; and emergency response; and

 

--A company owned equipment calibration and maintenance laboratory that services, maintains, calibrates, and sources (i.e., rental) health physics, IH and customized nuclear, environmental, and occupational safety and health (“NEOSH”)NEOSH instrumentation.
-A company owned gamma spectroscopy laboratory for the analysis of oil and gas industry solids and liquids.

MEDICAL SEGMENT, which includes: R&D of the Company’s medical isotope production technology by our majority-owned Polish subsidiary, Perma-Fix Medical S.A. and its wholly-owned subsidiary Perma-Fix Medical Corporation (“PFM Corporation”) (together known as “PF Medical” or the Medical Segment). The Company’s Medical Segment has not generated any revenue as it remains in the R&D stage and has substantially reduced its R&D costs and activities due to the need for capital to fund these activities. All costs incurred by the Medical Segment are reflected within R&D in the accompanying consolidated financial statements (see “Financial Position and Liquidity” below for further discussion of Medical Segment’s significant curtailment of its R&D costs and activities).

The Company’s continuing operations consist of the operations of our subsidiaries/facilities as follow: Diversified Scientific Services, Inc. (“DSSI”), Perma-Fix of Florida, Inc. (“PFF”), Perma-Fix of Northwest Richland, Inc. (“PFNWR”), Safety & Ecology Corporation (“SEC”), Perma-Fix Environmental Services UK Limited (“PF UK Limited”), Perma-Fix of Canada, Inc. (“PF Canada”), PF Medical and East Tennessee Materials & Energy CorporationOak Ridge Environmental Waste Operations Center (“M&EC”EWOC”).

The Company’s continuing operations also consisted of Perma-Fix ERRG, a variable interest entity (“VIE”) (facility closurefor which we were the primary beneficiary. The VIE was an unpopulated joint venture (“JV”) entered between the Company and Engineering/Remediation Resources Group, Inc. (“ERRG”) for a specific project under the Services Segment in which the Company and ERRG had a 51% and 49% partnership interest in the joint venture, respectively. During the fourth quarter of 2022, project work under the JV was completed in 2019)As of December 31, 2022, total assets and liabilities under the VIE were each $0.

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The Company’s discontinued operations (see Note 9)“Note 9 – Discontinued Operations”) consist of operations of all our subsidiaries included in our Industrial Segment which wereencompasses subsidiaries divested in 2011 and prior and three previously closed locations,locations.

For 2021, the Company’s segment also included the Medical Segment. The Medical Segment entailed the R&D of the Company’s medical isotope production technology by the Company’s majority-owned Polish subsidiary, Perma-Fix Medical S.A (“PFM Poland”), and ourPFM Poland’s wholly-owned subsidiary, Perma-Fix Medical Corporation (“PFMC”). The Company’s Medical Segment (or “PF Medical”) had not generated any revenue. During the fourth quarter of South Georgia, Inc. (“PFSG”) facility2021, the Company made the strategic decision to cease all R&D activities under the Medical Segment which isresulted in closure status.the sale of 100% of PFM Poland (See “Note 15 – PF Medical” for a discussion of this sale).

Financial PositionPositions and Liquidity

The Company’s 2022 financial results continued to be impacted by COVID-19, among other things. The Company’s Treatment Segment began to see steady improvements in waste receipts starting in the second quarter of 2022 from certain customers who had previously delayed waste shipments due, in part, from the impact of COVID-19. This positive trend was negatively impacted by occurrences of severe weather conditions which resulted in temporary delays in waste shipments from certain customers and a temporary shortage in skilled production personnel which peaked through the fourth quarter of 2022 at one of the Company’s facilities. In early part of 2022, the Company’s Services Segment continued to experience delays/curtailments in project work by certain customers since the award of projects to us late in the second quarter of 2021 due to COVID-19 impact and/or administrative delays. However, starting in the second quarter of 2022, work under these projects had resumed/increased as the pandemic impacts began to subside and has since reached full operational status.

In 2022, the Company continued to realize delays in procurement and planning on behalf of our government clients that saw easing through the second half of the year. Heading into 2023, the Company expects to see continued improvements in waste receipts and continued increases in project work from contracts recently won and bids submitted in both segments that are awaiting awards, subject to potential impact of COVID-19 and economic impacts.

The Company’s cash flow requirements during 2019the twelve months ended December 31, 2022 were primarily financed by ourits operations, cash on hand and credit facility availability, loan proceeds of $2,500,000 from a loan that we consummated on April 1, 2019 (see “Note 10 – Long Term Debt” for further information of this loan), and the receipt of the $5,000,000 in finite risk sinking funds from AIG Specialty Insurance Company (“AIG”) in July 2019 resulting from the closure of our M&EC facility (see a discussion of this finite risk sinking funds in “Note 14 – Commitment and Contingencies - Insurance”). The Company’s working capital at December 31, 2019 was approximately $26,000 as compared to a working capital deficit of $6,753,000 at December 31, 2018.

availability. The Company’s cash flow requirements for 2020 and into the first quarter of 2021next twelve months will consist primarily of general working capital needs, scheduled principal payments on ourits debt obligations, remediation projects, and planned capital expenditures. The Company plans to fund these requirements from ourits operations, credit facility availability, and cash on hand.hand and a refund that it expects to receive under the Employee Retention Credit program under the CARES Act (see a discussion of this expected refund in “Note 11 – The Coronavirus Aid, Relief, and Economic Security Act (“CARES ACT) – Employee Retention Credit (“ERC”)”). The Company continues to explore all sources of increasing its capital and/or liquidity and to improve its revenue and working capital, including either amending our existing lines of credit, obtaining new term loans or entering into equity transactions. There are no assurances that we will be successful in increasing our liquidity though these efforts. The Company is continually reviewing operating costs and is committed toreviewing the possibility of further reducing operating costs and non-essential expenditures to bring them in line with revenue levels, when necessary. As previously disclosed,At this time, the Company’s Medical Segment has not generated any revenue but continues on a limited basis to evaluate strategic options to commercialize its medical isotope production technology. These options require substantial capital to fund research and development (“R&D”) requirements, in addition to start-up and production costs. The Company’s Medical Segment has substantially reduced its R&D costs and activities due to the need for capital to fund such activities. The Company anticipatesbelieves that its Medical Segment will not resume full R&D activities until it obtains the necessary funding through obtainingcash flows from operations, available liquidity from its own credit facility, or additional equity raise or obtaining new partners willingcash on hand and the expected refund from the ERC program should be sufficient to fund its R&D activities. Ifoperations for the Medical Segment is unablenext twelve months. The Company continues to raiseclosely monitor any potential impact from the necessary capital, the Medical Segment could be required to further reduce, delay or eliminate its R&D program.countries’ economic conditions and COVID-19 pandemic on all aspects of our business.

NOTE 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

OurThe Company’s consolidated financial statements include our accounts, those of our wholly-owned subsidiaries, and our majority-owned Polish subsidiary, PF Medical,Perma-Fix ERRG, a VIE for which we were the primary beneficiary as discussed above, after elimination of all significant intercompany accounts and transactions.

On May 24, 2019, The consolidated financial statements for 2021 also included the Company and Engineering/Remediation Resources Group, Inc. (“ERRG”) entered into an unpopulated joint venture agreement for project work bids withinaccounts of the Company’s Services Segment. The joint venture is doing businessMedical Segment which was divested in December 2021 as Perma-Fix ERRG, a general partnership. Perma-Fix has a 51% partnership interest in the joint venture and ERRG has a 49% partnership interest in the joint venture. At December 31, 2019, no activities have occurred under the Perma-Fix ERRG joint venture. Once activities commence under the joint venture, Perma-Fix will consolidate the operations of Perma-Fix ERRG into the Company’s financial statements.discussed above.

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Use of Estimates

The Company prepares financial statements in conformity with accounting standards generally accepted in the United States of America (“USU.S. GAAP”), which may require estimates of future cash flows and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as, the reported amounts of revenues and expenses during the reporting period. ActualDue to the inherent uncertainty involved in making estimates, actual results could differ from those estimates. See Notes 9, 12, 13 and 14 for estimates of discontinued operations and environmental liabilities, closure costs, income taxes and contingencies for details on significant estimates.

Cash and Finite Risk Sinking Fund (Restricted Cash)

At December 31, 2019, we had cash on hand of approximately $390,000, which reflects primarily account balances of our foreign subsidiaries totaling approximately $388,000. At December 31, 2018,2022, the Company had cash on hand of approximately $810,000, which reflects primarily account balances of our foreign subsidiaries totaling approximately $806,000.$1,866,000. At December 31, 2019 and 2018,2021, the Company hashad cash on hand of approximately $4,440,000. At December 31, 2022 and 2021, the Company had finite risk sinking funds of approximately $11,307,000$11,570,000 and $15,971,000,$11,471,000, respectively, which representsrepresented cash held as collateral under the Company’s financial assurance policy (see “Note 1416 – Commitment and Contingencies – Insurance” for a discussion of this finite risk sinking fund).

Accounts Receivable

During the fourth quarter of 2022, the Company adopted ASU 2016-13, “Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments.” This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including accounts receivable. Accounts receivable are customer obligations due under normal trade terms requiring payment within 30 or 60 days from the invoice date based on the customer type (government, broker, or commercial). The carrying amountnew standard requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of accounts receivablelosses for receivbles that are current or not yet due, which were not considered under the previous accounting guidance. In accordance with ASU 2016-13, the Company’s expected loss allowance methodology for receivables is reduced by an allowance for doubtful accounts, which isdeveloped using historical collection experience, current and future economic and market conditions that may affect customers’ ability to pay, and a valuation allowance that reflects management’s best estimatereview of the amounts that will not be collected.current status of customers’ accounts receivables. The Company regularly reviews all accounts receivable balances that exceed 60 days from the invoice date and based on an assessment of currentdoes not apply a credit worthiness, estimates the portion, if any, of the balance that will not be collected. This analysis excludesloss allowance to government related receivables due to our past successful experience in their collectability. SpecificThe Company’s monitoring activities include routine follow-up on past due accounts that are deemed to be uncollectible are reserved at 100%and consideration of their outstanding balance. The remaining balances aged over 60 days have a percentage applied by aging category, based on historical experience that allows us to calculate the total allowance required.customers’ financial conditions. Once the Company has exhausted all options in the collection of a delinquent accounts receivable balance, which includes collection letters, demands for payment, collection agencies and attorneys, the account is deemed uncollectible and subsequently written off. The write off process involves approvals from senior management based on required approval thresholds.

The following table sets forth the activity in the allowance for doubtful accountscredit losses for the years ended December 31, 20192022 and 20182021 (in thousands):

SCHEDULE OF CREDIT LOSSES FOR FINANCING RECEIVABLES, CURRENT

  Year Ended December 31, 
  2019  2018 
Allowance for doubtful accounts - beginning of year $105  $720 
Provision for bad debt reserve  386   66 
Write-off  (4)  (681)
Allowance for doubtful accounts - end of year $487  $105 
         
  Year Ended December 31, 
  2022  2021 
Allowance for credit losses - beginning of year $85  $404 
(Recovery of) provision charges  (21)  41 
Write-off  (7)  (360)
Allowance for credit losses - end of year $57  $85 

Unbilled Receivables

Unbilled receivables are generated by differences between invoicing timing and our proportional performance-basedover time revenue recognition methodology used for revenue recognition purposes. As major processing and contract completion phases are completed and the costs are incurred, the Company recognizes the corresponding percentage of revenue. Within our Treatment Segment, the facilities experience delays in processing invoices due to the complexity of the documentation that is required for invoicing, as well as the difference between completion of revenue recognition milestones and agreed upon invoicing terms, which results in unbilled receivables. The timing differences occur for several reasons which include: partially from delays in the final processing of all wastes associated with certain work orders and partially from delays for analytical testing that is required after the facilities have processed waste but prior to our release of waste for disposal. The tasks relating to these delays can take months to complete but are generally completed within twelve months.

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Unbilled receivables within our Services Segment can result from: (1) revenue recognized by our Earned Value Management program (a program which integrates project scope, schedule, and cost to provide an objective measure of project progress)from work performed under contracts but invoice milestones have not yet been met and/or (2) contract claims and pending change orders, including Requestsrequests for Equitable Adjustmentsequitable adjustments (“REAs”REA”) when work has been performed and collection of revenue is reasonably assured.

Inventories

Inventories

Inventories consist of treatment chemicals, saleable used oils, and certain supplies. Additionally, the Company has replacement parts in inventory, which are deemed critical to the operating equipment and may also have extended lead times should the part fail and need to be replaced. Inventories are valued at the lower of cost or marketnet realizable value with cost determined by the first-in, first-out method.

Disposal and Transportation Costs

The Company accrues for waste disposal based on the waste at each facility at the end of each accounting period. Current market prices for transportation and disposal costs are applied to the end of period waste inventories to calculate for the transportation and disposal accruals.

Property and Equipment

Property and equipment expenditures are capitalized and depreciated using the straight-line method over the estimated useful lives of the assets for financial statement purposes, while accelerated depreciation methods are principally used for income tax purposes. Generally, asset lives range from ten to forty years for buildings (including improvements and asset retirement costs) and three to seven years for office furniture and equipment, vehicles, and decontamination and processing equipment. Leasehold improvements are capitalized and amortized over the lesser of the term of the lease or the life of the asset. Maintenance and repairs are charged directly to expense as incurred. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any gain or loss from sale or retirement is recognized in the accompanying Consolidated Statements of Operations. Renewals and improvements, which extend the useful lives of the assets, are capitalized.

Certain property and equipment expenditures are financed through the use of leases. Amortization of financed leased assets is computed using the straight-line method over the estimated useful lives of the assets. At December 31, 2019,2022, assets recorded under finance leases were $1,410,000$1,201,000 less accumulated depreciation of $71,000,$549,000, resulting in net fixed assets under finance leases of $1,339,000.$652,000. At December 31, 2018,2021, assets recorded under finance leases were approximately $517,000$2,409,000 less accumulated depreciation of $8,000$475,000, resulting in net fixed assets under finance leases of $509,000.$1,934,000. These assets are recorded within net property and equipment on the Consolidated Balance Sheets.

Long-lived assets, such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated.

Our depreciation expense totaled approximately $1,086,000$1,872,000 and $1,105,000$1,476,000 in 20192022 and 2018,2021, respectively.

Leases

The Company accountaccounts for leases in accordance with Accounting Standards Update (“ASU”)FASB’s ASU 2016-02, “Leases (Topic 842). which the Company adopted effective January 1, 2019 (see “Recently Adopted Accounting Standards” below for a discussion of this standard). 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.

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The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities represent primarily leases for office/office and warehouse spaces used to conduct our business. These leases have remaining terms of approximately 4one to 10 years. The majority of the Company’s leases includes one or moreseven years which include additional options to renew, with renewal terms ranging from 3 years to 8 years.renew. The Company includes renewal options in valuing its ROU assets and liabilities when it determines that it is reasonably certain to exercise these renewal options. Based on conditions of the Company’s existing leases, historical trend and its overall business strategies, the Company has included the renewal options in all of its operating leases in valuing its ROU assets and liabilities. As most of our operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate when determining the present value of the lease payments. The incremental borrowing rate is determined based on the Company’s secured borrowing rate, lease terms and current economic environment. Some of our operating leases include both lease (rent payments) and non-lease components (maintenance costs such as cleaning and landscaping services). The Company has elected the practical expedient to account for lease component and non-lease component as a single component for all leases under ASU 2016-02. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

Finance leases primarily consist of processing and labtransport equipment forused by our facilities as well as a building with land for our waste treatmentfacilities’ operations. The Company’s finance leases also included a building with land utilized for processing and lab equipment generallyour waste treatment operations which included a purchase option. During the third quarter of 2021, the Company concluded that it was more likely than not that it would not exercise this purchase option but will continue to lease the property. Accordingly, a reassessment of this lease was performed which resulted in reclassification of this lease to an operating lease. The Company’s finance leases have remaining terms between twoof approximately one to three years and some of the leases include options to purchase the underlying assets at fair market value at the conclusion of the lease term. The lease for the building and land has a term of two year with option to buy at the end of the lease term which the Company is reasonably certain exercise.years. See “Property and Equipment” above for assets recorded under financed leases. Borrowing rates for our finance leases are either explicitly stated in the lease agreements or implicitly determined from available terms in the lease agreements.

The Company adopted the policy to not recognize ROU assets and liabilities for short term leases.

Capitalized Interest

The Company’s policy is to capitalize interest cost incurred on debt during the construction of projects for its use. A reconciliation of our total interest cost to “Interest Expense” as reported on our Consolidated Statements of Operations for 2019 and 2018 is as follows:

(Amounts in Thousands) 2019  2018 
Interest cost capitalized $29  $70 
Interest cost charged to expense  432   251 
Total interest $461  $321 

Intangible Assets

Intangible assets consist primarily of the recognized value of the permits required to operate our business. Indefinite-lived intangible assets are not amortized but are reviewed for impairment annually as of October 1, or when events or changes in the business environment indicate that the carrying value may be impaired. If the fair value of the asset is less than the carrying amount, a quantitative test is performed to determine the fair value. The impairment loss, if any, is measured as the excess of the carrying value of the asset over its fair value. Significant judgmentsJudgments and estimates are inherent in these analyses and include assumptions for, among other factors, forecasted revenue, gross margin, growth rate, operating income, timing of expected future cash flows, and the determination of appropriate long-term discount rates. Impairment testing of our indefinite-lived permits related to our Treatment reporting unit as of October 1, 20192022 and 20182021 resulted in no impairment charges.

Intangible assets that have definite useful lives are amortized using the straight-line method over the estimated useful lives (with the exception of customer relationships which are amortized using an accelerated method) and are excluded from our annual intangible asset valuation review as of October 1. The Company had one definite-lived permit which was excluded from our annual impairment review as noted above. This definite-lived permit which had a net carrying value of approximately $7,000 at December 31, 2018 was fully amortized in the first quarter of 2019. Definite-lived intangible assets are also tested for impairment whenever events or changes in circumstances suggest impairment might exist.

R&D

Operational innovation and technical know-how are very important to the success of our business. Our goal is to discover, develop, and bring to market innovative ways to process waste that address unmet environmental needs and to develop new company service offerings. The Company conducts research internally and also through collaborations with other third parties. R&D costs consist primarily of employee salaries and benefits, laboratory costs, third party fees, and other related costs associated with the development and enhancement of new potential waste treatment processes and new technology and are charged to expense when incurred in accordance with ASC Topic 730, “Research and Development.” The Company’s R&D expenses included approximately $314,000 and $811,000 for the years ended December 31, 2019 and 2018, respectively, incurred by our Medical Segment.

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Accrued Closure Costs and Asset Retirement Obligations (“ARO”)ARO

Accrued closure costs represent our estimated environmental liability to clean up our facilities, as required by our permits, in the event of closure. ASC 410, “Asset Retirement and Environmental Obligations” requires that the discounted fair value of a liability for an ARO be recognized in the period in which it is incurred with the associated ARO capitalized as part of the carrying cost of the asset. The recognition of an ARO requires that management make numerous estimates, assumptions and judgments regarding such factors as estimated probabilities, timing of settlements, material and service costs, current technology, laws and regulations, and credit adjusted risk-free rate to be used. This estimate is inflated, using an inflation rate, to the expected time at which the closure will occur, and then discounted back, using a credit adjusted risk free rate, to the present value. ARO’s are included within buildings as part of property and equipment and are depreciated over the estimated useful life of the property. In periods subsequent to initial measurement of the ARO, the Company must recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows. Increases in the ARO liability due to passage of time impact net income as accretion expense, which is included in cost of goods sold. Changes in costs resulting from changes or expansion at the facilities require adjustment to the ARO liability and are capitalized and charged as depreciation expense, in accordance with the Company’s depreciation policy.

Income Taxes

Income taxes are accounted for in accordance with ASC 740, “Income Taxes.” Under ASC 740, the provision for income taxes is comprised of taxes that are currently payable and deferred taxes that relate to the temporary differences between financial reporting carrying values and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 requires that deferred income tax assets be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The Company regularly assesses the likelihood that the deferred tax asset will be recovered from future taxable income. The Company considers projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred income taxes to an amount that is more likely than not to be realized.

ASC 740 sets out a consistent framework for preparers to use to determine the appropriate recognition and measurement of uncertain tax positions. ASC 740 uses a two-step approach wherein a tax benefit is recognized if a position is more-likely-than-not to be sustained. The amount of the benefit is then measured to be the highest tax benefit which is greater than 50% likely to be realized. ASC 740 also sets out disclosure requirements to enhance transparency of an entity’s tax reserves. The Company recognizes accrued interest and income tax penalties related to unrecognized tax benefits as a component of income tax expense.

The Company reassesses the validity of our conclusions regarding uncertain income tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position’s sustainability under audit.

Foreign Currency

The Company’s foreign subsidiaries include PF UK Limited and PF Canada and also included PF Medical. Assets and liabilities are translated to U.S. dollars at the exchange rate in effect at the balance sheet date and revenue and expenses at the average exchange rate for the period. Foreign currency translation adjustments for these subsidiaries are accumulated as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity. Gains and losses resulting from foreign currency transactions are recognized in the Consolidated Statements of Operations.

 

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Concentration Risk

The Company performed services relating to waste generated by government clients (domestic and foreign (primarily Canadian)), either directly as a prime contractor or indirectly for others as a subcontractor to government entities or directly as a prime contractor, representing approximately $59,985,000,$60,030,000, or 81.7%85.0%, of our total revenue during 2019,2022, as compared to $35,944,000,$60,812,000, or 72.6%84.2%, of our total revenue during 2018.2021.

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As ourOur revenues are project/event based where the completion of one contract with a specific customer may be replaced by another contract with a different customer from year to year, the Company does not believe the loss of one specific customer from one year to the next will generally have a material adverse effect on our operations and financial condition.year.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains cash with high quality financial institutions, which may exceed Federal Deposit Insurance Corporation (“FDIC”) insured amounts from time to time. Concentration of credit risk with respect to accounts receivable is limited due to the Company’s large number of customers and their dispersion throughout the United States as well as with the significant amount of work that we perform for the federal and Canadian government.government entities.

The Company had two government related customers whose total unbilled and net outstanding receivable balances represented 12.5% and 34.3%23.0% of the Company’s total consolidated unbilled and net accounts receivable at December 31, 2019.2022. The Company had a government and atwo government related customers whose total unbilled and net outstanding receivable balances represented 10.7%18.2% and 10.5%, respectively23.5% of the Company’s total consolidated unbilled and net accounts receivable at December 31, 2018.2021.

Revenue Recognition and Related Policies

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09,The Company recognizes revenue in accordance with FASB’s ASC 606, “Revenue from Contracts with Customers” followed byCustomers.” ASC 606 provides a series of related accounting standard updates (collectively referred to as “Topic 606”) which superseded nearly all existingsingle, comprehensive revenue recognition guidance.model for all contracts with customers. Under the new standard,ASC 606, a five-step process is utilized in order to determine revenue recognition, depicting the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The Company adopted Topic 606 under the modified retrospective approach to all contracts as of the date of adoption. The Company recognized the cumulative effect of initially adopting Topic 606 as an increase of approximately $316,000 to the opening balance of accumulated deficit at January 1, 2018. The adoption of Topic 606 did not result in significant changes to our revenues within our Treatment and Services Segments. The cumulative impact to the opening balance of accumulated deficit at January 1, 2018 was primarily driven by changes to the timing of revenue recognition in certain immaterial waste streams within our Treatment Segment. Under TopicASC 606, a performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. A contract transaction price is allocated to each distinct performance obligation and recognized as revenues as the performance obligation is satisfied.

Treatment Segment Revenues:

 

Contracts in our Treatment Segment primarily have a single performance obligation as the promise to receive, treat and dispose of waste is not separately identifiable in the contract and, therefore, not distinct. Performance obligations are generally satisfied over time using the input method. Under the input method, the Company uses a measure of progress divided into major phases which include receipt (generally ranging(ranging from 9.0% to 33%), treatment/processing (generally ranging(ranging from 15%40% to 79%) and shipment/final disposal (generally ranging(ranging from 9%9.0% to 52%27%). As major processing phases are completed and the costs are incurred, the proportional percentage of revenue is recognized. Transaction price for Treatment Segment contracts are determined by the stated fixed rate per unit price as stipulated in the contract.

The Company periodically enter into arrangements with customers for transportation of wastes to either our facility or to non-company owned disposal sites. Revenue from this arrangement is recognized at a point in time, upon the transfer of control. Control transfers when the wastes are picked up by the Company.

Services Segment Revenues:

 

Revenues for our Services Segment are generated from time and materials cost reimbursement or fixed price arrangements:

OurThe Company’s primary obligation to customers in time and materials contracts relate to the provision of services to the customer at the direction of the customer. This provision of services at the request of the customer is the performance obligation, which is satisfied over time. Revenue earned from time and materials contracts is determined using the input method and is based on contractually defined billing rates applied to services performed and materials delivered.

Our primary performance obligation to customers in cost reimbursement contracts is to complete certain tasks and work streams. Each specified work stream or task within the contract is considered to be a separate performance obligation. The transaction price is calculated using an estimated cost to complete the various scope items to achieve the performance obligation as stipulated in the contract. An estimate is prepared for each individual scope item in the contract and the transaction price is allocated on a time and materials basis as services are provided. Revenue from cost reimbursement contracts is recognized over time using the input method based on costs incurred, plus a proportionate amount of fee earned.

Under fixed price contracts, the objective of the project is not attained unless all scope items within the contract are completed and all of the services promised within fixed fee contracts constitute a single performance obligation. Transaction price is estimated based upon the estimated cost to complete the overall project. Revenue from fixed price contracts is recognized over time primarily using the output or input method. For the output method, revenue is recognized based on milestone attained on the project. For the input method, revenue is recognized based on costs incurred on the project relative to the total estimated costs of the project.

The majority of ourAs discussed above for the Treatment and Services Segments, the Company’ revenue is derived fromgenerally recognized using the input method. This method of measuring progress provides a faithful depiction of the transfer to goods and services because the costs incurred are expected to be substantially proportionate to the Company’s satisfaction of the performance obligation.

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Contracts with our customers within our Treatment Segment are generally short term contracts with an original expected length of one year or less. Also,For the natureServices Segment, contracts with our customers generally have original terms ranging from one year or less to approximately twenty-four months. 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 oura substantial penalty.

Variable Consideration

The Company’s contracts doesgenerally do not give rise to variable consideration. However, from time to time, the Company may submit requests for equitable adjustments under certain of its government contracts for price or other modifications that are determined to be variable consideration. The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical experience with government contracts, anticipated performance and management’s best judgment at the time and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. These estimates are re-assessed each reporting period as required.

Significant Payment Terms

 

Invoicing is based on schedules established in customer contracts. Payment terms vary by customers but are generally established at 30 days from invoicing.

Incremental Costs to Obtain a Contract

 

Costs incurred to obtain contracts with our customers are immaterial and as a result, the Company expenses (within selling, general and administration expenses (“SG&A”)) incremental costs incurred in obtaining contracts with our customer as incurred.

Remaining Performance Obligations

 

The Company applies the practical expedient in 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.

Stock-Based Compensation

Stock-based compensation granted to employees are accounted for in accordance with ASC 718, “Compensation – Stock Compensation.” Stock-based payment transactions for acquiring goods and services from nonemployees (consultants) are also accounted for under ASC 718 resulting from the adoption of ASU No. 2018-07, “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.” by the Company effective January 1, 2019.718. ASC 718 requires stock-based payments to employees and nonemployees, including grant of options, to be recognized in the Statement of Operations based on their fair values. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards which requires subjective assumptions. Assumptions used to estimate the fair value of stock-based awards include the exercise price of the award, the expected term, the expected volatility of our stock over the stock-based award’s expected term, the risk-free interest rate over the award’s expected term, and the expected annual dividend yield. The Company accounts for forfeitures when they occur.

Comprehensive (Loss) Income (Loss)

The components of comprehensive (loss) income (loss) are net (loss) income (loss) and the effects of foreign currency translation adjustments.

 

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(Loss) Income (Loss) Per Share

Basic (loss) income (loss) per share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted (loss) 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. Income (loss)(Loss) income per share is computed separately for each period presented.

Fair Value of Financial Instruments

Certain assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are recorded at fair value on a nonrecurring basis. Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

Level 1Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

Financial instruments include cash (Level 1), accounts receivable, accounts payable, and debt obligations (Level 3).Credit is extended to customers based on an evaluation of a customer’s financial condition and, generally, collateral is not required.At December 31, 20192022 and December 31, 2018,2021, the fair value of the Company’s financial instruments approximated their carrying values. The fair value of the Company’s revolving credit and term loan approximate its carrying value due to the variable interest rate.

Recently Adopted Accounting Standards

In February 2016,May 2021, the FASB issued ASU 2016-02, “LeasesAccounting Standards Update (“ASU”) No. 2021-04, “Earnings Per Share (Topic 842)206),” which requires the recognition Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of ROU lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. The original guidance required application on a modified retrospective basis with the earliest period presented. In July 2018,Freestanding Equity-Classified Written Call Options (a consensus of the FASB issuedEmerging Issues Task Force).” ASU 2018-11, “Targeted Improvements,” to Topic 842 which included an option to not restate comparative periods in transition and elect to use the effective date of Topic 842 as the date of initial application of transition, which the Company elected. As permitted under Topic 842, the Company adopted several practical expedients that permit us to not reassess (1) whether any expired or existing contract as of the adoption date is or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, and (3) initial direct costs for any existing leases as of the adoption date. As a result of the adoption of Topic 842 on January 1, 2019, the Company recorded both operating ROU assets of $2,602,000 and operating lease liabilities of $2,622,000. The cumulative-effect adjustment was immaterial to our beginning accumulated deficit upon adoption of ASU 2016-02. The adoption of Topic 842 had an immaterial impact on our Consolidated Statements of Operations and Cash Flows for the year 2019. The Company’s2021-04 addresses issuer’s accounting for finance leases remained substantially unchanged.

In February 2018, FASB issued ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassificationcertain modifications or exchanges of Certain Tax Effects from Accumulated Other Comprehensive Income.”freestanding equity-classified written call options. This ASU allows for the reclassification of certain income tax effects related to the new Tax Cuts and Jobs Act legislation between “Accumulated other comprehensive income” and “Retained earnings.” This ASU relates to the requirement that adjustments to deferred tax liabilities and assets related to a change in tax laws or rates be included in “Income from continuing operations”, even in situations where the related items were originally recognized in “Other comprehensive income” (rather than in “Income from continuing operations”). ASU 2018-02 is effective for all entities, for fiscal years beginning after December 15, 2018, and2021, including interim periods within those fiscal years, with earlyyears. Early adoption is permitted. AdoptionThe adoption of this ASU is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax laws or rates were recognized. The adoption of ASU 2018-09 by the Company effective January 1, 20192022 did not have a material impact on the Company’sits financial statements.

In June 2018,March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued because of reference rate reform. The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022. In January 2021, the FASB issued ASU No. 2018-07, “Compensation — Stock Compensation2021-01, “Reference Rate Reform (Topic 718)848): Improvements to Nonemployee Share-Based Payment Accounting,Scope,” which expandsclarified the scope and application of Topic 718the original guidance. The Company determined that only its obligations under its credit facility were impacted by these ASUs. During the third quarter of 2022, the Company entered into an amendment dated August 29, 2022 to include all share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions inits loan agreement which replaced the grantor acquires goods and services to be used or consumed inLIBOR option with the Secured Overnight Finance Rate (“SOFR”) option under its own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under ASC 606. ASU 2018-07 is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.credit facility. The adoption of ASU 2018-09these aforementioned ASUs by the Company effective January 1, 2019during the third quarter of 2022 did not have a material impact onto its financial statements (see “Note 10 – Long Term Debt” for a discuss of the Company’s financial statements.credit facility and the amendment dated August 29, 2022). On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024.

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Recently Issued Accounting Standards – Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, “Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments, (“ASC” and various subsequent amendments to the initial guidance (collectively, “Topic 326”),” which amends the current. Topic 326 introduces an approach, based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. The new approach to estimating credit losses (referred to as the current expected credit losses model) applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses is permitted. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” which, with respect to credit losses, among other things, clarifies and addresses issues related to accrued interest, transfers between classifications of loans or debt securities, recoveries, and variable interest rates. Additionally, in May 2019, the FASB issued ASU 2019-05, “Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,” which allows entities to irrevocably elect the fair value option on certain financial instruments. These standards are effective for interim and annual reporting periods beginning after December 15, 2019.loans. Entities are required to apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. These ASUsIn November 2019, FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which defers the effective date of ASU 2016-13 for public companies that are effective January 1, 2020 forconsidered smaller reporting companies (“SRC”) as defined by the Company.Commission to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company does not expect the adoption of these ASUs willby the Company during the fourth quarter of 2022 did not have a material impact on the Company’sto its financial statements.

Recently Issued Accounting Standards – Not Yet Adopted

In August 2018,2020, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.No. 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity.” ASU 2018-13 improves2020-06 simplifies the disclosure requirements on fair value measurements.accounting for convertible instruments by removing major separation models and removing certain settlement condition qualifiers for the derivatives scope exception for contracts in an entity’s own equity, and simplifies the related diluted net income per share calculation for both Subtopics. ASU 2018-132020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This ASU is effective January 1, 20202023, for the Company. The Company does not expect theas an SRC. Early adoption of this ASU will have a material impact on the Company’s financial statements.

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within thosepermitted, but no earlier than fiscal years beginning after December 15, 2020, with early adoption permitted.including interim periods within those fiscal years. The Company is currently evaluating the impact of this standardASU on its consolidated financial statements and related disclosures.

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NOTE 3

REVENUE

 

NOTE 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 following tables present further disaggregation of our revenues by different categories for our Services and Treatment Segments:

Revenue by Contract Type Twelve Months Ended  Tweleve Months Ended 
(In thousands) December 31, 2019  December 31, 2018 
  Treatment  Services  Total  Treatment  Services  Total 
Fixed price $40,364  $12,162  $52,526  $36,271  $1,575  $37,846 
Time and materials   ―   20,788   20,788      11,693   11,693 
Cost reimbursement   ―   145   145          
Total $40,364  $33,095  $73,459  $36,271  $13,268  $49,539 

Revenue by generator Twelve Months Ended  Twelve Months Ended 
(In thousands) December 31, 2019  December 31, 2018 
  Treatment  Services  Total  Treatment  Services  Total 
Domestic government $29,420  $25,077  $54,497  $25,181  $9,630  $34,811 
Domestic commercial  10,601   2,724   13,325   10,969   2,521   13,490 
Foreign government  279   5,209   5,488   114   1,019   1,133 
Foreign commercial  64   85   149   7   98   105 
Total $40,364  $33,095  $73,459  $36,271  $13,268  $49,539 

SCHEDULE OF DISAGGREGATION OF REVENUE

                         
Revenue by Contract Type                  
(In thousands) Twelve Months Ended  Twelve Months Ended 
  December 31, 2022  December 31, 2021 
  Treatment  Services  Total  Treatment  Services  Total 
Fixed price $33,358  $26,960  $60,318  $32,992  $11,236  $44,228 
Time and materials     10,281   10,281      27,963   27,963 
Total $33,358  $37,241  $70,599  $32,992  $39,199  $72,191 
Revenue $33,358  $37,241  $70,599  $32,992  $39,199  $72,191 

                         
Revenue by generator                  
(In thousands) Twelve Months Ended  Twelve Months Ended 
  December 31, 2022  December 31, 2021 
  Treatment  Services  Total  Treatment  Services  Total 
Domestic government $23,752  $35,906  $59,658  $22,538  $29,013  $51,551 
Domestic commercial  8,307   1,408   9,715   9,294   1,412   10,706 
Foreign government  574   (202)  372   577   8,684   9,261 
Foreign commercial  725   129   854   583   90   673 
Total $33,358  $37,241  $70,599  $32,992  $39,199  $72,191 
Revenue $33,358  $37,241  $70,599  $32,992  $39,199  $72,191 

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Contract Balances

The timing of revenue recognition billings, and cash collectionsbillings results in accounts receivable and unbilled receivables (contract assets). The Company’s contract liabilities consist of deferred revenues which representsrepresent advance payment from customers in advance of the completion of our performance obligation.

The following table represents changes in our contract assetsasset and contract liabilities balances:

SCHEDULE OF CONTRACT LIABILITIES

     Year-to-date Year-to-date      Year-to-date Year-to-date 
(In thousands) December 31, 2019 December 31, 2018 Change ($) Change (%)  December 31, 2022 December 31, 2021 Change ($) Change (%) 
Contract assets                                
Account receivables, net of allowance $13,178  $7,735  $5,443   70.4%
Unbilled receivables - current  7,894   3,105   4,789   154.2% $6,062  $8,995  $(2,933)  (32.6)%
                                
Contract liabilities                                
Deferred revenue $5,456  $6,595  $(1,139)  (17.3)% $4,813  $5,580  $(767)  (13.7)%

The decrease in unbilled receivables was primarily due to invoicing in connection with the Company’s Canadian projects within the Services Segment.

The decrease in deferred revenue was attributed primarily to revenue recognized in connection with a Services Segment contract.

During the twelve months ended December 31, 20192022 and 2018,2021, the Company recognized revenue of $10,354,000$6,576,000 and $8,052,000,$7,196,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of each respective year. Revenue recognized in each period related to performance obligations satisfied within the respective period.

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NOTE 4LEASES

LEASES

The components of lease cost for the Company’s leases were as follows (in thousands):

SCHEDULE OF COMPONENTS OF LEASE COST

        
 Twelve Months Ended  Twelve Months Ended
December 31,
 
 December 31, 2019  2022 2021 
        
Operating Leases:            
Lease cost $456  $627  $499 
            
Finance Leases:            
Amortization of ROU assets  63   176   220 
Interest on lease liability  63   37   97 
  126 
Finance leases  213   317 
            
Short-term lease rent expense  43   7   13 
            
Total lease cost $625  $847  $829 

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at December 31, 2019 was:2022 were:

SCHEDULE OF WEIGHTED AVERAGE LEASE

 Operating Leases Finance Leases  Operating Leases Finance Leases 
Weighted average remaining lease terms (years)  8.8   2.0   6.2   3.0 
                
Weighted average discount rate  8.0%  9.3%  7.8%  5.3%

 

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases at December 31, 2021 were:

  Operating Leases  Finance Leases 
Weighted average remaining lease terms (years)  6.9   4.0 
         
Weighted average discount rate  7.6%  6.2%

The following table reconciles the undiscounted cash flows for the operating and finance leases at December 31, 20192022 to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

SCHEDULE OF OPERATING AND FINANCE LEASE LIABILITY MATURITY

 Operating Leases Finance Leases  Operating Leases Finance Leases 
2020 $442  $529 
2021  450   396 
2022  458   113 
2023  466    ―  $556  $174 
2024  342    ―   416   170 
2025 and thereafter  1,458    ― 
2025  325   149 
2026  301   18 
2027  286    
2028 and thereafter  656    
Total undiscounted lease payments  3,616   1,038   2,540   511 
Less: Imputed interest  (1,030)  (101)  (540)  (39)
Present value of lease payments $2,586  $937  $2,000  $472 
        
Current portion of operating lease obligations $416  $ 
Long-term operating lease obligations, less current portion $1,584  $ 
Current portion of finance lease obligations $  $154 
Long-term finance lease obligations, less current portion $  $318 

Current portion of operating lease obligations$244  $ 
Long-term operating lease obligations, less current portion $2,342  $ 
Current portion of finance lease obligations $  $471 
Long-term finance lease obligations, less current portion $  $466 

Supplemental cash flow and other information related to our leases were as follows (in thousands):

SCHEDULE OF SUPPLEMENTAL CASH FLOW AND OTHER INFORMATION RELATED TO LEASES

  Twelve Months Ended 
  December 31, 2019 
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flow used in operating leases $434 
Operating cash flow used in finance leases $63 
Financing cash flow used in finance leases $272 
     
ROU assets obtained in exchange for lease obligations for:    
Finance liabilities $893 
Operating liabilities $182 

         
  Twelve Months Ended December 31, 
  2022  2021 
Cash paid for amounts included in the measurement of lease liabilities:      
Operating cash flow from operating leases $573  $439 
Operating cash flow from finance leases $37  $97 
Financing cash flow from finance leases $860  $334 
         
ROU assets obtained in exchange for lease obligations for:        
Finance liabilities $147  $577 
Operating liabilities $  $491 
         
Reduction to ROU assets resulitng from reassessment for        
Finance liabilities $  $(364)

NOTE 5

PERMIT AND OTHER INTANGIBLE ASSETS

The following table summarizes changes in the carrying value of permits. No permit exists atpermits, which exist only in our Services and Medical Segments.Treatment Segment.

SCHEDULE OF INTANGIBLE ASSETS

Permit (amount in thousands) Treatment 
Balance as of December 31, 2020 $8,922 
Permit renewal  121 
Permit in progress  433 
Balance as of December 31, 2021 $9,476 
Permit in progress  134 
Balance as of December 31, 2022 $9,610 

 

Permit (amount in thousands) Treatment 
Balance as of December 31, 2017 $8,419 
PCB permit amortized(1)  (55)
Permit in progress  79 
Balance as of December 31, 2018  8,443 
PCB permit amortized(1)  (7)
Permit in progress  354 
Balance as of December 31, 2019 $8,790 
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(1)Amortization for the one definite-lived permit capitalized in 2009 that was fully amortized in the first quarter of 2019. This permit was amortized over a ten-year period in accordance with its estimated useful life.

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

SCHEDULE OF DEFINITE LIVED INTANGIBLE ASSETS

 Weighted Average December 31, 2019 December 31, 2018  Weighted Average December 31, 2022 December 31, 2021 
 Amortization Gross   Net Gross   Net  Amortization Gross   Net Gross   Net 
Other Intangibles Period Carrying Accumulated Carrying Carrying Accumulated Carrying 
(amount in thousands) (Years) Amount Amortization Amount Amount Amortization Amount 
 Period Carrying Accumulated Carrying Carrying Accumulated Carrying                
 (Years) Amount Amortization Amount Amount Amortization Amount 
Intangibles (amount in thousands)               
Patent  11  $760  $(358) $402  $728  $(336) $392  8.3 $711  $(374) $337  $787  $(351) $436 
Software  3   414   (408)  6   410   (403)  7  3  640   (468)  172   592   (415)  177 
Customer relationships  10   3,370   (2,713)  657   3,370   (2,491)  879  10  3,370   (3,250)  120   3,370   (3,089)  281 
Permit  10   545   (545)   ―   545   (538)  7 
Total    $5,089  $(4,024) $1,065  $5,053  $(3,768) $1,285    $4,721  $(4,092) $629  $4,749  $(3,855) $894 

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

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

SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE

    
 Amount  Amount 
Year (In thousands)  (In thousands) 
      
2020  219 
2121  199 
2022  173 
2023  132  $    195 
2024  10   63 
2025  26 
2026  25 
2026  22 

Amortization expense recorded for definite-lived intangible assets was approximately $256,000$237,000 and $350,000,$211,000, for the years ended December 31, 20192022 and 2018,2021, respectively.

 

NOTE 6

CAPITAL STOCK, STOCK PLANS, WARRANTS AND STOCK BASED COMPENSATION

Stock Option Plans

The Company adopted theCompany’s 2003 Outside Directors Stock Plan (the “2003 Plan”), which was approved by our stockholders at provides for the Company’s July 29, 2003 Annual Meetinggrant of Stockholders. Non-Qualified Stock Options (“NQSOs”) to member of the Company’s Board of Directors (the “Board”) who is not an employee of the Company or its subsidiaries (“Eligible Director”). On July 20, 2021, the Company’s stockholders approved an amendment (the “Amendment”) to the 2003 Plan which provided the following, among other things: i) authorized an additional 500,000 shares of the Company’s Common Stock for issuance under the 2003 Plan, (ii) increased (a) the number of shares of Common Stock subject to the automatic option grant made to each Eligible Director upon initial election, from 6,000 to 20,000 shares, and (b) the number of shares of Common Stock subject to the automatic option grant made to each Eligible Director upon reelection, from 2,400 to 10,000 shares, (iii) amended the vesting period of options granted under the 2003 Plan, generally havefrom asix-month vesting period of six months fromto 25% per year, beginning on the first anniversary date of the grant, and a term(iv) provided for acceleration of 10 years, with anvesting under certain conditions. The exercise price of options to be granted under the 2003 Plan continued to equal to the closing trade price on the date prior to the grant date. The 2003 Plan also providescontinued to provide for the issuance to each outside directorEligible Director a number of shares of the Company’s Common Stock in lieu of 65% or 100% (based on option elected by each director) of the fee payable to the eligible directorEligible Director for services rendered as a member of the Board of Directors (“Board”).Board. The number of shares issued is determined at 75% of the market value as defined in the plan2003 Plan (the Company recognizes 100% of the market value of the shares issued). The 2003 Plan, as amended, also provides for the grant of an NQSO to purchase up to 6,000 shares of our Common Stock for each outside director upon initial election to the Board, and the grant of an NQSO to purchase 2,400 shares of our Common Stock upon each re-election. The number of shares of the Company’s Common Stock authorized under the 2003 Plan was 1,100,000.is 1,600,000. At December 31, 2019,2022, the 2003 Plan had available for issuance 262,312448,534 shares.

The Company’s 2010 Stock Option Plan (“2010 Plan”) authorized an aggregate grant of 200,000 NQSOs and Incentive Stock Options (“ISOs”) to officers and employees of the Company for the purchase of up to 200,000 shares of the Company’s Common Stock. The term of each stock option granted was to be fixed by the Compensation and Stock Option Committee (the “Compensation Committee”), but no stock option was exercisable more than ten years after the grant date, or in the case of an incentive stock option granted to a 10% stockholder, five years after the grant date. As a result of the approval of the 2017 Stock Option Plan (“2017 Plan” – see below) at the Company’s 2017 Annual Meeting, no further options remained available for issuance under the 2010 Plan immediately upon the approval of the 2017 Plan; however, the 2010 Plan remains in full force and effect with respect to the outstanding options issued and unexercised at the date of the approval of the 2017 Plan. At December 31, 2019, the 2010 Plan had an option for the purchase of up to 50,000 shares of our Common Stock at $3.97 per share with expiration date of May 15, 2022.

 

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The Company’s 2017 Stock Option Plan (“2017 Plan”) authorizes the grant of options to officers and employees of the Company, including any employee who is also a member of the Board, as well as to consultants of the Company. The 2017 Stock Option Plan, as amended (the “2017 Plan”), authorizes an aggregate grant of 540,0001,140,000 NQSOs and ISOs, which includes a rollover of 140,000 shares that remained available for issuance under the 2010 Plan immediately upon the approval of the 2017 Plan.Incentive Stock Options (“ISOs”). Consultants of the Company can only be granted NQSOs. The term of each stock option granted under the 2017 Plan shall be fixed by the Compensation and Stock Option Committee (the “Compensation Committee”), but no stock options will be exercisable more than ten years after the grant date, or in the case of an ISO granted to a 10% stockholder, five years after the grant date. The exercise price of any ISO granted under the 2017 Plan to an individual who is not a 10% stockholder at the time of the grant shall not be less than the fair market value of the shares at the time of the grant, and the exercise price of any ISO granted to a 10% stockholder shall not be less than 110% of the fair market value at the time of grant. The exercise price of any NQSOs granted under the plan shall not be less than the fair market value of the shares at the time of grant. At December 31, 2019,2022, the 2017 Plan had available for issuance 27,500353,000 shares.

Stock Options to Employees and Outside Director

On January 17, 2019July 21, 2022, the Company granted 105,000 ISOs fromissued a NQSO to each of the 2017Company’s seven reelected outside directors for the purchase, under the Company’s 2003 Plan, of up to certain employees, which included our named executive officers as follows: 25,000 ISOs to our Chief Executive Officer (“CEO”); 15,000 ISOs to our Chief Financial Officer (“CFO”); and 15,000 ISOs to our10,000 shares of the Company’s Common Stock. The Company’s Executive Vice President (“EVP”) of Strategic Initiatives. The ISOsInitiatives and also a member of the Company’s Board, was not eligible to receive an option under the 2003 Plan as an employee of the Company. Each NQSO granted wereis for a contractual term of ten years with one-fourth vesting annually over a four-year period. The exercise price of the NQSO is $5.15 per share, which was equal to the fair market value of the Company’s Common Stock the day preceding the grant date, pursuant to the 2003 Plan.

On July 21, 2022, the Company granted ISOs to certain employees for purchase under the Company’s 2017 Plan, of up to an aggregate of 24,000 shares of the Company’s Common Stock. Each ISO granted is for a contractual term of six years with one-fifth vesting annually over a five-year period. The exercise price of the ISO was $3.15is $5.34 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.

On July 25, 2019,October 14, 2021, the Company granted ISOs to certain employees for the purchase, under the Company’s 2017 Plan, of up to an aggregate 305,000 shares of 12,000 NQSOs from the Company’s 2003 Plan to fiveCommon Stock. The total ISOs granted included an ISO for each of the six re-elected directors atCompany’s executive officers for the Company’s Annual Meetingpurchase set forth in his respective ISO Agreement, as follows: 50,000 shares for the CEO; 25,000 shares for the CFO; 20,000 shares for the EVP of Stockholders held on July 25, 2019. Dr. Louis F. Centofanti (a Board member) was not eligible to receive options underStrategic Initiatives; 25,000 shares for the 2003 Plan as an employeeEVP of Waste Treatment Operations; and 25,000 shares for the EVP of Nuclear and Technical Services. Each of the Company, pursuant to the 2003 Plan. The NQSOsISOs granted were forhas a contractual term of ten years with a vesting period of six months. The exercise price of the NQSO was $3.31 per share, which was equal to our closing stock price the day preceding the grant date, pursuant to the 2003 Plan.

On August 29, 2019 the Company granted an aggregate of 12,500 ISOs from the 2017 Plan to certain employees. The ISOs granted were for a contractual term of six years with one-fifth yearly vesting annually over a five-year period. The exercise price of the ISO was $3.90is $7.005 per share, which was equal to the fair market value of the Company’s Common Stock on the date of grant.

On January 18, 2018,July 20, 2021, the Company granted 6,000 NQSOs fromissued a NQSO to each of the Company’s seven reelected outside directors for the purchase, under the Company’s 2003 Plan, of up to a new director elected by10,000 shares of the Company’s Board to fill a vacancy on the Board. The optionsCommon Stock. Each NQSO granted werehas for a contractual term of ten years with one-fourth vesting annually over a vesting period of six months.four-year period. The exercise price of the options was $4.05NQSO is $5.93 per share, which was equal to our closing stock pricethe fair market value of the Company’s Common Stock the day preceding the grant date, pursuant to the 2003 Plan.

On July 26, 2018,May 4, 2021, the Company granted an aggregate of 12,000 NQSOs fromissued a NQSO to a new director elected by the Company’s Board, for the purchase, under the Company’s 2003 Plan, of up to five6,000 shares of the six re-elected directors at the Company’s July 26, 2018 Annual Meeting of Stockholders. Dr. Louis F. Centofanti (a Board member) was not eligible to receive options under the 2003 Plan as an employee of the Company, pursuant to the 2003 Plan.Common Stock. The NQSOsNQSO granted were forhas a contractual term of ten years with a vesting period of six months.months. The exercise price of the NQSO was $4.30is $7.50 per share, which was equal to our closing stock pricethe fair market value of the Company’s Common Stock the day preceding the grant date, pursuant to the 2003 Plan.

TheDuring 2022, the Company issued an aggregate of 14,40016,526 shares of its Common Stock to two previous retired outside directors resultingfrom a cashless exercise of an option for the purchase of 50,000 shares of the Company’s Common Stock at $3.97 per share. Additionally, the Company issued 2,400 shares of its Common Stock from the exercise of options froman option for the 2003 Plan for a total proceedpurchase of 2,400 shares of the Company’s Common Stock at $5.50 per share resulting in proceeds of approximately $54,000 in$13,000. During 2021, the fourth quarter of 2019. The Company also issued an aggregate of 18,000290 shares of its Common Stock to an employee resulting from a cashless exercise of optionsan option for a total proceedthe purchase of approximately $79,000 in500 shares of the fourth quarter of 2019.Company’s Common Stock at $3.15 per share.

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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 during 20192022 and 20182021 and the related assumptions used in the Black-Scholes option model used to value the options granted were as follows. No options were granted to employees in 2018:follows:

SCHEDULE OF STOCK OPTIONS VALUATION ASSUMPTIONS

         
  Employee Stock
Options Granted
 
  2022  2021 
Weighted-average fair value per share $2.71   3.51 
Risk -free interest rate (1)  3.00%  1.05%
Expected volatility of stock (2)  55.72%  58.61%
Dividend yield  None   None 
Expected option life (3)  5.0 years   5.0 years 

         
  Outside Director Stock
Options Granted
 
  2022  2021 
Weighted-average fair value per share $3.61  $3.9 
Risk -free interest rate (1)  2.91%  1.23%-1.61% 
Expected volatility of stock (2)  55.04%  55.84%-55.91% 
Dividend yield  None   None 
Expected option life (3)  10.0 years   10.0 years 

(1)Employee Stock
Option Granted
2019
Weighted-average fair value per share$1.46
Risk -freeThe risk-free interest rate(1)1.40%-2.58%
Expected volatility is based on the U.S. Treasury yield in effect at the grant date over the expected term of stock(2)48.67%-51.38%
Dividend yieldNone
Expected option life(3)5.0 yearsthe option.

  Outside Director Stock Options Granted 
  2019  2018 
Weighted-average fair value per share $2.27  $2.87 
Risk -free interest rate(1)  2.08%  2.62%-2.98% 
Expected volatility of stock(2)  54.28%  55.34%-57.29% 
Dividend yield  None   None 
Expected option life(3)  10.0 years   10.0 years 
(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.

(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 fiscal years 20192022 and 2018.2021.

SCHEDULE OF SHARE-BASED COMPENSATION, ALLOCATION OF RECOGNIZED PERIOD COSTS

        
 Year Ended  Year Ended 
 2019 2018  2022 2021 
Employee Stock Options $150,000  $147,000  $313,000  $178,000 
Director Stock Options  29,000   51,000   95,000   72,000 
Total $179,000  $198,000  $408,000  $250,000 

At December 31, 2019,2022, the Company has approximately $431,000$1,293,000 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 2.13.6 years.

Stock Options to Consultant

The Company granted a NQSO to Robert Ferguson is a consultant to the Company in connection with the Company’s Test Bed Initiative (“TBI”) at its PFNWR facility. For Robert Ferguson’s consulting work in connection with the Company’s TBI, on July 27, 2017 (“grant date”), the Company granted Robert Ferguson a NQSO from the Company’s 2017 Plan for the purchase of up to 100,000 shares of the Company’s Common Stock (“Ferguson Stock Option”) in connection with his work as a consultant to the Company’s Test Bed Initiative (“TBI”) at our PFNWR facility at an exercise price of $3.65 a$3.65 per share, which was the fair market value of the Company’s Common Stock on the date of grant (“grant. The term of the Ferguson Stock Option”).Option is seven years from the grant date. The vesting of the Ferguson Stock Option is subject to the achievement of three separate milestones by certain dates. The first milestone was met and the following milestones (“waste” as noted below is defined as liquid LAW (“low activity waste”) and/or liquid TRU (“transuranic waste”)):

● Upon treatment and disposal of three gallons of waste at the PFNWR facility by January 27, 2018, 10,000 shares of the Ferguson Stock Option shall become exercisable;
Upon treatment and disposal of 2,000 gallons of waste at the PFNWR facility by January 27, 2019, 30,000 shares of the Ferguson Stock Option shall become exercisable; and
Upon treatment and disposal of 50,000 gallons of waste at the PFNWR facility and assistance, on terms satisfactory10,000 shares under the first milestone were issued to the Company, in preparing certain justifications of cost and pricing data for the waste and obtaining a long-term commercial contract relating to the treatment, storage and disposal of waste by January 27, 2021, 60,000 shares of the Ferguson Stock Option shall become exercisable.

The term of the Ferguson Stock Option is seven (7) years from the grant date. Each of the milestones is exclusive of each other; therefore, achievement of any of the milestones above by Robert Ferguson by the designated date will provide Robert Ferguson the right to exercise the number of options in accordance with the milestone attained. On January 17, 2019, the Ferguson Stock Option was amendedMay 2018. The Company had previously entered into amendments whereby the vesting date of the Ferguson Stock Optiondates for the second milestone as discussed above was amended from “by January 27, 2019” to “by March 31, 2020.” All other terms of the Ferguson Stock Option remain unchanged.

On May 1, 2018, Robert Ferguson exercised the 10,000 options which became vested by Mr. Ferguson in December 2017and third milestones for the purchase of 10,000up to 30,000 and 60,000 shares of the Company’s Common Stock resulting in total proceeds paidwere extended to the Company of approximately $36,500.

At December 31, 2019,2022 and December 31, 2023, respectively. The 30,000 shares under the second milestone failed to vest by December 31, 2022 and therefore were forfeited. The Company has not recognized compensation costs (fair value of approximately $123,000$39,000 at December 31, 2019)2022) for the remaining 60,000Ferguson Stock Option discussed aboveunder the remaining final milestone since achievement of the performance obligation under the second milestone is unlikely and achievement of the performance obligation under the thirdremaining final milestone is uncertain at December 31, 2019.2022. Upon Mr. Ferguson’s death, the remaining Ferguson Stock Option is now held by Mr. Ferguson’s estate.

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Summary of Stock Option Plans

The summary of the Company’s total plans as of December 31, 20192022 and 2018,2021, and changes during the period then ended are presented as follows:

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, 2022  1,019,400  $4.91       - 
Granted  94,000  $5.20         
Exercised  (52,400) $4.04      $97,856 
Forfeited/expired  (42,600) $4.08         
Options outstanding end of period (1)  1,018,400  $5.02   3.8  $44,262 
Options exercisable at December 31, 2022(1)  530,900  $4.27   2.4  $30,962 

 

 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value(3)  Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (2) 
Options outstanding January 1, 2019  616,000  $4.23         
Options outstanding January 1, 2021  658,400  $3.87       - 
Granted  129,500   3.24           381,000  $6.82         
Exercised  (32,400)  4.10      $93,000   (500) $3.15      $2,175 
Forfeited/expired  (31,800)  8.68           (19,500) $6.75         
Options outstanding end of period(1)  681,300  $3.84   4.2  $3,587,000   1,019,400  $4.91   4.0  $1,669,687 
Options exercisable as of December 31, 2019(1)  286,800  $4.28   3.8  $1,383,000 
Options exercisable at December 31, 2021(1)  438,400  $3.95   2.7  $1,064,432 

 

  Shares  Weighted Average Exercise Price  Weighted Average Remaining Contractual Term (years)  Aggregate Intrinsic Value(3) 
Options outstanding January 1, 2018  624,800  $4.42         
Granted  18,000   4.22         
Exercised  (10,000)  3.65      $8,000 
Forfeited/expired  (16,800)  11.70         
Options outstanding end of period(2)  616,000  $4.23   4.7  $ 
Options exercisable at December 31, 2018(2)  249,333  $5.04   4.4  $ 
(1)Options with exercise prices ranging from $2.79 to $7.50
(2)The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price

(1) Options with exercise prices ranging from $2.79 to $8.40

(2) Options with exercise prices ranging from $2.79 to $13.35

(3) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price

The summary of the Company’s nonvested options as of December 31, 20192022 and changes during the period then ended are presented as follows:

SCHEDULE OF NON VESTED OPTIONS

   Weighted Average    Weighted Average 
   Grant-Date    Grant-Date 
 Shares Fair Value  Shares Fair Value 
Non-vested options January 1, 2019  366,667  $1.91 
Non-vested options January 1, 2022  581,000  $3.13 
Granted  129,500   1.53   94,000   3.39 
Vested  (90,667)  2.02   (154,500)  2.67 
Forfeited  (11,000)  1.60   (33,000)  3.08 
Non-vested options at December 31, 2019  394,500  $1.77 
Non-vested options at December 31, 2022  487,500  $3.32 

 

Warrant

In connection with a $2,500,000$2,500,000 loan that the Company executed April 1, 2019entered into with Mr. Robert Ferguson (the “Ferguson Loan”) on April 1, 2019, the Company issued a Warrantwarrant to Mr. Ferguson for the purchase of up to 60,000 shares of our Common Stock at an exercise price of $3.51$3.51 per share. The Warrant is exercisable six months from April 1, 2019 andwarrant expires on April 1, 2024 and remains outstanding at December 31, 2019 (see “Note 10 – Long Term Debt” for further information of this Warrant).2022. Upon Mr. Ferguson’s death, the warrant is now held by Mr. Ferguson’s estate. The Ferguson Loan was paid-in-full in December 2020.

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Common Stock Issued for Services

The Company issued a total of 71,90590,920 and 60,59860,723 shares of our Common Stock in 20192022 and 2018,2021, respectively, under our 2003 Plan to our outside directors as compensation for serving on our Board. As a member of the Board, each director elects to receive either 65% or 100% of the director’s fee in shares of our Common Stock. The number of shares received is calculated 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 Company recorded approximately $232,000$477,000 and $249,000$467,000 in compensation expense (included in Selling, General &Administrative (“SG&A”)&A expenses) for the twelve months ended December 31, 20192022 and 2018,2021, respectively, for the portion of director fees earned in the Company’s Common Stock.

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Sale of Common Stock

On September 30, 2021, the Company entered into subscription agreements with certain institutional and retail investors in a registered direct offering, for the sale and issuance of 1,000,000 shares of the Company’s Common Stock (See “Note 7 – Common Stock Subscription Agreements” for a discussion of the issuance of the shares from this direct offering).

Shares Reserved

At December 31, 2019,2022, the Company has reserved approximately 681,3001,018,400 shares of our Common Stock for future issuance under all of the option arrangements.

NOTE 7COMMON STOCK SUBSCRIPTION AGREEMENTS

On September 30, 2021, the Company entered into subscription agreements (the “Subscription Agreements”) with certain institutional and retail investors (the “Purchasers”), pursuant to which the Company agreed to sell and issue, in a registered direct offering, an aggregate of 1,000,000 shares (the “Shares”) of our Common Stock, at a negotiated purchase price per share of $6.20 (the “Shares”), for aggregate gross proceeds to us of approximately $6,200,000. The offering price per share was negotiated based on the average closing price of our Common Stock as quoted on Nasdaq over the three-week period immediately preceding the date of the Subscription Agreements, less a five percent discount.

The Shares were offered and sold by the Company through a prospectus supplement pursuant to the Company’s “shelf” registration statement on Form S-3, which was previously filed with the Commission on May 13, 2019 and subsequently declared effective on May 22, 2019 (the “Registration Statement”).

Wellington Shields & Co., LLC (“Wellington”) served as the exclusive placement agent in connection with the Offering, pursuant to a placement agency agreement dated as of September 23, 2021 (the “Placement Agency Agreement”), between the Company and Wellington. The Company paid Wellington a cash fee of 6.00% of the aggregate gross proceeds in the Offering which totaled $372,000. The Company also reimbursed Wellington for certain expenses in connection with the Offering in an aggregate amount not to exceed $50,000. After deducting costs incurred directly in connection with the offering of approximately $496,000 which were recorded as deduction to equity, net proceeds to the Company totaled approximately $5,704,000. Approximately $61,000 of the offering costs were paid in 2022.

The aggregate net proceeds from the offering were primarily used for working capital and general corporate purposes, including for certain facility expansion and upgrades.

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NOTE 8 INCOME (LOSS) PER SHARE

The following table reconciles the (loss) income (loss) and average share amounts used to compute both basic and diluted loss(loss) income per share:

SCHEDULE OF EARNINGS PER SHARE

  Years Ended 
  December 31, 
(Amounts in Thousands, Except for Per Share Amounts) 2019  2018 
Net income (loss) attributable to Perma-Fix Environmental Services, Inc., common stockholders:        
Income (loss) from continuing operations, net of taxes $2,732  $(1,074)
Net loss attributable to non-controlling interest  (124)  (320)
Income (loss) from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders $2,856  $(754)
Loss from discontinuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders  (541)  (667)
Net income (loss) attributable to Perma-Fix Environmental Services, Inc. common stockholders $2,315  $(1,421)
         
Basic income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders $.19  $(.12)
        
Diluted income (loss) per share attributable to Perma-Fix Environmental Services, Inc. common stockholders $.19  $(.12)
         
Weighted average shares outstanding:        
Basic weighted average shares outstanding  12,046   11,855 
Add: dilutive effect of stock options  14    ─ 
Add: dilutive effect of warrants   ─    ─ 
Diluted weighted average shares outstanding  12,060   11,855 
         
Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:        
Stock options  482   107 
Warrant  60    ─ 

NOTE 8

SERIES B PREFERRED STOCK

The 1,284,730 shares of the Series B Preferred Stock (the “Series B Preferred Stock”) of the Company’s wholly-owned consolidated subsidiary, M&EC, were non-voting and non-convertible, had a $1.00 liquidation preference per share and were redeemable at the option and sole discretion of M&EC at any time, and from time to time, from and after one year from the date of issuance (June 25, 2001) of the Series B Preferred Stock for the purchase price of $1.00 per share. As previously disclosed, the Company completed the closure of its M&EC facility in 2019 in accordance with M&EC’s license and permit requirements. Holders of shares of M&EC Series B Preferred Stock were entitled to receive, when, as and if declared by M&EC’s Board out of funds legally available for payment, cumulative dividends at the rate per annum of 5% per share on the liquidation preference of $1.00 per share of Series B Preferred Stock. Dividends on the Series B Preferred Stock accrued without interest beginning one year from the date of original issuance (June 25, 2001), and was payable in cash, if, when, and as declared by M&EC Board, quarterly each year commencing on the first dividend due date following the expiration of one year from the date of original issuance. On April 24, 2018, the Company announced a private exchange offer (“Exchange Offer”), to all 13 holders of the M&EC Series B Preferred Stock, to exchange in a private placement exempt from registration, for every share of Series B Preferred Stock tendered, (a) 0.1050805 shares of newly issued Common Stock of the Company, par value $.001 per share (“Common Stock”), and (b) cash in lieu of fractional shares of Common Stock that would otherwise be issuable to the tendering holder of Series B Preferred Stock, in an amount equal to such fractional share of Common Stock multiplied by the closing price per share of the Common Stock on the last trading day immediately preceding the expiration date of the Exchange Offer. The Exchange Offer was made on an all-or-none basis, for all 1,284,730 shares of Series B Preferred Stock outstanding and had an expiration date of May 30, 2018. The Company owns 100% of the voting capital stock of M&EC. On May 30, 2018, the Exchange Offer was consummated, resulting in the issuance of an aggregate 134,994 unregistered shares of the Company’s Common Stock in exchange for the 1,284,730 shares of Series B Preferred Stock and the payment of an aggregate of approximately $29.00 in cash in lieu of the fractional shares of the Company’s Common Stock that would otherwise have been issuable to the tendering holders of the Series B Preferred Stock. The fair value of the 134,994 shares of the Company’s Common Stock issued was determined to be approximately $648,000 which was based on the closing price of the Company’s Common Stock on May 30, 2018 of $4.80 per share. Upon the consummation of the Exchange Offer, the previous holders of the M&EC Series B Preferred Stock forfeited all rights of a holder of Series B Preferred Shares, including the right to receive quarterly cash dividends, and the rights to the cumulative accrued and unpaid dividends with M&EC Series B Preferred Stock in the amount of approximately $1,022,000 at May 30, 2018. The M&EC Board never declared dividends on the Series B Preferred Stock and our credit facility prohibits the payment of cash dividends without the lender’s consent. After the Exchange Offer, the 1,284,730 shares of the Series B Preferred Stock acquired by the Company were contributed by the Company to M&EC and the Series B Preferred Stock was no longer outstanding. The Company recorded a gain of approximately $1,596,000 in 2018, which was net of approximately $63,000 in legal costs incurred for the completion of the transaction.

The shares of Company Common Stock issued in exchange for shares of M&EC’s Series B Preferred Stock were issued pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), and, as a result, were considered restricted securities when issued.

         
  Years Ended 
  December 31, 
(Amounts in Thousands, Except for Per Share Amounts) 2022  2021 
Net (loss) income attributable to Perma-Fix Environmental Services, Inc., common stockholders:        
(Loss) income from continuing operations, net of taxes $(3,211) $1,092 
Net loss attributable to non-controlling interest     (164)
(Loss) income from continuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders $(3,211) $1,256 
Loss from discontinuing operations attributable to Perma-Fix Environmental Services, Inc. common stockholders  (605)  (421)
Net (loss) income attributable to Perma-Fix Environmental Services, Inc. common stockholders $(3,816) $835 
         
Basic (loss) income per share attributable to Perma-Fix Environmental Services, Inc. common stockholders $(.29) $.07 
         
Diluted (loss) income per share attributable to Perma-Fix Environmental Services, Inc. common stockholders $(.29) $.07 
         
Weighted average shares outstanding:        
Basic weighted average shares outstanding  13,280   12,433 
Add: dilutive effect of stock options     211 
Add: dilutive effect of warrants     29 
Diluted weighted average shares outstanding  13,280   12,673 
         
Potential shares excluded from above weighted average share calculations due to their anti-dilutive effect include:        
Stock options  499   323 
Warrant      

NOTE 9

DISCONTINUED OPERATIONS

The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment: (1)Segment which encompasses subsidiaries divested in 2011 and prior (2) twoand three previously closed locations, and (3) our PFSG facility which is in closure status and which final closure is subject to regulatory approval of necessary plans and permits.locations.

The Company incurred losses from discontinued operations of $541,000$605,000 (net of tax benefit of $199,000) and $667,000$421,000 (net of tax benefit of $139,000) for the years ended December 31, 20192022 and 2018 (net of taxes of $0 for each period),2021, respectively. The loss for the year ended 2019 included an increase of approximately $50,000 in remediation reserve for our Perma-Fix of Memphis, Inc. (“PFM”) duenet losses in 2022 as compared to reassessment of the remediation reserve. The loss for the year ended 2018 included an increase of approximately $50,000 in remediation reserve for our Perma-Fix of Dayton (“PFD”) subsidiary due to reassessment of the remediation reserve. The remaining loss for each of the periods noted above2021 was primarily due to costs incurred in connection with management of administrative and regulatory matters for the administration and continued monitoring of our discontinued operations.Company’s remediation projects as discussed below.

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The following table presents the major class of assets of discontinued operations at December 31, 20192022 and December 31, 2018.2021. No assets and liabilities were held for sale at each of the periods noted.

SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATION BALANCE SHEET

        
 December 31, December 31, 
(Amounts in Thousands) December 31, 2019 December 31, 2018  2022 2021 
Current assets                
Other assets $104  $107  $15  $15 
Total current assets  104   107   15   15 
Long-term assets                
Property, plant and equipment, net(1)  81   81   81   81 
Other assets  36   118 
Total long-term assets  117   199   81   81 
Total assets $221  $306  $96  $96 
Current liabilities                
Accounts payable $8  $10  $104  $3 
Accrued expenses and other liabilities  169   296   146   154 
Environmental liabilities  817   50   112   349 
Total current liabilities  994   356   362   506 
Long-term liabilities                
Closure liabilities  134   126   159   150 
Environmental liabilities  110   837   749   527 
Total long-term liabilities  244   963   908   677 
Total liabilities $1,238  $1,319  $1,270  $1,183 

(1)net of accumulated depreciation of $10,000 for each period presented.

(1)net of accumulated depreciation of $10,000 for each period presented.

The Company’s discontinued operations included a note receivable in the original amount of approximately $375,000 recorded in May 2016 resulting from the sale of property at our Perma-Fix of Michigan, Inc. subsidiary. This note requires 60 equal monthly installment payments by the buyer of approximately $7,250 (which includes interest). At December 31, 2019, the outstanding amount on this note receivable totaled approximately $118,000, of which approximately $82,000 is included in “Current assets related to discontinued operations” and approximately $36,000 is included in “Other assets related to discontinued operations” in the accompanying Consolidated Balance Sheets.

Environmental Liabilities

The Company has three remediation projects, which are currently in progress atrelating to our PFD, PFM (closed location), and PFSG (in closure status) subsidiaries.(closed locations) subsidiaries, all within our discontinued operations. The Company divested PFD in 2008; however, the environmental liability of PFD was retained by the Company upon the divestiture of PFD. These remediation projects principally entail the removal/remediation of contaminated soil and, in most cases, the remediation of surrounding ground water. The remediation activities are closely reviewed and monitored by the applicable state regulators.

At December 31, 2019,2022, the Company had total accrued environmental remediation liabilities of $927,000, an increase$861,000, a decrease of $40,000$15,000 from the December 31, 20182021 balance of $887,000.$876,000. The net increase presents an increasedecrease represents payments for remediation projects. At December 31, 2022, $112,000 of approximately $50,000 made to the reserve at our PFM subsidiarytotal accrued environmental liabilities was recorded as discussed above and payments of approximately $10,000 on remediation projects for our PFD subsidiary.current.

The current and long-term accrued environmental liabilityliabilities at December 31, 2019 is2022 are summarized as follows (in thousands).

SCHEDULE OF CURRENT AND LONG TERM ACCRUED ENVIRONMENTAL LIABILITY

 Current Long-term   Current Long-term   
 Accrual Accrual Total  Accrual Accrual Total 
PFD $41  $60  $101     $60  $60 
PFM $50   15   65      15   15 
PFSG $726   35   761   112   674   786 
Total liability $817  $110  $927  $112  $749  $861 
Total liability $112  $749  $861 

NOTE 10

LONG-TERM DEBT

Long-term debt consists of the following at December 31, 20192022 and December 31, 2018:2021:

SCHEDULE OF LONG TERM DEBT

(Amounts in Thousands) December 31, 2019 December 31, 2018  December 31, 2022 December 31, 2021 
Revolving Credit facility dated October 31, 2011, as amended, borrowings based uponeligible accounts receivable, subject to monthly borrowing base calculation, balance dueon March 24, 2021. Effective interest rate for 2019 and 2018 was 6.6% and 5.8%, respectively.(1) $321  $639 
Term Loan dated October 31, 2011, as amended, payable in equal monthly installments ofprincipal, balance due on March 24, 2021. Effective interest rate for 2019 and 2018 was6.9% and 5.5%, respectively.(1)  1,827(2)  2,663(2)
Promissory Note dated April 1, 2019, payable in twelve monthly installments of interest only,starting May 1, 2019 followed with twelve monthly installments of approximatelyt $208 inprincipal plus accrued interest. Interest accrues at annual rate of 4.0%.(3)  1,732(4)   ─ 
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible accounts receivable, subject to monthly borrowing base calculation, balance due on May 15, 2024. Effective interest rate for 2022 and 2021 was 0% and 5.3%, respectively (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, 2024. Effective interest rate for 2022 and 2021 was 8.9% and 5.3%, respectively (1) $  $ 
Term Loan dated May 8, 2020, payable in equal monthly installments of principal, balance due on May 15, 2024. Effective interest rate for 2022 and 2021 was 5.6% and was 4.5%, respectively (1)  552(2)  954(2)
Capital Line dated May 4, 2021, payable in equal monthly installments of principal, balance due on May 15, 2024. Effective interest rate for 2022 was 6.2%. (1)  463    
Notes Payable to 2023 and 2025, annual interest rate of 5.6% and 9.1%.  24   39 
Total debt  3,880   3,302   1,039   993 
Less current portion of long-term debt  1,300(4)  1,184   476   393 
Long-term debt $2,580  $2,118  $563  $600 

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

(2)Net of debt issuance costs of ($88,000) and ($112,000) at December 31, 2022 and December 31, 2021, respectively.

(1)Our revolving credit facility is collateralized by our accounts receivable and our term loan is collateralized by our property, plant, and equipment. Effective July 1, 2019, monthly installment principal payment on theRevolving Credit, Term Loan was amended to approximately $35,500 from approximately $101,600. See discussion of the amendment dated June 20, 2019 to the Company’s loan agreement below.and Capital Line Agreement

(2)Net of debt issuance costs of ($92,000) and ($80,000) at December 31, 2019 and December 31, 2018, respectively.

(3)Uncollateralized note.

(4)Net of debt discount/debt issuance costs of ($248,000) at December 31, 2019. The Promissory Note provides for prepayment of principal over the term of the Note without penalty. The Company made prepayments of principal totaling $520,000 in 2019 which was reflected in the current portion of the debt.

Revolving Credit and Term Loan Agreement

The Company entered into ana Second Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated October 31, 2011May 8, 2020 (“Amended Loan Agreement”), with PNC National Association (“PNC”), acting as agent and lender. The Amended Loan Agreement has been amended from time to time since the execution of the Amended Loan Agreement. The Amended Loan Agreement, as subsequently amended (“Revised Loan Agreement”), provides the Company with the following credit facility with a maturity date of March 24, 2021:15, 2024: (a) up to $12,000,000$18,000,000 revolving credit (“revolving credit”) see “Note 20 – Subsequent Events – Credit Facility” for a discussion of an amendment that the Company entered into with its lender on March 21, 2023 which reduced the maximum revolving credit to $12,500,000) and (b) a term loan (“term loan”) of approximately $6,100,000, which requires$1,742,000, requiring monthly installments of approximately $101,600 (based on a seven-year amortization)$35,547. The maximum that the Company can borrow under the revolving credit is based on a percentage of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and borrowing reductions that ourthe Company’s lender may impose from time to time. The Loan Agreement, as amended (the “Amended Loan Agreement”), also provides a capital expenditure 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”). Only interest is payable on advances during the Borrowing Period. At the end of the Borrowing Period, the total amount advanced under the line will amortize equally based on a five-year amortization schedule with principal payment due monthly plus interest. At the maturity date of the Amended Loan Agreement, any unpaid principal balance plus interest, if any, will become due. Amount advanced under the capital line totaled approximately $524,000 which requires monthly installments in principal of approximately $8,700 plus interest, starting June 1, 2022. The advance was used to purchase the underlying asset under a previous finance lease.

On March 29, 2019,During 2022, the Company entered into an amendmentfurther amendments to its Revisedthe Amended Loan Agreement with its lender, under the credit facility which provided the following:following, among other things (with the amended terms set forth in a Revised Loan Agreement):

waived the Company’s failure to meet the minimum quarterly fixed charge coverage ratio (“FCCR”)FCCR requirement for the fourth quarter of 2018;2021 and second quarter of 2022;
waivedremoved the quarterly FCCR testing requirement for the first and third quarters of 2022;
reinstated the quarterly FCCR testing requirement starting for the fourth quarter of 2019;
2022 and revised the methodology in calculating the FCCR for the quarter ended December 31, 2022 and the methodology to be used in calculating the FCCR in each offor the second and third quarters of 2019quarter ending March 31, 2023 (with continued requirementno change to maintain athe minimum 1.15:1 ratio inrequirement for each of the quarters)quarter);
revisedrequired maintenance of a minimum of $3,000,000 in borrowing availability under the minimum Tangible Adjusted Net Worth requirement (as defined in the Revised Loan Agreement) from $26,000,000 to $25,000,000;
eliminated the London InterBank Offer Rate (“LIBOR”) interest payment option of paying annual rate of interest due on our term loan and revolving credit until the Company becomes compliant with itsminimum FCCR requirement again. Prior to this amendment,for the Company had the option of paying annual rate of interest due on the revolving credit at prime (4.75% atquarter ended December 31, 2019) plus 2% or LIBOR plus 3%2022 has been met and certified to the term loan at prime plus 2.5% or LIBOR plus 3.5%;lender;

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provided consent for the $2,500,000 loan that the Company entered into with Robert Ferguson on April 1, 2019 discussed below. No principal prepayment on this loan was allowed until the Company received the restricted finite risk sinking funds of approximately $5,000,000 held as collateral by AIG Specialty Insurance Company (“AIG”) under our financial assurance policy resulting from the closure of the Company’s M&EC facility (see “Note 14 – Commitments and Contingencies – Insurance” for a discussion of the receipt of this $5,000,000 in finite risk sinking funds on July 22, 2019); and
revised the annual rate used to calculate the Facility Fee (as defined in the Loan Agreement) on the revolving credit, with addition of the capital expenditure line, from 0.375% to 0.500%. Upon meeting the minimum FCCR requirement of 1.15:1 on a twelve-month trailing basis, the Facility Fee rate of 0.375% will be reinstated;
added certain additional anti-terrorism provisions to the covenants; and
replaced the LIBOR based interest rate benchmark with the SOFR. As a result of this new provision, payment of annual rate of interest due on the revolving credit is at prime (7.50% at December 31, 2022) plus 2% or Term SOFR Rate (as defined in the Revised Loan Agreement) (unused revolving credit line fee) from 0.250% to 0.375%.

On June 20, 2019, we entered into another amendment to our Revised Loan Agreement with our lender under the credit facility which provided the following, among other things:

removalplus 3.00% plus an SOFR Adjustment applicable for an interest period selected by us and payment of the FCCR calculation requirement for the second, third and fourth quarterannual rate of 2019. Starting in the first quarter of 2020, the Company will again be required to maintain a minimum FCCR of not less than 1.15 to 1.0 for the four-quarter period ending March 31, 2020 and for each fiscal quarter thereafter;
requires the Company to maintain a minimum Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA” as defined in the Amendment) of at least (i) $475,000 for the one quarter period ending June 30, 2019; (ii) $2,350,000 for the two quarter period ending September 30, 2019; and (iii) $3,750,000 for the three quarter period ending December 31, 2019;
immediate release of $450,000 of the $1,000,000 indefinite reduction in borrowing availability that PNC had previously imposed; the release of another $300,000 of the remaining $550,000 reduction in borrowing availability if the Company meets it minimum Adjusted EBITDA requirement for the quarter ending September 30, 2019 as discussed above (which our lender released in November 2019), in addition to the Company having received no less than $4,000,000 of the restricted finite risk sinking funds held as collateral by AIG under our financial assurance policy; and the release the final $250,000 reduction in borrowing availability if we meet our Adjusted EBITDA requirement for the three quarter period ending December 31, 2019; and
reduceinterest due on the term loan monthly principal payment starting July 1, 2019 from $101,600 to approximately $35,547, withand the remaining balancecapital expenditure line is at prime plus 2.50% or Term SOFR Rate plus 3.50% plus an SOFR Adjustment applicable for an interest period selected by us. A SOFR Adjustment rates of the term loan due at the maturity of the Revised Loan Agreement which is March 24, 2021.0.10% and 0.15% are applicable for a one-month interest period and three-month period, respectively, that may be selected by us

Most ofIn connection with the other termsamendments, the Company paid its lender fees totaling $30,000 which is being amortized over the remaining term of the Revised Loan Agreement as amended, remain principally unchanged. In connection with amendment dated March 29, 2019 and June 20, 2019, the Company paid its lender a fee of $20,000 and $50,000, respectively.interest expense-financing fees.

Pursuant to the Revised Loan Agreement, as amended, the Company may terminate the Revised Loan Agreement, as amended, upon 90 days’ prior written notice upon payment in full of its obligations under the Revised Loan Agreement, as amended. No early termination fee shall apply if the Company pays off its obligations after March 23, 2019.

At December 31, 2019, the borrowing availability under our revolving credit was approximately $8,714,000, based on our eligible receivables and includes an indefinite reduction of borrowing availability of $250,000 that the Company’s lender has imposed. This $8,714,000 in borrowing availability under our revolving credit also included a reduction in borrowing availability of approximately $2,639,000 from outstanding standby letters of credit.

The Company’s credit facility under its Revised Loan Agreement 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. As discussed above,The Company’s Revised Loan Agreement prohibits us from paying cash dividends on our lender waived/removedCommon Stock without prior approval from our FCCRlender. The Company was not required to perform testing requirement for each of the FCCR requirement in the first and third quarters of 2022 pursuant to amendments as discussed above. Based on an amendment that the Company entered into with its lender on March 21, 2023, the Company was not required to perform testing of the FCCR requirement in 2019.the fourth quarter of 2022 (see “Note 20 – Subsequent Events – Credit Facility” for a discussion of this amendment which provided for this provision, among other things). The Company metfailed to meet its “Adjusted EBITDA” minimumFCCR requirement in the second third and fourth quartersquarter of 20192022; however, this non-compliance was waived by our lender pursuant to an amendment that we entered into with our lender in accordance to the amendment dated June 20, 20192022 as discussed above. Additionally,Other than the above discussion pertaining to the Company’s FCCR requirements, the Company met all of its remainingother financial covenant requirements in each of the quarters of 2019. As a result of2022.

After May 7, 2022, the Company meetingmay terminate its Revised Loan Agreement upon 90 days’ prior written notice upon payment in full of our obligations under the “Adjusted EBITDA” minimum requirement forRevised Loan Agreement with no early termination fees.

At December 31, 2022, the fourth quarter of 2019,borrowing availability under the Company’s lenderrevolving credit was approximately $4,290,000 based on our eligible receivables and is expected to release the remaining $250,000 reductionnet of approximately $3,016,000 in outstanding standby letters of credit. The Company’s borrowing availability subsequent to the filing of our 2019 Form 10-K.

Loan and Securities Purchase Agreement, Promissory Note and Subordination Agreement

On April 1, 2019, the Company completed a lending transaction with Robert Ferguson (the “Lender”), whereby the Company borrowed from the Lender the sum of $2,500,000 pursuant to the terms of a Loan and Security Purchase Agreement and promissory note (the “Loan”). The Lender is a shareholder of the Company. The Lender also currently serves as a consultant to the Company in connection with the Company’s TBI at its PFNWR subsidiary. The proceeds from the Loan were used for general working capital purposes. The Loan is unsecured, with a term of two years with interest payable at a fixed interest rate of 4.00% per annum. The Loan provides for monthly payments of accrued interest only during the first year of the Loan, with the first interest payment due May 1, 2019 and monthly payments of approximately $208,333 in principal plus accrued interest starting in the second year of the Loan. The Loan also allows for prepayment of principal payments over the term of the Loan without penalty with such prepayment of principal payments to be applied to the second year of the loan payments at the Company’s discretion. In 2019, the Company made total prepayments in principal of $520,000. In connection with the above Loan, the Lender agreed under the terms of the Loan and a Subordination Agreement with our credit facility lender, to subordinate payment under the Loan, and agreed that the Loan will be junior in right of payment to the credit facility in the event of default or bankruptcy or other insolvency proceeding by us. In connection with this capital raise transaction described above and consideration for us receiving the Loan, the Company issued a Warrant (the “Warrant”) to the Lender to purchase up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share, which was the closing bid price for a share of our Common Stock on NASDAQ.com immediately preceding the execution of the Loan and Warrant. The Warrant is exercisable six months from April 1, 2019 and expires on April 1, 2024 and remains outstanding$4,290,000 at December 31, 2019. The fair value2022 included a requirement from our lender that we maintain a minimum of the Warrant was estimated to be approximately $93,000 using the Black-Scholes option pricing model with the following assumptions: 50.76% volatility, risk free interest rate of 2.31%, an expected life of five years and no dividends. As further consideration for this capital raise transaction relating to the Loan, the Company issued 75,000 shares of its Common Stock to the Lender. The Company determined the fair value of the 75,000 shares of Common Stock to be approximately $263,000 which was based on the closing bid price for a share of the Company’s Common Stock on NASDAQ.com immediately preceding the execution of the Loan, pursuant to the Loan and Securities Purchase Agreement. The fair value of the Warrant and Common Stock and the related closing fees incurred totaling approximately $398,000 from the transaction was recorded as debt discount/debt issuance costs, which is being amortized over the term of the loan as interest expense – financing fees. The 75,000 shares of Common Stock, the Warrant and the 60,000 shares of Common Stock that may be purchased under the Warrant were and will be issued$3,000,000 in a private placement that was and will be exempt from registration under Rule 506 and/or Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “Act”) and bear a restrictive legend against resale except in a transaction registered under the Act or in a transaction exempt from registration thereunder.borrowing availability.

Upon default, the Lender will have the right to elect to receive in full and complete satisfaction of the Company’s obligations under the Loan either: (a) the cash amount equal to the sum of the unpaid principal balance owing under the loan and all accrued and unpaid interest thereon (the “Payoff Amount”) or (b) upon meeting certain conditions, the number of whole shares of the Company’s Common Stock (the “Payoff Shares”) determined by dividing the Payoff Amount by the dollar amount equal to the closing bid price of our Common Stock on the date immediately prior to the date of default, as reported or quoted on the primary nationally recognized exchange or automated quotation system on which our Common Stock is listed; provided however, that the dollar amount of such closing bid price shall not be less than $3.51, the closing bid price for our Common Stock as disclosed on NASDAQ.com immediately preceding the signing of this loan agreement.

If issued, the Payoff Shares will not be registered and the Lender will not be entitled to registration rights with respect to the Payoff Shares. The aggregate number of shares, warrant shares, and Payoff Shares that are or will be issued to the Lender pursuant to the Loan, together with the aggregate shares of the Company’s Common Stock and other voting securities owned by the Lender or which may be acquired by the Lender as of the date of issuance of the Payoff Shares, shall not exceed the number of shares of the Company’s Common Stock equal to 14.9% of the number of shares of the Company’s Common Stock issued and outstanding as of the date immediately prior to the default, less the number of shares of the Company’s Common Stock owned by the Lender immediately prior to the date of such default plus the number of shares of our Common Stock that may be acquired by the Lender under warrants and/or options outstanding immediately prior to the date of such default.

The following table details the amount of the maturities of long-term debt maturing in future years at December 31, 20192022 (excludes debt issuance/debt discountissuance costs of $340,000)$88,000).

SCHEDULE OF MATURITIES OF LONG-TERM DEBT

Year ending December 31:   
(In thousands)   
2020  1,573 
2021  2,647 
Total $4,220 
Year ending December 31:    
(In thousands) 2023 $542 
2024  578 
2025  7 
Total $1,127 

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NOTE 11 CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY ACT (“CARES ACT”)

Employee Retention Credit (“ERC”)

The CARES Act, which was enacted on March 27, 2020, provides an Employee Retention Credit (“ERC”) for qualifying businesses keeping employees on their payroll during the COVID-19 pandemic. The ERC was subsequently amended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, the Consolidated Appropriation Act of 2021, and the American Rescue Plan Act of 2021, all of which amended and extended the ERC availability and guidelines under the CARES Act. Following these amendments, the Company determined that it was eligible for the ERC, and as a result of the foregoing legislations, is eligible to claim a refundable tax credit against the Company’s share of certain payroll taxes equal to 70% of the qualified wages paid to employees between July 1, 2021 and September 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021 for a maximum allowable ERC per employee of $7,000 per calendar quarter in 2021. For purposes of the amended ERC, an eligible employer is defined as having experienced a significant (20% or more) decline in gross receipts during one or more of the first three 2021 calendar quarters when compared to 2019.

During the third quarter of 2022, the Company determined it was eligible for the ERC and amended its third quarter 2021 employer payroll tax filings claiming a refund from the U.S. Treasury in the amount of approximately $1,975,000. As there is no authoritative guidance under U.S. GAAP on accounting for government assistance to for-profit business entities, we account for the ERC by analogy to International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, management determined it has reasonable assurance for receipt of the ERC and recorded the expected refund as other income (within “Other income (expense)”) on the Company’s Consolidated Statements of Operations and other receivables (within “Prepaid and other assets”) on the Company’s Consolidated Balance Sheets. For federal income tax purposes, this item was treated as a reduction in payroll costs for 2021, the year in which the costs originated. This resulted in a timing difference for the benefit between financial statement inclusion and tax inclusion between 2021 and 2022. This timing difference does not impact the Company’s effective tax rate.

Paycheck Protection Program (“PPP”) Loan

In April 2020, the Company received a PPP Loan in the amount of approximately $5,318,000 under the CARES Act, as amended. The PPP Loan was administered by the SBA. Proceeds from the promissory note was used by the Company for eligible payroll costs, mortgage interest, rent and utility costs as permitted by the CARES Act, as amended. The annual interest rate on the PPP Loan was 1.0%. In late 2020, the Company applied for forgiveness on repayment of the PPP Loan and effective June 15, 2021, the entire balance of the PPP Loan of approximately $5,318,000, along with accrued interest of approximately $63,000 was forgiven by the SBA. Accordingly, the Company recorded the entire forgiven PPP Loan balance, along with accrued interest, totaling approximately $5,381,000 as “Gain on extinguishment of debt” on its Consolidated Statement of Operations for the year ended 2021.

Deferral of Employment Tax Deposits

The CARES Act, as amended, provided employers the option to defer the payment of an employer’s share of social security taxes beginning on March 27, 2020 through December 31, 2020 with 50% of the amount of social security taxes deferred to become due on December 31, 2021 with the remaining 50% due on December 31, 2022. The Company’s deferment of such taxes totaled approximately $1,252,000 of which approximately $626,000 was paid in December 2021 with the remaining paid in December 2022 (previously included in “Accrued expenses” within current liabilities in our Consolidated Balance Sheets).

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NOTE 11

12 ACCRUED EXPENSES

Accrued expenses include the following (in thousands) at December 31:

SCHEDULE OF ACCRUED EXPENSES

  2019  2018 
Salaries and employee benefits $3,908  $3,228 
Accrued sales, property and other tax  793   404 
Interest payable  17   7 
Insurance payable  935   710 
Other  465   665 
Total accrued expenses $6,118  $5,014 

Each of our executives has an individual Management Incentive Plan (“MIP”) for fiscal years 2019 and 2018 which provides for the potential payment of performance compensation (see “Note 16 – Related Party Transactions – MIPs” for further discussion of the MIPs). The Company accrued an aggregate of approximately $270,700 in compensation expenses for the three MIPs in 2019 for the Company’s 2019 three named executive officers (“NEOs”) (Mr. Mark Duff, Mr. Ben Naccarato, and Mr. Louis Centofanti. No performance compensation payments were earned under any of the MIPs for 2018 for the NEOs.

         
  2022  2021 
Salaries and employee benefits $2,629  $3,049 
Accrued sales, property and other tax  240   183 
Interest payable  8   3 
Insurance payable  1,253   1,209 
Other  463   634 
Total accrued expenses $4,593  $5,078 

NOTE 12

13 ACCRUED CLOSURE COSTS AND ARO

Accrued closure costs represent our estimated environmental liability to clean up our fixed-based regulated facilities as required by our permits, in the event of closure. Changes to reported closure liabilities (current and long-term) for the years ended December 31, 20192022 and 2018,2021, were as follows:

SCHEDULE OF CHANGE IN ASSET RETIREMENT OBLIGATION

Amounts in thousands      
Balance as of December 31, 2017 $8,395 
Balance as of December 31, 2020 $6,365 
Accretion expense  325   377 
Addition to closure liability  499 
Spending  (5,293)  (50)
Adjustment to closure liability  3,323 
Balance as of December 31, 2018  6,750 
Balance as of December 31, 2021 $7,191 
Accretion expense  320   411 
Addition to closure liability  1,339 
Spending  (1,359)  (975)
Adjustment to closure liability  330 
Balance as of December 31, 2019 $6,041 
Balance as of December 31, 2022 $7,966 

TheIn 2022, the Company recorded ana total of approximately $1,339,000 in additional $330,000 of closure costs and currentestimated closure liabilities of which approximately $465,000 (within long-term) was recorded in 2019 dueconnection with the footprint expansion at one of our facilities and an update to finalization ofa processing enclosure area at another facility. The remaining additional closure requirementsliabilities was recorded for the Company’s M&EC facility. In 2019, the Company completed the closure andour EWOC facility for decommissioning activities of its M&EC facility in accordance with M&EC’s license and permit requirements. The Company had recorded an additional $3,323,000 in closure costs and current closure liabilities in 2018 due to changes in estimated future closure costs for the M&EC subsidiary.

The spending of approximately $1,359,000 in 2019 was primarily for the closure of the Company’s M&EC facility. In 2018, the Company had total spending of approximately $5,293,000, of which $4,991,000 was for activities related to the closure of the M&EC facility with the remaining for the PFNWR facility in connection with the closure of certain processing equipment/enclosure.

costs. At December 31, 2019 and 2018, M&EC’s2022, current portion of the closure liabilities totaled approximately $84,000 and $1,142,000, respectively, with$682,000 which reflects primarily closure liabilities for our EWOC facility. The spending made in 2022 was primarily for our EWOC facility.

The addition to closure liabilities for 2021 reflected primarily estimated costs for decommissioning activities required to restore the entire amount classified as current.leased property at our EWOC facility back to its original condition at the end of its lease term. As of December 31, 2021, current portion of the closure liabilities totaled approximately $578,000 which consists primarily of the closure liabilities for our EWOC facility.

 

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The reported closure asset or ARO, is reported as a component of “Net Property and equipment” in the Consolidated Balance Sheets at December 31, 20192022 and 20182021 with the following activity for the years ended December 31, 20192022 and 2018:2021:

SCHEDULE OF ASSET RETIREMENT OBLIGATIONS

Amounts in thousands      
Balance as of December 31, 2017 $3,921 
Balance as of December 31, 2020 $3,348 
Addition to closure and post-closure asset  478 
Amortization of closure and post-closure asset  (191)  (250)
Balance as of December 31, 2018  3,730 
Balance as of December 31, 2021 $3,576 
Addition to closure and post-closure asset  1,128 
Amortization of closure and post-closure asset  (191)  (603)
Balance as of December 31, 2019 $3,539 
Balance as of December 31, 2022 $4,101 

 

The addition to ARO reflects closure obligations as discussed above.

NOTE 13

14 INCOME TAXES

The components of (loss) income (loss) before income tax expense (benefit)benefits by jurisdiction for continuing operations for the years ended December 31, consisted of the following (in thousands):

SCHEDULE OF INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE

         
  2022  2021 
United States  (2,782)  (1,733)
Canada  (630)  (1,880)
United Kingdom  (177)  (246)
Poland     1,061 
Total loss before tax benefit $(3,589) $(2,798)

  2019  2018 
United States  4,120   (857)
Canada  (735)  (138)
United Kingdom  (184)  (210)
Poland  (312)  (805)
Total income (loss) before tax expense (benefit) $2,889  $(2,010)

The components of current and deferred federal and state income tax expense (benefit)(benefits) expense for continuing operations for the years ended December 31, consisted of the following (in thousands):

SCHEDULE OF COMPONENTS OF INCOME TAX (BENEFIT) EXPENSE

  2019  2018 
Federal income tax expense (benefit) - deferred  5   (1,171)
State income tax expense - current  153   173 
State income tax (benefit) expense - deferred  (1)  62 
Total income tax expense (benefit) $157  $(936)
         
  2022  2021 
Federal income tax benefit - deferred  (331)  (3,503)
State income tax expense (benefit) - current  12   (56)
Foreign income tax expense - current     26 
State income tax benefit - deferred  (59)  (357)
Total income tax benefit $(378) $(3,890)

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An overall reconciliation between the expected tax expense (benefit)benefit using the federal statutory rate of 21% for each of the years ended 20192022 and 20182021 and the expense (benefit)benefit for income taxes from continuing operations as reported in the accompanying Consolidated Statement of Operations is provided below (in thousands).

  2019  2018 
Federal tax expense (benefit) at statutory rate $607  $(392)
State tax expense (benefit), net of federal benefit  152   (178)
Change in deferred tax rates  106   (78)
Permanent items  54   (388)
Difference in foreign rate  (27)  13 
Change in deferred tax liabilities  835   114 
Other  (218)  (99)
(Decrease) increase in valuation allowance  (1,352)  72 
Income tax expense (benefit) $157  $(936)

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

A provision

65

         
  2022  2021 
Federal tax benefit at statutory rate $(754) $(588)
State tax expense (benefit), net of federal benefit  5   (412)
Change in deferred tax rates  20   (93)
Permanent items  220   62 
PPP Loan forgiveness     (1,130)
Debt forgiveness (PFM Poland)     (518)
Difference in foreign rate  (42)  (135)
True-up of deferred tax items  63   1,058 
Other     (7)
Increase (decrease) in valuation allowance  110   (2,127)
Income tax benefit $(378) $(3,890)

During the fourth quarter of 2021, the Company sold PFM Poland resulting from its decision to cease all R&D activities under its Medical Segment. Prior to the sale, the Company purchased Perma-Fix Medical LLC which was converted from PFMC, a wholly-owned subsidiary of PFM Poland. Perma-Fix Medical LLC was treated as a disregarded entity for tax purposes, resulting in a realized tax loss of $2,466,000 from uncollected payables. As a condition of the sale of PFM Poland, the Company forgave its receivables from PFM Poland resulting in a $3,089,000 capital loss on the sale of 100% interest of PFM Poland stock (see “Note 15 – PF Medical for a discussion on the sale of PFM Poland).

The Company regularly assesses the likelihood that the deferred tax asset will be recovered from future taxable income. In conducting this assessment, the Company considers projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred income taxes to an amount that is more likely than not to be realized. As of September 30, 2021, the Company determined that it was more likely than not that it would be able to realize a portion of the deferred income tax assets. As a result, a deferred income tax benefit in the amount of approximately $2,351,000 attributable to the valuation allowance release on beginning of year deferred tax assets primarily related to U.S. Federal income taxes was realized in the three months ended September 30, 2021. The Company had previously maintained a full valuation allowance against its net deferred income tax assets. The Company continues to maintain a valuation allowance against certain state and foreign tax attributes that may not be realizable along with the capital loss carryover generated during 2021 that it does not expect to realize.

As of December 31, 2022, the Company assessed whether its deferred tax asset will more likely than not to be realized. This assessment included both positive and negative available evidences, which included the Company’s current contracts, cumulative loss, future reversal of existing taxable differences, and overall prospect of future business and earnings. Based on the weight of these available evidences, the Company concluded that it will more likely than not utilize its Federal and certain state net operating losses.

The global intangible low-taxed income (“GILTI”) provisions under the Tax Cuts and Jobs Act of 2017 (the “TCJA”) which was signed into law in December 2017 provides an indefinite carryforward period for net operating losses (“NOLs”) generated starting in 2018. Also, the law limits the utilization of these NOLs to 80% of taxable income in the year in which the NOL is utilized. The Company had been carrying on its balance sheet a deferred tax liability related to indefinite-lived intangible assets. A common accounting interpretation of the TCJA provisions is that deferred tax assets related to indefinite-lived NOLs may be used to offset indefinite-lived deferred tax liabilities, up to 80% of the amount of the liability. During 2018, the Company forecasted a substantial tax loss for the full year due to the closure of the M&EC facility. As a result, the Company released a portion of the valuation allowance against deferred tax assets equal to 80% of the deferred tax liability related to indefinite-lived intangible assets and recorded a tax benefit in the amount of approximately $1,235,000 in accordance to the provisions of the TCJA.

The global intangible low-taxed income (“GILTI”) provisions under the TCJA require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended December 31, 20192022 and 2018.2021. As the Canada and United Kingdom foreign subsidiaries are all in loss positions for 2019, there is2022, no GILTI inclusion is expected for these entities for the current year. In addition, the aforementioned sale of PFM Poland in 2021 did not result in any GILTI inclusion.

On March 27, 2020, the CARES Act was enacted and signed into law. The base-erosionCARES Act included a number of income tax law changes, including modifications to the interest limitation under Internal Revenue Code (“IRC”) §163(j) and anti-abuse tax provisions (“BEAT”) inreinstatement of the TCJA eliminates the deduction of certain base-erosion payments madeability to related foreign corporations, and imposes a minimum tax if greater than regular tax.carry back net operating losses. The Company does not expect it will be subject to this tax due to the immaterial amountsreceived forgiveness of outbound U.S. payments and therefore has notits PPP Loan effective June 15, 2021 which was included any tax impacts of BEAT in its consolidated financial statements for the years ended December 31, 2019 and 2018.Consolidated Statement of Operations as “Gain on extinguishment of debt” but was exempt from income taxes.

66

The Company had temporary differences and net operating loss carry forwards from both our continuing and discontinued operations, which gave rise to deferred tax assets and liabilities at December 31, 20192022 and 20182021 as follows (in thousands):

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

 2019 2018         
Deferred tax assets:      2022 2021 
Net operating losses $9,391  $9,540  $11,647  $10,057 
Environmental and closure reserves  1,977   2,124   2,269   2,040 
Lease liability  742      482   575 
Capital loss carryforward  756   740 
Other  1,295   1,263   936   1,099 
Deferred tax liabilities:                
Depreciation and amortization  (3,211)  (2,418)  (4,351)  (3,362)
Goodwill and indefinite lived intangible assets  (590)  (586)
Indefinite lived intangible assets  (503)  (464)
Right-of-use lease asset  (730)     (476)  (583)
481(a) adjustment  (336)     (53)  (104)
Prepaid expenses  (22)  (30)  (30)  (24)
  8,516   9,893 
Deferred tax assets, gross   10,677   9,974 
Valuation allowance  (9,106)  (10,479)  (6,560)  (6,447)
Net deferred income tax liabilities  (590)  (586)
Net deferred income tax asset  4,117   3,527 

In 2019 and 2018, the Company concluded that it was more likely than not that $9,106,000 and $10,479,000 of our deferred income tax assets would not be realized, and as such, a full valuation allowance was applied against those deferred income tax assets.

The Company has estimated net operating loss carryforwards (“NOLs”) for federal and state income tax purposes of approximately $20,548,000$25,413,000 and $57,809,000,$78,400,000, respectively, as of December 31, 2019. The estimated consolidated federal and state2022. These NOLs include approximately $2,410,000 and $3,763,000, respectively, of our majority-owned subsidiary, PF Medical, which is not part of our consolidated group for tax purposes. These net operating losses can be carried forward and applied against future taxable income, if any, and expire in various amounts starting in 2021.2022. Approximately $12,199,000$25,296,000 of our federal NOLs were generated after December 31, 2017 and thus do not expire. However, as a result of various stock offerings and certain acquisitions, which in the aggregate constitute a change in control, the use of these NOLs will be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended. Additionally, NOLs may be further limited under the provisions of Treasury Regulation 1.1502-21 regarding Separate Return Limitation Years.

The tax years 20172019 through 20192021 remain open to examination by taxing authorities in the jurisdictions in which the Company operates.

No uncertain tax positions were identified by the Company for the years currently open under statute of limitations, including 2019 and 2018.limitations.

The Company had no federal income tax payable for the years ended December 31, 20192022 and 2018.2021.

Beginning in 2022, the TCJA amended Section 174 to eliminate current-year deductibility of research and experimentation (“R&E”) expenditures and software development costs (collectively, “R&E expenditures”) and instead require taxpayers to charge their R&E expenditures to a capital account amortized over five years (15 years for expenditures attributable to R&E activity performed outside the United States). For the 2022 tax year, the Company has capitalized $303,000 of research and development expenses. While Management believes this estimate to be materially accurate, the Company plans to complete a formal IRC Section 174 analysis in advance of filing the tax return for the year ended December 31, 2022.

NOTE 15 PF MEDICAL

The Company made the strategic decision during the fourth quarter of 2021 to cease all R&D activities under its Medical Segment. The Medical Segment conducted its activities through the Company’s majority-owned Polish subsidiary, PFM Poland and PFM Poland’s wholly-owned subsidiary PFMC, a Delaware corporation. On December 30, 2021, the Company entered into a Sales of Shares Agreement (the “sales agreement”) for its entire stock ownership (60.54%) of PFM Poland for notes receivable of approximately $47,000 (USD) which was paid by the buyer in 2022. As condition precedent to the sales agreement, the Company released PFM Poland from unsatisfied trade payables owed by PFM Poland to the Company totaling approximately $2,537,000 (USD). The Company ceased to have any continuing involvement with PFM Poland.

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Immediately before the sales agreement was executed, the Company converted PFMC from a S Corporation to a limited liability company (Perm-Fix Medical LLC or “PFM LLC”) and acquired the entire ownership from the majority-owned Polish subsidiary for $10. The transaction was deemed to be a common control transaction and all assets and liabilities were transferred using the historical carrying values in accordance with guidance in ASC 805-50-25, “Business Combinations, Related Issues, Recognition.” The carrying amount of the non-controlling interest was adjusted to reflect the change in the ownership of the subsidiary. As a result, approximately $1,004,000 of the non-controlling interest related to the cumulative loss of PFM LLC was recognized as additional paid-in capital on the Company’s Consolidated Statements of Stockholders’ Equity and approximately $902,000 was recognized as a component within “Loss on deconsolidation of subsidiary” recorded on the Company’s Consolidated Statement of Operations.

As a result, effective December 30, 2021, PFM Poland was no longer a subsidiary of the Company and the Company deconsolidated the entity from its consolidated financial statements in accordance with guidance in ASC 810-10-40, “Consolidation, Overall, Derecognition.Accordingly, the December 31, 2021 Consolidated Balance Sheet did not in include balances for PFM due to the sale and deconsolidation of PFM Poland. The Company’s Consolidated Statements of Operations included results of its majority-owned Polish subsidiary for the period through December 30, 2021.

The Company recognized a non-cash “Loss on deconsolidation of subsidiary” of approximately $1,062,000 on its Consolidated Statements of Operation from the above transaction. The loss included approximately $94,000 in legal and accounting costs incurred for the transaction.

SCHEDULE OF LOSS ON DECONSOLIDATION

     
(In thousands)   
Note receivable consideration received $47 
     
Less:    
Carrying amount of non-controlling interest  902 
Carrying amount of accumulated other comprehensive loss  148 
Net liabilities  (35)
Transaction costs  94 
     
Loss on deconsolidation of subsidiary $(1,062)

 

NOTE 14

16 COMMITMENTS AND CONTINGENCIES

Hazardous Waste

In connection with our waste management services, we processthe Company processes hazardous, non-hazardous, low-level radioactive and mixed (containing both hazardous and non-hazardouslow-level radioactive) 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 at the disposal site, wethe 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, we arethe Company may be involved in various litigation. We areThe 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.

7168
 

InsuranceCH2M 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.

Our 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.

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 December 31, 2022, PF Canada has approximately $1,853,000 in unpaid receivables due from CNL as a result of work performed under the TOA. Additionally, CNL has approximately $1,060,000 in contractual holdback under the TOA that is payable to PF Canada. CNL also established a bond securing approximately $1,900,000 (CAD) to cover certain issues raised in connection with the TOA. Under the TOA, CNL may be entitled to set off certain costs and expenses incurred by CNL in connection with the termination of the TOA, including the bond as discussed above, against amounts owed to PF Canada for work performed by PF Canada or its subcontractors. PF Canada continues to be in discussions with CNL to finalize the amounts due to PF Canada under the TOA and continues to believe these amounts are due and payable to PF Canada.

Insurance

The Company has a 25-year25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with 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, providedprovides for a maximum allowable coverage of $39,000,000 which included available capacity to allow for annual inflation and other performance and surety bond requirements. As a result of the closure of the Company’s M&EC facility, on July 22, 2019, AIG released $5,000,000 of the finite risk sinking funds held as collateral under the 2003 Closure Policy to the Company. The finite risk sinking funds received by the Company are to be used for general working capital needs. In conjunction with the release of the finite risk sinking funds by AIG, total coverage under the 2003 Closure Policy was amended from $30,549,000 to $19,314,000. Additionally, the maximum coverage allowable under the 2003 Closure Policy was amended from $39,000,000 to approximately $28,177,000$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 $21,175,000 at December 31, 2021. At December 31, 20192022 and December 31, 2018,2021, 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 Consolidated Balance Sheets totaled $11,307,000$11,570,000 and $15,971,000,$11,471,000, respectively, which included interest earned of $1,836,000$2,099,000 and $1,500,000$2,000,000 on the finite risk sinking funds as of December 31, 20192022 and December 31, 2018,2021, respectively. Interest income for the year ended 20192022 and 20182021 was approximately $336,000$99,000 and $295,000,$25,000, respectively. If wethe Company so elect,elects, AIG is obligated to pay us an amount equal to 100%100% of the finite risk sinking fund account balance in return for complete release of liability from both us 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 December 31, 2019,2022, the total amount of standby letters of credit outstanding was approximately $2,639,000$3,016,000 and the total amount of bonds outstanding was approximately $28,937,000.$35,432,000.

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NOTE 15

17 PROFIT SHARING PLAN

The Company adopted a 401(k) Plan in 1992, which is intended to comply with Section 401 of the Internal Revenue Code and the provisions of the Employee Retirement Income Security Act of 1974. All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) Plan. Eligibility is immediate upon employment but enrollment is only allowed during four quarterly open periods of January 1, April 1, July 1, and October 1. Participating employees may make annual pretax contributions to their accounts up to 100%100% of their compensation, up to a maximum amount as limited by law. The Company, at its discretion, may make matching contributions of 25%25% based on the employee’s elective contributions. Company contributions vest over a period of five years.years. In 20192022 and 2018,2021, the Company contributed approximately $395,000$575,000 and $338,000$589,000 in 401(k) matching funds, respectively.

NOTE 16

18 RELATED PARTY TRANSACTIONS

David Centofanti

 

David Centofanti serves as our Vice President of Information Systems. For such position, he received annual compensation of $177,000$187,000 and $173,000$184,000 for 20192022 and 2018,2021, respectively. David Centofanti is the son of our EVP of Strategic Initiatives and a Board member, Dr. Louis Centofanti. Dr. Louis Centofanti previously held the position of President and CEO until September 8, 2017.member.

Robert Ferguson

Robert Ferguson previously served as an advisor to the Company’s Board until the first quarter of 2019 and continues to serve as a consultant to the Company relating to our TBI at our PFNWR facility (see “Note 6 – Capital Stock, Stock Plan, Warrants, and Stock Based Compensation” for a discussion of the options granted to Robert Ferguson in connection with the TBI initiatives). For his services to the Company, Robert Ferguson was paid $4,000 monthly plus reasonable expenses. Mr. Ferguson ceased to be a related party to the Company when he ceased providing advisory services to the Board.

Employment Agreements

 

The Company entered into an employment agreementsagreement dated July 22, 2020 with each of Mark Duff (President and CEO), Ben Naccarato (CFO), and Dr. Louis Centofanti, (EVP of Strategic Initiatives), with eachour executive officers (each employment agreement dated September 8, 2017. referred to as “Employment Agreement”).

Each of the employment agreementsEmployment Agreement is effective for three years from September 8, 2017July 22, 2020 (the “Initial Term”) unless earlier terminated by usthe Company or by the executive officer. At the end of the Initial Term of each employment agreement,Employment Agreement, each employment agreementEmployment Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, the Companywe or the executive officer provides written notice not to extend the terms of the employment agreement.Employment Agreement. Each employment agreementEmployment Agreement provides for annual base salaries,salary, performance bonuses as(as provided in the MIPManagement Incentive Plan (“MIP”) as approved by our Board,the Company’s Compensation Committee and Board) and other benefits commonly found in such agreements. In addition,agreement.

Pursuant to each Employment Agreement, if the executive officer’s employment agreement provides thatis terminated due to death/disability or for cause (as defined in the eventagreement), the Company will pay to the executive officer or to his estate an amount equal to the sum of any unpaid base salary and accrued unused vacation time through the date of termination and any benefits due to the executive officer under any employee benefit plan (the “Accrued Amounts”) plus any performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of termination.

If the executive officer terminates his employment for “good reason” (as defined in the agreements)agreement) or is terminated by the Company without cause (including the executive officer terminating his employmentany such termination for “good reason” or is terminated by us without cause within 24 months after a Change in Control (as defined in the agreement)), the Company will pay the executive officer the following: (a) a sum equal to any unpaid base salary; (b) accrued unused vacation time and any employee benefits accrued as of termination but not yet been paid (“Accrued Amounts”); (c)Amounts, two years of full base salary;salary, and (d) two times the performance compensation (under the MIP) earned with respect to the fiscal year immediately preceding the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the date of termination has not been paid. If performance compensation earned with respect to the fiscal year immediately preceding the date of termination has been made to the executive officer, the executive officer will be paid an additional year of the performance compensation earned with respect to the fiscal year immediately preceding the date of termination. If the executive terminates his employment for a reason other than for good reason, the Company will pay to the executive thean amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP.MIP with respect to the fiscal year immediately preceding the date of termination.

 

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If there is a Change in Control (as defined in the agreements)agreement), all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination through the original term of the options. In the event of the death of an executive officer, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’s death. In the event of an executive officer terminatingterminates his employment for “good reason” or is terminated by usthe Company without cause, all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’s date of termination. Severance benefits payable with respect to a termination (other than Accrued Amounts) shall not be payable until the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)).

MIPs

 

On January 17, 2019,20, 2022, the Company’s Board and the Compensation Committee also approved individual MIP for the CEO, CFO, and EVPcalendar year 2022 for each of Strategic Initiatives.our executive officers. Each MIP iswas effective January 1, 20192022 and applicable for the year ended December 31, 2019.2022. Each MIP providesprovided guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cashThe performance compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentageunder each of the executive’s annual 2019 base salary. TheMIPs was based upon meeting certain of the Company’s separate target objectives during 2022. Assuming each target objective was achieved under the same performance threshold range under each MIP, the total potential target performance compensation rangespayable ranged from 5%25% to 150%150% of the 20192022 base salary for the CEO ($14,35093,717 to $430,500)$562,304), 5%25% to 100%100% of the 20192022 base salary for the CFO ($11,76276,193 to $235,231)$304,772), and 5%25% to 100%100% of the 20192022 base salary for the EVP of Strategic Initiatives ($11,44963,495 to $228,985). The amount payable under$253,980), 25% to 100% of the 2019 MIP was approximately $110,700, $81,100, and $78,900,2022 base salary for the CEO, CFO, and EVP of Strategic Initiatives, respectively, which we anticipate will be paid in April 2020.

EachNuclear and Technical Services ($76,193 to $304,772) and 25% to 100% ($65,308 to $261,233) of the executives also had a MIP2022 base salary for the year ended December 31, 2018, which also provides guidelines for the calculationEVP of annual cash incentive-based compensation, similar to the 2019 MIPs discussed above.Waste Treatment Operations. No performance compensation was earned or payable under each of the 2018 MIPs.

NOTE 17

19 SEGMENT REPORTING

In accordance with ASC 280, “Segment Reporting”, 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 chief operating decision maker (“CODM”)CODM 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 threetwo reporting segments, which includeconsisting of the Treatment and Services Segments, which are based on a service offering approach; andapproach. The Company’s segment in 2021 also included the Medical whoseSegment which primary purpose iswas the R&D of a new medical isotope production technology. The Medical Segment hashad not generated any revenues andrevenues. During December 2021, the Company made the strategic decision to cease all costs incurred are reflected within R&D in the accompanying consolidated financial statements. As previously disclosed,activities under the Medical Segment has substantially reducedwhich resulted in the sale of 100% of its R&D costs and activities due to the needinterest of PFM Poland (see “Note 15 – PF Medical” for capital to fund these activities. The Company anticipates that the Medical Segment will not resume full R&D activities until the necessary capital is obtained through its own credit facility or additional equity raise, or obtains partners willing to provide funding for its R&D.a discussion of this transaction). Our reporting segments exclude our corporate headquarter, business center and our discontinued operations (see “Note 9 – Discontinued Operations”) which do not generate revenues.

The table below shows certain financial information of our reporting segments as of and for the years ended December 31, 20192022 and 20182021 (in thousands).

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SCHEDULE OF SEGMENT REPORTING INFORMATION

Segment Reporting as of and for the year ended December 31, 20192022

 

 Treatment Services Medical Segments Total Corporate (2) Consolidated Total  Treatment Services Segments
Total
   Corporate (2) Consolidated
Total
 
Revenue from external customers $40,364  $33,095     $73,459(3)(4) $  $73,459  $33,358  $37,241  $70,599(3)(4)  $  $70,599 
Intercompany revenues  329   38      367         56   213   269       
Gross profit  12,248   3,336      15,584      15,584   5,243   4,366   9,609      9,609 
Research and development  401   12   314   727   23   750   246   23   269   67   336 
Interest income              337   337             99   99 
Interest expense  (129)  (23)     (152)  (280)  (432)  (74)  (3)  (77)   (98)  (175)
Interest expense-financing fees              (208)  (208)     (1)  (1)   (60)  (61)
Depreciation and amortization  999   318      1,317   25   1,342   1,710   334   2,044   65   2,109 
Segment income (loss) before income taxes  7,973   795   (314)  8,454   (5,565)  2,889   1,531   1,565   3,096   (6,685)  (3,589)(13)
Income tax expense  153         153   4   157 
Income tax benefit  (236)  (133)  (369)   (9)  (378)
Segment income (loss)  7,820   795   (314)  8,301   (5,569)  2,732   1,767   1,698   3,465   (6,676)  (3,211)
Segment assets(1)  34,260   15,410(10)  16   49,686   16,829(5)  66,515   37,918   8,473(8)  46,391   24,507(5)  70,898 
Expenditures for segment assets (net)  169   1,366      1,535      1,535(9)  866   157   1,023      1,023(7)
Total debt              3,880   3,880(6)  482   5   487   552   1,039(6)

 

Segment Reporting as of and for the year ended December 31, 20182021

 Treatment Services Medical Segments Total Corporate (2) Consolidated Total  Treatment Services Medical Segments
Total
 Corporate (2) Consolidated
Total
 
Revenue from external customers $36,271  $13,268     $49,539(3)(4) $  $49,539  $32,992  $39,199     $72,191(3)(4) $  $72,191 
Intercompany revenues  509   70      579         1,265   47      1,312       
Gross profit  7,197   1,264      8,461      8,461   6,718   106      6,824      6,824 
Research and development  483      811   1,294   76   1,370   221   71   414   706   40   746 
Interest income              295   295   1         1   25   26 
Interest expense  (22)  (2)     (24)  (227)  (251)  (100)  (10)     (110)  (137)  (247)
Interest expense-financing fees              (38)  (38)     (1)     (1)  (40)  (41)
Depreciation and amortization  943   465      1,408   47   1,455   1,306   353      1,659   28   1,687 
Segment income (loss) before income taxes  4,550(7)  (756)  (811)  2,983   (4,993)  (2,010)  2,283   (3,044)  (1,476)(11)(12)  (2,237)  (561)(9)(11)  (2,798)
Income tax (benefit) expense  (943)(8)        (943)  7   (936)  (150)  (962)  26   (1,086)  (2,804)  (3,890)(10)
Segment income (loss)  5,493   (756)  (811)  3,926   (5,000)  (1,074)  2,433   (2,082)  (1,502)  (1,151)  2,243   1,092 
Segment assets(1)  32,800   5,188(10)  25   38,013   19,429(5)  57,442   37,050   15,244(8)  48   52,342   24,959(5)  77,301 
Expenditures for segment assets (net)  1,311   117      1,428   4   1,432(9)  1,363   205      1,568   9   1,577(7)
Total debt              3,302   3,302(6)  25   14      39   954   993(6)

(1)Segment assets have been adjusted for intercompany accounts to reflect actual assets for each segment.
  
(2)Amounts reflect the activity for corporate headquarters not included in the segment information.
  
(3)The Company performed services relating to waste generated by government clients (domestic and foreign (primarily Canadian)), either directly as a prime contractor or indirectly for others as a subcontractor to government entities, representing approximately $59,985,00060,030,000 or 81.7%85.0% of total revenue for 20192022 and $35,944,00060,812,000 or 72.6%84.2% of total revenue for 2018.2021. The following reflects such revenue generated by our two segments:

  2019  2018 
  Treatment  Services  Total  Treatment  Services  Total 
Domestic government $29,420  $25,077  $54,497  $25,181  $9,630  $34,811 
Foreign government  279   5,209   5,488   114   1,019   1,133 
Total $29,699  $30,286  $59,985  $25,295  $10,649  $35,944 

(4)The following table reflects revenue based on customer location:

  

  2019  2018 
United States $67,822  $48,301 
Canada  5,488   1,140 
United Kingdom  149   98 
Total $73,459  $49,539 

(5)Amount includes assets from our discontinued operations of $221,000$96,000 and $306,000$96,000 at December 31, 20192022 and 2018,2021, respectively.

(6)Net of debt discount/debt issuance costs of ($340,000)88,000) and ($80,000)112,000) for 20192022 and 2018,2021, respectively (see “Note 10 – “Long-Term Debt” for additional information).

(7)Amount includes a net gain of $1,596,000 recorded resulting from the exchange offer of the Series B Preferred Stock of the Company’s M&EC subsidiary (see “Note 8 – Series B Preferred Stock”)
(8)For the year ended December 31, 2018, amount includes a tax benefit recorded in the amount of approximately $1,235,000 resulting from certain provisions of the TCJA (see “Note 13 – Income Taxes” for further information of this tax benefit).
(9)Net of financed amount of $393,000$114,000 and $545,000$585,000 for the year ended December 31, 20192022 and 2018,2021, respectively.

(8)
(10)Includes long-lived asset (net) for our PF Canada, Inc. subsidiary of $41,000$0 and $0,$25,000 for the year ended December 31, 20192022 and 2018,2021, respectively.

(9)Amount includes approximately $5,381,000 of “Gain on extinguishment of debt” recorded in connection with the Company’s PPP Loan which was forgiven by the SBA effective June 15, 2021 (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act (“CARES ACT”) – Paycheck Protection Program (“PPP”) Loan” for information of this loan forgiveness).

(10)Includes tax benefit recorded in amount of approximately $2,351,000 resulting from release of valuation allowance on the Company’s deferred tax assets.

(11)Includes elimination of gain/loss of $2,537,000 in debt forgiveness between PFM Poland and the Company (see “Note 15 – PF Medical” for a discussion of this debt forgiveness).

(12)Amount includes a “Loss on deconsolidation of subsidiary” recorded in the amount of approximately $1,062,000 resulting from the sale of PFM Poland (see “Note 15 – PF Medical” for a discussion of this loss).

(13)Includes approximately $1,975,000 recorded as other income under the Employee Retention Credit program under the CARES Act, as amended (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act (“CARES ACT”) – Employee Retention Credit (“ERC”)” for a discussion of this expected refund amount).

SCHEDULE OF REVENUE BY MAJOR CUSTOMERS BY REPORTING SEGMENTS

  2022  2021 
  Treatment  Services  Total  Treatment  Services  Total 
Domestic government $23,752  $35,906  $59,658  $22,538  $29,013  $51,551 
Foreign government  574   (202)  372   577   8,684   9,261 
Total $24,326  $35,704  $60,030  $23,115  $37,697  $60,812 

(4)The following table reflects revenue based on customer location:

SCHEDULE OF REVENUE BASED ON CUSTOMER LOCATION

  2022  2021 
United States $69,373  $62,257 
Canada  406   9,277 
Germany  678   567 
Italy  14    
United Kingdom  128   90 
Total $70,599  $72,191 

(5)Amount includes assets from our discontinued operations of $96,000 and $96,000 at December 31, 2022 and 2021, respectively.

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(6)Net of debt issuance costs of ($88,000) and ($112,000) for 2022 and 2021, respectively (see “Note 10 – “Long-Term Debt” for additional information).

(7)Net of financed amount of $114,000 and $585,000 for the year ended December 31, 2022 and 2021, respectively.

(8)Includes long-lived asset (net) for our PF Canada, Inc. subsidiary of $0 and $25,000 for the year ended December 31, 2022 and 2021, respectively.

(9)Amount includes approximately $5,381,000 of “Gain on extinguishment of debt” recorded in connection with the Company’s PPP Loan which was forgiven by the SBA effective June 15, 2021 (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act (“CARES ACT”) – Paycheck Protection Program (“PPP”) Loan” for information of this loan forgiveness).

(10)Includes tax benefit recorded in amount of approximately $2,351,000 resulting from release of valuation allowance on the Company’s deferred tax assets.

(11)Includes elimination of gain/loss of $2,537,000 in debt forgiveness between PFM Poland and the Company (see “Note 15 – PF Medical” for a discussion of this debt forgiveness).

(12)Amount includes a “Loss on deconsolidation of subsidiary” recorded in the amount of approximately $1,062,000 resulting from the sale of PFM Poland (see “Note 15 – PF Medical” for a discussion of this loss).

(13)Includes approximately $1,975,000 recorded as other income under the Employee Retention Credit program under the CARES Act, as amended (see “Note 11 – Coronavirus Aid, Relief and Economic Securities Act (“CARES ACT”) – Employee Retention Credit (“ERC”)” for a discussion of this expected refund amount).

 

NOTE 18

20 SUBSEQUENT EVENTS

Management evaluated events occurring subsequent to December 31, 2022 through March 23, 2023, the date these consolidated financial statements were available for issuance, and other than as noted below determined that no material recognizable subsequent events occurred.

Executive Compensation

MIPs

On January 16, 2020,19, 2023, the Company’s Board and the Compensation Committee approved individual MIP for the calendar year 2023 for each Mark Duff, CEO and President, Ben Naccarato, CFO, and Dr. Louis Centofanti, EVP of Strategic Initiatives. Additionally, the Board and the Compensation Committee approved aour executive officers. Each MIP for Andy Lombardo, who was elected EVP of Nuclear and Technical Services and an executive officer of the Company. Mr. Lombardo previously held the position of Senior Vice President (“SVP”) of Nuclear and Technical Services. The MIPs areis effective January 1, 20202023 and applicable for year ended December 31, 2020.2023. Each MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cashThe performance compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentageunder each of the executive’s 2020 annual base salary (see below for salaryMIPs is based upon meeting certain of the Company’s separate target objectives during 2023. Assuming each executive officers for 2020). Thetarget objective is achieved under the same performance threshold range under each MIP, the total potential target performance compensation payable ranges from 5%25% to 150%150% of the 2023 base salary for the CEO ($17,22093,717 to $516,600)$562,305), 5%25% to 100%100% of the 2023 base salary for the CFO ($14,00076,193 to $280,000)$304,772), 5%25% to 100%100% of the 2023 base salary for the EVP of Strategic Initiatives ($11,66763,495 to $233,336) and 5%$253,980), 25% to 100%100% of the 2023 base salary for the EVP of Nuclear and Technical Services ($14,00076,193 to $280,000).$304,772) and 25% to 100% ($65,308 to $261,233) of the 2023 base salary for the EVP of Waste Treatment Operations.

SalaryISOs

On January 16, 2020,19, 2023, the Board,Company granted ISOs to certain employees for the purchase, under the Company’s 2017 Plan, of up to an aggregate 295,000 shares of the Company’s 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 CEO; 40,000 shares for the CFO; 30,000 shares for the 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 the 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.

Credit Facility

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

removed the quarterly FCCR testing requirement for the fourth quarter of 2022 and removes the FCCR testing requirement the first quarter of 2023;
reduced the maximum revolving credit line under the credit facility from $18,000,000 to $12,500,000;
reinstates the quarterly FCCR testing requirement starting in the second quarter of 2023 using a trailing twelve months period (with no change to the minimum 1.15:1 ratio requirement for each quarter); and
requires 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.

In connection with the approvalamendment, the Company paid its lender a fee of the Compensation Committee approved the following salary increase for the Company’s NEO effective January 1, 2020:$25,000.

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 Annual base salary for Mark Duff, CEO and President, was increased to $344,400 from $287,000.
Annual base salary for Ben Naccarato, who was promoted to EVP and CFO from VP and CFO, was increased to $280,000 from $235,231; and
Annual base salary for Andy Lombardo, who was elected to EVP of Nuclear and Technical Services as discussed above, was increased to $280,000 from $258,662, which was the annual base salary that Mr. Lombardo was paid as SVP of Nuclear and Technical Services and prior to his election as an executive officer of the Company by the Board.

Coronavirus (“Covid-19”)

The spread of Coronavirus around the world in the first quarter of 2020 has resulted in significant volatility in the U.S. and international markets. Currently, there is significant uncertainty around the breadth and duration of business disruptions related to the Coronavirus, as well as its impact on the U.S and international economies. As a result of the Coronavirus, the Company has been informed that certain field projects for remediation work are being suspended until further notice due to precautions associated with the risk of potential virus spread among staff and client. Additionally, certain customers have delayed waste shipments to us into the second quarter of 2020 that were originally scheduled for the first quarter of 2020. At this time, the Company is unable to determine if the Coronavirus will have a material impact to its operations.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A.CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.

Evaluation of disclosure controls and procedures.

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission (the “Commission”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including the Chief Executive Officer (“CEO”) (Principal Executive Officer), and Chief Financial Officer (“CFO”) (Principal Financial Officer), as appropriate to allow timely decisions regarding the required disclosure. In designing and assessing our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their stated control objectives and are subject to certain limitations, including the exercise of judgment by individuals, the difficulty in identifying unlikely future events, and the difficulty in eliminating misconduct completely. Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended. Based upon this assessment, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of December 31, 2019.2022.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements or fraudulent acts. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed, can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the consolidated financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with appropriate authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

 

In our annual report on Form 10-K for the year ended December 31, 2021 and our quarterly reports on Form 10-Q for the periods ended March 31, 22, June 30, 2022 and September 30, 2022, management concluded that internal controls over financial reporting were not effective as of those dates because of a material weakness in our internal control over financial reporting as described below. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is reasonable possibility that a material misstatement of a Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Certain revenue contracts that contained nonstandard terms and conditions were not appropriately evaluated in accordance with ASC 606, “Revenue from Contracts with Customers.” Specifically, management did not have the appropriate controls in place over the determination of revenue recognition for nonroutine and complex revenue transactions. The material weakness identified resulted in errors in the Company’s books and records in fiscal year 2021 which led to audit adjustments. However, the errors arising from the underlying revenue adjustments were not material to the financial statements reported in any interim or annual period and therefore, did not result in a revision to any previously filed financial statements.

During the year ended December 31, 2022, management implemented its remediation plan which included the following:

consulted with third-party experts for guidance on large and/or unique contracts to ensure ASC 606 guidance was accurately applied and documented;
updated our ASC 606 revenue templates to ensure unique contract provisions were able to be identified so ASC 606 guidance was applied accurately;
instituted more robust collaboration with the Company’s operation personnel to identify nonstandard contract terms in order to determine appropriate treatment under ASC 606; and
continued training of accounting and operations personnel on ASC 606 by subject matter experts and internal financial department to ensure proper application of guidance under ASC 606.

We tested and evaluated the design and operating effectiveness of our remediation plan and have determined that the material weakness identified above has been remediated.

Management, with the participation of our CEO and CFO, conducted an assessment of the effectiveness of internal control over financial reporting as of December 31, 20192022 based on the framework inInternal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management with the participation ofand our CEO and CFO, concluded that the Company’s internal control over financial reporting was effective as of December 31, 2019.2022.

 

This Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Since the Company is not a large accelerated filer or an accelerated filer, management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the Commission that permit the Company to provide only management’s report in this Form 10-K.

 

Changes in Internal Control over Financial Reporting

 

ThereOther than the steps taken in implementing our remediation plan as discussed above, there was no other change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 20192022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

DIRECTORS

The following table sets forth, as of the date of this Report, information concerning our Board of Directors (“Board”(the “Board”):

NAME(1) AGE 

POSITION

Mr. Thomas P. Bostick66Director
Dr. Louis F. Centofanti 7679 

Director; Executive Vice President (“EVP”)EVP of Strategic Initiatives; President of Perma-Fix Medical (“PF Medical”)Initiatives

Ms. Kerry C. Duggan44Director
Mr. Joseph T. Grumski(2) 5861 Director
The Honorable Joe R. Reeder 7275 Director
Mr. Larry M. Shelton 6669 Chairman of the Board
Mr.The Honorable Zach P. Wamp 6265 Director
Mr. Mark A. Zwecker 6972 Director

Each director is elected to serve until the next annual meeting of stockholders.stockholders or until their respective successors are duly elected and qualified.

(1)Mr. Stanley Robert Cochran, who had served on the Company’s Board of Director since January 2017, resigned from the Board effective October 18, 2019. Mr. Cochran’s decision to resign from the Board was based on personal reasons and was not as a result of any disagreement with the Company or due to any matter relating to the Company’s operations, policies or practices.
(2)Mr. Grumski was unanimously elected by the Board effective February 4, 2020 to fill the board vacancy left by Mr. Cochran’s resignation.

Director Information

Our directors and executive officers, their ages, the positions with us held by each of them, the periods during which they have served in such positions and a summary of their recent business experience isare set forth below. Each of the biographies of the current directors listed below also contains information regarding such person’s service as a director, business experience, director positions with other public companies held currently or at any time during the past five years, and the experience, qualifications, attributes and skills that our Board considered in nominating or appointing each of them to serve as one of our directors.

Mr. Thomas P. Bostick

Mr. Bostick, a director since August 2020, is currently the Chief Executive Officer (“CEO”) of Bostick Global Strategies, LLC, a position he has held since July 2016. Bostick Global Strategies, LLC provides strategic advisory support in the areas of engineering, environmental sustainability, human resources, biotechnology, education, executive coaching, and Agile Project Management. In February 2021, Mr. Bostick was selected by U. S. Senator Jack Reed, Chairman of the Senate Armed Services Committee, to serve as a member of the Naming Commission consisting of eight appointed individuals, tasked with renaming Confederate-named military bases and property. Mr. Bostick previously served (from November 2017 to February 2020) as the Chief Operating Officer (“COO”) and President of Intrexon Bioengineering, a division of Intrexon Corporation (formerly NASDAQ: XON; now NASDAQ: PGEN). Intrexon Bioengineering addresses global challenges across food, agriculture, environmental, energy, and industrial fields by advancing biologically engineered solutions to improve sustainability and efficiency. Since October 2020, Mr. Bostick has served as a board member of CSX Corporation (NASDAQ: CSX), a publicly-held rail transportation company, and since December 2020, as a member of both the Finance Committee and the Governance Committee of CSX Corporation. Since June 2021, Mr. Bostick has served on the Board of Trustees of Fidelity Equity and High Income Funds overseeing equity funds and high yield funds sponsored by Fidelity Investments, Inc., a privately-owned investment management company. Mr. Bostick continues to serve as a board member for several other privately-held and nonprofit organizations. Mr. Bostick was named as one of 2021’s Most Influential Black Corporate Directors by Savoy Magazine, a national publication that showcases and drives positive dialogue about Black culture.

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Mr. Bostick has had a distinguished career in the U.S. military, retiring from the U.S. Army in July 2016 with the rank of Lieutenant General. Prior to his retirement, General Bostick held a variety of positions within the U.S. Army, including the 53rd Chief of Engineers and Commanding General, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick has been awarded many military honors and decorations during his military career, including the Distinguished Service Medal, the Defense Superior Service Medal, and the Bronze Star Medal.

As a White House Fellow, one of America’s most prestigious programs for leadership and public service, General Bostick was a special assistant to the Secretary of Veterans Affairs. He graduated with a Bachelor of Science degree from the U.S. Military Academy at West Point and later returned to the Academy to serve as an Associate Professor of Mechanical Engineering. He holds Master’s degrees in Civil Engineering and Mechanical Engineering from Stanford University and a Doctorate in Systems Engineering from George Washington University. He is a Member of the National Academy of Engineering and the National Academy of Construction.

Mr. Bostick’s distinguished career in both the government and private sectors brings valuable experience and insight into solving complex issues domestically and globally. His extensive knowledge and problem-solving experiences enhance the Board’s ability to address significant challenges in the nuclear market and led the Board to conclude that he should serve as a director.

Dr. Louis F. Centofanti

Dr. Centofanti, the founder of the Company and a director of the Company since its inception in 1991, currently holds the position of EVP of Strategic Initiatives. Effective January 26, 2018, Dr. Centofanti was appointed to the position of President of PF Medical and is no longer a member of the Supervisory Board of PF Medical (a position he had held since June 2, 2015). From March 1996 to September 8, 2017 and from February 1991 to September 1995, Dr. Centofanti held the position of President and Chief Executive Officer (“CEO”)CEO of the Company. Dr. Centofanti served as Chairman of the Board from the Company’s inception in February 1991 until December 16, 2014. In January 2015, Dr. Centofanti was appointed by the U.S Secretary of Commerce Penny Prizker to serve on the U.S. Department of Commerce’s Civil Nuclear Trade Advisory Committee (CINTAC)(“CINTAC”). The CINTAC is composed of industry representatives from the civil nuclear industry and meets periodically throughout the year to discuss the critical trade issues facing the U.S. civil nuclear sector. From 1985 until joining the Company, Dr. Centofanti served as Senior Vice President (“SVP”)SVP of USPCI, Inc., a large publicly-held hazardous waste management company, where he was responsible for managing the treatment, reclamation and technical groups within USPCI. In 1981, he and Mark Zwecker, a current Board member of the Company, founded PPM, Inc. (later sold to USPCI), a hazardous waste management company specializing in treating PCB-contaminated oil. From 1978 to 1981, Dr. Centofanti served as Regional Administrator of the U.S. Department of Energy for the southeastern region of the United States. Dr. Centofanti has a Ph.D. and a M.S. in Chemistry from the University of Michigan, and a B.S. in Chemistry from Youngstown State University.

As founder of Perma-Fix and PPM, Inc., and as a senior executive at USPCI, Dr. Centofanti combines extensive business experience in the waste management industry with a drive for innovative technology which is critical for a waste management company. In addition, his service in the government sector provides a solid foundation for the continuing growth of the Company, particularly within the Company’s Nuclear business. Dr. Centofanti’s comprehensive understanding of the Company’s operations and his extensive knowledge of its history, coupled with his drive for innovation and excellence, positions Dr. Centofanti to optimize our role in this competitive, evolving market, andled the Board to conclude that he should serve as a director.

77

Kerry C. Duggan

Ms. Duggan, a director of the Company since May 2021, is the founder of SustainabiliD, a woman-owned advisory services firm working with gamechangers to equitably solve the climate crisis. She has been named the founding director of the University of Michigan’s SEAS Sustainability Clinic in Detroit.

In 2021, Ms. Duggan was appointed to the Department of Energy’s prestigious Secretary of Energy Advisory Board, serving under Secretary Jennifer Granholm. In February 2021, Michigan Governor Gretchen Whitmer also appointed Duggan to the State of Michigan’s Council on Climate Solutions, to advise on the implementation of the MI Healthy Climate Plan, to reduce greenhouse gas emissions and to transition toward economy-wide carbon neutrality. In 2020-21, Ms. Duggan was a member of the Biden-Harris Transition Team on the Department of Energy Agency Review Team. In May 2020, Ms. Duggan was named a member of the Biden-Sanders Unity Task Force on Climate Change, serving as one of Biden’s five delegates alongside Gina McCarthy and Sec. John Kerry; and later co-chaired the climate change policy committee and served as a Surrogate for the Biden campaign.

Previously, Ms. Duggan served nearly seven years in public-service leadership roles, including inside the Obama-Biden White House as Deputy Director for Policy in the Office of Vice President Biden Policy to then Vice President Joe Biden for energy, environment, climate, and distressed communities. Simultaneously, she served as Deputy Director of the Detroit Federal Working Group to support Detroit’s revitalization. Prior to the White House, Ms. Duggan held several senior roles at the Department of Energy, including as Secretary Moniz’s embedded Liaison to the City of Detroit (where she championed a citywide LED streetlight conversion), and in the Office of Energy Efficiency & Renewable Energy as Director of Stakeholder Engagement, Director of Legislative, Regulatory & Urban Affairs, and as a Senior Policy Advisor.

After her time in federal service, Ms. Duggan co-founded the Smart Cities Lab, was a Partner with the Honorable Thomas J. Ridge’s firm, RIDGE-LANE Limited Partners, and served on the external advisory board of the University of Michigan’s Erb Institute for Global Sustainable Enterprise and was a Board Member at the Global Council for Science and the Environment. She was also a Trustee of the University Liggett School. In 2018, Ms. Duggan was named to the prestigious “40 Under 40” list by Crain’s Detroit Business. She previously worked at the League of Conservation Voters in Washington, D.C.

Currently, Ms. Duggan serves as a senior advisor at The RockCreek Group, LP, a registered private fund adviser that manages fund of funds portfolios and direct equity trading portfolios. She also sits on the corporate advisory boards of Our Next Energy, Inc. (ONE), a privately-held energy storage solutions company; Aclima, Inc., a public benefit corporation dedicated to protecting public health, reducing climate-changing emissions, and advancing environmental justice; BlueConduit, a privately-held water analytics company that builds machine learning software to support the efficient removal of lead and other dangerous materials from communities; Walker-Miller Energy Services, L.L.C., a privately-held energy efficiency services company; Commonweal Investors, a private equity firm that invests in early-stage technology companies advancing a sustainable economy, upgrading transportation and infrastructure systems, and revitalizing the urban environment; and Arctaris Impact Investors, LLC, an investment management company that manages funds which invest in growth-oriented operating businesses and community infrastructure projects located in underserved communities, among others.

Ms. Duggan earned her B.S. in Environmental Studies from the University of Vermont and her M.S. in Natural Resource Policy & Behavior from the University of Michigan.

Ms. Duggan’s career in both the government and private sectors brings valuable experience and insight into solving complex issues. Her extensive knowledge and problem-solving experiences, with an Environmental, Social and Governance (“ESG”) mindset and Diversity, Equity and Inclusion (“DEI”) core values, led the Board to conclude that she should serve as a director.

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Mr. Joseph T. Grumski

Effective February 4, 2020, Mr. Grumski, was unanimously elected by the Board as a director of the Company since February 2020, has served since April 2020 as the President and CEO of TAS Energy Inc. (“TAS”), a wholly-owned subsidiary of Comfort Systems USA, Inc. (NYSE: FIX), a publicly-held company that provides mechanical and electrical contracting services in 139 locations and 114 cities throughout the United States. Prior to fill the vacancy leftacquisition of TAS by Mr. Cochran’s resignation effective October 18, 2019.Since May 2013,Comfort Systems USA, Inc., Mr. Grumski has beenserved as President and CEO and a board member of TAS Energy Inc. (“TAS”), a company that delivers efficient modular systems manufactured offsite and utilized in power, data centers, industrial and commercial applications. TAS has successfully managed over 400 projects in over 32 countries.from May 2013 to March 2020. From 1997 to February 2013, Mr. Grumski was employed with Science Applications International Corporation (“SAIC”) (NYSE: SAIC), a publicly-held company that provides government services and information technology support. During his employment with SAIC, Mr. Grumski held various senior management positions, including the positions of President of SAIC’s Energy, Environment & Infrastructure (“E2I”) commercial subsidiary and General Manager of the E2I Business Unit. SAIC’s E2I commercial subsidiary and Business Unit is comprised of approximately 5,200 employees performing over $1.1B$1.1 billion of services for federal, commercial, utility and state customers. Mr. Grumski’s many accomplishments with SAIC included growing SAIC’s $300M$300 million federal environmental business to a top ranked, $1.1B$1.1 billion business; receiving the National Safety Council “Industry Leader” award in 2009; and receiving highest senior executive performance rating three years in a row. Mr. Grumski began his career with Gulf Oil Company and has progressed through senior level engineering, operations management, and program management positions with various companies, including Westinghouse Electric Corporation and Lockheed Martin, Inc. Mr. Grumski received a B.S. in Mechanical Engineering from The University of Pittsburgh and a M.S in Mechanical Engineering from West Virginia University.

Mr. Grumski has had an extensive career in solving and overseeing solutions to complex issues involving both domestic and international concerns. In addition, his extensive experience in companies that provide services to the government sector as well as his experience in the commercial sector provide solid experience for the continuing growth of the Company’s Treatment and Services Segment. HisMr. Grumski’s extensive knowledge and problem-solving experiences, executive operational leadership experience and governance experience enhance the Board’s ability to address significant challenges in the nuclear market, and led the Board to conclude that he should serve as sa director.

The Honorable Joe R. Reeder

Mr. Reeder, a director since 2003, is a principal shareholder inof the law firm of Greenberg Traurig LLP, one of the nation’s largest U.S.-based law firms, with 41 offices43 locations and approximately 2,2002,500 attorneys worldwide, andfor which Mr. Reeder served as Shareholder-in-Charge of the law firm’s Mid-Atlantic Region of the law firmoffices from 1999 to 2008. Mr. Reeder’sHis clientele includes celebrities, heads of state, sovereign nations, international corporations, and law firms. As the 14th Undersecretary of the U.S. Army (1993-97), Mr. Reederhe also served three years as Chairman of the Panama Canal Commission’s Board, overseeing a multibillion-dollar infrastructure program. For the past 18 years, he has served on the Canal’s International Advisory Board. He has written extensively in leading journals on the subject of corporate cybersecurity, served on the boards of the National Defense Industry Association (“NDIA”), chairing NDIA’s Ethics Committee, the Armed Services YMCA, the Marshall Legacy Institute, and many other private companies and charitable organizations. Mr. Reeder served as a director of ELBIT Systems of America, LLC, (2005-2020), a subsidiary of Elbit Systems Ltd. (NASDAQ: ESLT), a multi-billion-dollar provider of defense, homeland security, and commercial aviation system solutions. Mr. Reeder has served as a director of WashingtonFirst Bank, the bank subsidiary of WashingtonFirst Bankshares, Inc. (NASDAQ: WSBI), from 2004 to 2017; as a director of WashingtonFirst Bankshares, Inc., from 2009 to 2017; Sandy Spring Bancorp, Inc. (NASDAQ: SASR), from 2018 to 2020; and Trustar Bank, a Virginia state-chartered bank (2022 - present).

After successive 4-year appointments by Virginia Governors Mark Warner and Tim Kaine, Mr. Reeder served seven years as Chairman of two Commonwealth of Virginia military boards, and ten10 years on the USO Board of Governors of United Service Organizations (USO). Mr. Reeder was appointedGovernors. Appointed by former Governor Terry McAuliffe to the Virginia Military Institute’s Board of Visitors (2014), andhe was reappointed in 2018 by currentformer Virginia Governor Ralph Northam.Northam, with his term ending in 2022. Mr. Reeder, is alsowho has been a television commentator on legal and national security issues. Among other corporate positions, heissues, has consistently been named a director since September 2005Super Lawyer for ELBIT Systems of America, LLC, a subsidiary of Elbit Systems Ltd. (NASDAQ: ESLT)Washington, D.C., that provides product and system solutions focusing on defense, homeland security, and commercial aviation. Mr. Reeder served on the Washington First Bank board from 2004 to 2017, and, since January 2018, has served on the board of Sandy Spring Bancorp, Inc. (NASDAQ: SASR), and, since April 2018, its Audit Committee.most recently in 2022.

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In May 2018 Mr. Reeder was appointed to the Advisory Council Bid Protest Committee to the United States Court of Federal Claims.

A West Point graduate who served in the 82nd Airborne Division after Ranger School, Mr. Reeder earned his J.D. from the University of Texas, and L.L.M. from Georgetown University.

Mr. Reeder’Reeder has devoted his career has focused on solving and overseeing solutions to resolving complex domestic and international issues. His problem-solving experience has enhancedissues, and continues to greatly enhance the Board’s ability to address major challenges in the nuclear market as well asand day-to-day corporate, and Washington D.C.- related challenges. These factorsled the Board to conclude that he should serve as a director.

Mr. Larry M. Shelton

Mr. Shelton, a director since July 2006, has also held the position of Chairman of the Board of the Company since December 16, 2014. Mr. Shelton served as the Chief Financial Officer (“CFO”)CFO of S K Hart Management, LLC, a private investment management company (“S K Hart Management”), from 1999 until August 31, 2018, when he resigned from his duties as CFO to pursue personal interests. Mr. Shelton remains an employee of and provides advisory services to S K Hart Management.2018. Mr. Shelton served as President of Pony Express Land Development, Inc. (an affiliate of SK Hart Management), a privately held land development company, from January 2013 to until August 2017, and has served on its board since December 2005. In March 2012, he was appointedMr. Shelton served as Director and CFO of S K Hart Ranches (PTY) Ltd, a private South African Company involved in agriculture.agriculture, from March 2012 to March 2020. Mr. Shelton served as a member of the Supervisory Board of PF Medical from April 2014continues to December 2016.provide advisory services to S K Hart Ranches (PTY) Ltd. Mr. Shelton has over 1920 years of experience as an executive financial officer for several waste management companies, including as CFO of Envirocare of Utah, Inc. (now EnergySolutions, Inc. (1995–1999)), a privately held nuclear waste services company, and as CFO of USPCI, Inc. (1982–1987), then a NYSE- listed public company engaged in the hazardous waste business. Since July 1989, Mr. Shelton has served on the board of Subsurface Technologies, Inc., a privately held company specializing in providing environmentally sound innovative solutions for water well rehabilitation and development. Mr. Shelton has a B.A. in accounting from the University of Oklahoma.

With his years of accounting experience as CFO for various companies, including a number of waste management companies, Mr. Shelton combines extensive industry knowledge and understanding of accounting principles, financial reporting requirements, evaluating and overseeing financial reporting processes and business matters. These factorsled the Board to conclude that he should serve as a director.

The Honorable Zach P. Wamp

Mr. Wamp, a director since January 2018, is currently the President of Zach Wamp Consulting, a position he has held since 2011. As the President and owner of Zach Wamp Consulting, he has served some of the most prominent companies from Silicon Valley to Wall Street as a business development consultant and advisor. From September 2013 to November 2017, Mr. Wamp chaired the Board of Directors for Chicago Bridge and Iron Federal Services, LLC (a subsidiary of Chicago Bridge & Iron Company, NYSE: CBI, which provides critical services primarily to the U.S. government). From January 1995 to January 2011, Mr. Wamp served as a member of the U.S. House of Representatives from Tennessee’s 3rd Congressional District. His district included the Oak Ridge National Laboratory, with strong science and research missions from energy to homeland security. Among his many accomplishments, which included various leadership roles in the advancement of education and science, Mr. Wamp was instrumental in the formation and success of the Tennessee Valley Technology Corridor, which created thousands of jobs for Tennesseans in the areas of high-tech research, development, and manufacturing. During his career in the political arena, Mr. Wamp served on several prominent subcommittees during his 14 years on the House Appropriations Committee, including serving as a “ranking member” of the Subcommittee on Military Construction and Veterans Affairs and Related Agencies. Mr. Wamp has been a regular panelist on numerous media outlets and has been featured in a number of national publications effectively articulating sound social and economic policy. Mr. Wamp’s business career has also included work in the real estate sector for a number of years as a licensed industrial-commercial real estate broker, wherefor which he was named Chattanooga’s Small Business Person of the Year. He is a founding partner infounder and Board Chair of Learning Blade, the nation’s premiere STEM education platform, which is now operating at some level in 28six states with deployment in another 10 states. Learning Blade is owned and operated by SAI Interactive, Inc., d/b/a Thinking Media, a privately-held educational products and services company.

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Mr. Wamp has an extensive career in solving and overseeing solutions to complex issues involving domestic concerns. In addition, his wide-ranging career, particularly with respect to his government-related work, provides solid experience for the continuing growth of the Company’s Treatment and Services Segments. His extensive knowledge and problem-solving expertise enhance the Board’s ability to address significant challenges in the nuclear market, andled the Board to conclude that he should serve as a director.

Mr. Mark A. Zwecker

MarkMr. Zwecker, a director since the Company’s inception in January 1991, previously served as the CFO and a board member for JCI US Inc. from 2013 until his retirement on December 31,to 2019. JCI US Inc. is a telecommunications company and wholly-owned subsidiary of Japan Communications, Inc. (Tokyo Stock Exchange (Securities Code: 9424)), which provides cellular service for M2M (machine to machine) applications. From 2006 to 2013, Mr. Zwecker served as Director of Finance for Communications Security and Compliance Technologies, Inc., a wholly-owned subsidiary of JCI US Inc. that develops security software products for the mobile workforce. From 1997 to 2006, Mr. Zwecker served ashas held various other senior management positions, including President of ACI Technology, LLC, ana privately-held IT services provider, and from 1986 to 1998, he served as Vice President of Finance and Administration for American Combustion, Inc., a privately-held combustion technology solutions provider. In 1983,1981, with Dr. Centofanti, Mr. Zwecker co-founded a start-up, PPM, Inc., a hazardous waste management company. He remained with PPM, Inc. until its acquisition in 1985 by USPCI. Mr. Zwecker has a B.S. in Industrial and Systems Engineering from the Georgia Institute of Technology and an M.B.A. from Harvard University.

As a director since our inception, Mr. Zwecker’s understanding of our business provides valuable insight to the Board. With years of experience in operations and finance for various companies, including a number of waste management companies, Mr. Zwecker combines extensive knowledge of accounting principles, financial reporting rules and regulations, the ability to evaluate financial results, and understanding of financial reporting processes. He has an extensive background in operating complex organizations. Mr. Zwecker’s experience and background position him well to serve as a member of our Board. These factorsled the Board to conclude that he should serve as a director.

BOARD LEADERSHIP STRUCTUREBoard Skills Matrix

We currently separate the roles of Chairman of the Board and CEO. The Board believes that this leadership structure promotes balance between the Board’s independent authority to oversee our business, and the CEO and his management team, who manage the business on a day-to-day basis.

The Company does not haveis focused on nominating a written policyBoard of Directors with respecta balance of functional expertise, leadership experience, high moral character, critical thinking, and a diversity of backgrounds and tenure necessary to the separation of the positions of Chairman of the Board and CEO. The Company believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and CEO in any way that is in the best interests of the Company at a given point in time; therefore,effectively oversee the Company’s leadership structure may change inbusiness. The Company’s Corporate Governance and Nominating Committee is responsible for developing the future as circumstances may dictate.

Mr. Mark Zwecker, a current member ofcriteria and qualifications required for directors. The following Board Skills Matrix below reflects how certain relevant and important skills, experience, characteristics and other criteria are currently represented on our Board, continues to serve as the Independent Lead Director, a position he has held since February 2010. The Lead Director’s role includes:Board.

 

KEY SKILLS/EXPERIENCEconveningNUMBER
OF DIRECTORS
Corporate Governance:
Supports management and chairing meetingsboard accountability, transparency and protection of shareholder interests
8
Financial Literacy:
Knowledge of financial reporting, internal controls and procedures and complex financial transactions, as is involved with the Company business
6
Government/DOE/DOD Policies:
Significant work experience with government decision makers
8

Business/Investment Structures:

Work experience with infrastructure for financial interests and proven success

7
Risk Management and Compliance:
Understanding and experience with identification, assessment and oversight of risk management and programs, including cyber-security risks
8
Nuclear Waste Management:
Understanding the compliance and environmentally responsible nuclear services and radioactive waste management solutions
6
Environmental Studies:
Analytical tools and skills understanding the environment, while emphasizing the role of beliefs, values and ethics of the non-employee directors as necessary from time to timecorporate body
8
Human Capital Management:
Experience and Board meetings in the absenceunderstanding talent management and development, executive compensation issues and succession planning efforts
8
Regulatory/Legal Processes:
Knowledge of the Chairman of the Board;various regulatory processes governing Perma-Fix business sectors, such as financial, environmental, nuclear, safety and food and drug
8
International Work:
Experience in overseeing global operations and assessing opportunities and challenges
acting as liaison between directors, committee chairs and management;
serving as information sources for directors and management; and
carrying out such responsibilities as the Board may delegate from time to time.8

AUDIT COMMITTEEBoard Diversity Matrix

We have a separately designated standing Audit CommitteeThe following table reflects the Company’s Board diversity matrix as of the date of this Form 10-K. In addition to gender and demographic diversity, two of our Board established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committeeeight current directors are Mark A. Zwecker (Chairperson), Larry M. Shelton, and Zach Wamp, who replaced Stanley Robert Cochran as a member of the Audit Committee effective October 18, 2019 upon Mr. Cochran’s resignation from the Board effective on such date.also military veterans.

Total Number of Directors 8
  Female Male Non-Binary Did Not Disclose Gender
Gender Identity:        
Directors  1 7  -  -
Number of Directors Who Identify in Any of The Categories Below:
African American or Black  - -  -  -
Alaskan Native or Native American  -  -  -  -
Asian  -  -  -  -
Hispanic or Latinx  -  -  -  -
Native Hawaiian or Pacific Islander  -  -  -  -
White  1 6  -  -
Two or More Races or Ethnicities  - 1  -  -
LGBTQ  -  -  -  -
Did not Disclose Demographic Background  -  -  -  -

Our Board has determined that each of our Audit Committee members is and was independent within the meaning of the rules of the NASDAQ and is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Audit Committee has also discussed with Grant Thornton, LLP, the Company’s independent registered accounting firm, the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 16 (Communications with Audit Committee).

BOARD OF DIRECTOR INDEPENDENCE

The Board has determined that each director, other than Dr. Centofanti, is “independent” within the meaning of the applicable NASDAQ rules. Dr. Centofanti is not deemed to be an “independent director” because of his employment as a senior executive of the Company.

COMPENSATION AND STOCK OPTION COMMITTEE

The Compensation and Stock Option Committee (“Compensation Committee”) reviews and recommends to the Board the compensation and benefits of all of the Company’s officers and reviews general policy matters relating to compensation and benefits of the Company’s employees. The Compensation Committee also administers the Company’s stock option plans. The Compensation Committee has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s fees and other terms of engagement. It also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. No compensation consultant was employed during 2019. Members of the Compensation Committee are Larry M. Shelton (Chairperson), Joe R. Reeder, and Mark A. Zwecker. None of the members of the Compensation Committee has been an officer or employee of the Company or has had any relationship with the Company requiring disclosure under applicable Commission regulations.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

We have a separately-designated standing Corporate Governance and Nominating Committee (“Nominating(the “Nominating Committee”). Members of the Nominating Committee areduring 2022 were Joe R. Reeder (Chairperson), Thomas P. Bostick, Kerry C. Duggan and Zach P. Wamp, and Larry M. Shelton, who replaced Stanley Robert Cochran as a member of the Nominating Committee effective October 18, 2019 upon Mr. Cochran’s resignation from the Board.Wamp. All members of the Nominating Committee are and were “independent” as that term is defined by current NASDAQ listing standards.

The Nominating Committee recommends to the Board candidates to fill vacancies on the Board and the nominees for election as the directors at each annual meeting of stockholders. In making such recommendation,recommendations, the Nominating Committee takes into account information provided to them from the candidate,candidates, as well as the Nominating Committee’s own knowledge and information obtained through inquiries to third parties to the extent the Nominating Committee deems appropriate. The Company’s Amended and Restated Bylaws as amended (the “Bylaws”), sets forth certain minimum director qualifications to qualify for nomination for elections as a Director.nominee for election as a director. To qualify for nomination or for election as a director, an individual must:

be an individual at least 21 years of age who is not under legal disability;
have the ability to be present, in person, at all regular and special meetings of the Board;Board of Directors;
not serve on the boards of more than three other publicly heldpublicly-held companies;
satisfy the director qualification requirements of all environmental and nuclear commissions, boards or similar regulatory or law enforcement authorities to which the CorporationCompany is subject so as not to cause the CorporationCompany to fail to satisfy any of the licensing requirements imposed by any such authority;
not be affiliated with, employed by or a representative of, or have or acquire a material personal involvement with, or material financial interest in, any “Business Competitor” (as defined in the Bylaws);
not have been convicted of a felony or of any misdemeanor involving moral turpitude; and
have been nominated for election to the Board of Directors in accordance with the terms of the Bylaws.

In addition to the minimum director qualifications as mentioned above, in order for any proposed nominee to be eligible to be a candidate for election to the Board, such candidate must deliver to the Nominating Committee a completed questionnaire with respect to the background, qualifications, stock ownership and independence of such proposed nominee. The Nominating Committee reviews each candidate’s qualifications are also reviewed to include:include considerations of:

standards of integrity, personal ethics and value,values, commitment, and independence of thought and judgment;
ability to represent the interests of the Company’s stockholders;
ability to dedicate sufficient time, energy, and attention to fulfill the requirements of the position; and
diversity of skills and experience with respect to accounting and finance, management and leadership, business acumen, vision and strategy, charitable causes, risk management, environmental knowledge, business operations (domestic and international), and industry knowledge.

The Nominating Committee does not assign specific weight to any particular criteria and no particular criterion is necessarily applicable to all prospective nominees. The Nominating Committee does not have a formal policy for the consideration of diversity in identifying nominees for directors; however,directors. However, diversity is one of the many factors taken into account when considering potential candidates to serve on the Board of Directors. The Company generally views and values diversity from the perspective of professional and life experiences, as well as geographic location, representative of the markets in which we do business. The Company recognizes that diversity in professional and life experiences may include consideration of gender, race, cultural background or national origin, in identifying individuals who possess the qualifications that the Nominating Committee believes are important to be represented on the Board. The Company believes that the backgrounds and qualificationsinclusion of the directors,diversity as one of many factors considered as a group, should provide a significant composite mix of experience, knowledge, and abilities that will allow the Board to fulfill its responsibilities.

Stockholder Nominees

There have been no changes to the stockholder nomination process sincein selecting director nominees is consistent with the Company’s last proxy statement. The procedure for stockholder nominees to the Board is set out below.goal of creating a board of directors that best serves our needs and those of our shareholders.

Stockholder Nominees

The Nominating Committee will consider properly submitted stockholder nominations for candidates for membership on the Board from stockholders who meet each of the requirements set forth in the Bylaws, including, but not limited to, the requirements that any such stockholder own at least 1% of the Company’s shares of the Common Stock entitled to vote at the meeting on such election, has held such shares continuously for at least one full year, and continuously holds such shares through and including the time of the annual or special meeting. Nominations of persons for election to the Board may be made at any Annual Meeting of Stockholders, or at any Special Meeting of Stockholders called for the purpose of electing directors. Any stockholder nomination (“Proposed Nominee”) must comply with the requirements of the Company’s Bylaws and the Proposed Nominee must meet the minimum qualification requirements as discussed above. For a nomination to be made by a stockholder, such stockholder must provide advance written notice to the Nominating Committee, deliveredto the Company’s principal executive office address (i) in the case of an Annual Meeting of Stockholders, no later than the 90th 90th day nor earlier than the 120th120th day prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; and (ii) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the 10th 10th day following the day on which public disclosure of the date of the Special Meeting of Stockholders wasis made.

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The Nominating Committee will evaluate the qualification of the Proposed Nominee and the Proposed Nominee’s disclosure and compliance requirements in accordance with the Company’s Bylaws. If the Board, upon the recommendation of the Nominating Committee, determines that a nomination was not made in accordance with the Company’s Bylaws, the Chairman of the Meeting shall declare the nomination defective and it will be disregarded.

STRATEGIC ADVISORY

BOARD LEADERSHIP STRUCTURE

We continue to separate the roles of Chairman of the Board and CEO. The Board believes that this leadership structure promotes balance between the Board’s independent authority to oversee our business, and the CEO and his management team, who manage the business on a day-to-day basis.

The Company does not have a written policy with respect to the separation of the positions of Chairman of the Board and CEO. The Company believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and CEO in any way that is in the best interests of the Company at a given point in time; therefore, the Company’s leadership structure may change in the future as circumstances may dictate.

Mr. Mark Zwecker, a current member of our Board, continues to serve as the Independent Lead Director, a position he has held since 2010. The Lead Director’s role includes:

convening and chairing meetings of the non-employee directors as necessary from time to time and Board meetings in the absence of the Chairman of the Board;
acting as liaison between directors, committee chairs and management;
serving as information sources for directors and management; and
carrying out such responsibilities as the Board may delegate from time to time.

AUDIT COMMITTEE

We have a separately designated Strategicstanding Audit Committee of our Board established in accordance with Section 3(a)(58)(A) of the Exchange Act. Members of the Audit Committee are Mark A. Zwecker (Chairperson), Joseph T. Grumski and Larry M. Shelton.

Our Board has determined that each of our Audit Committee members is independent within the meaning of the rules of the NASDAQ and is an “audit committee financial expert” as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Audit Committee has also discussed with Grant Thornton, LLP, the Company’s independent registered accounting firm, the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 16 (Communications with Audit Committee).

BOARD OF DIRECTOR INDEPENDENCE

The Board has determined that each director, other than Dr. Centofanti, is “independent” within the meaning of applicable NASDAQ rules. Dr. Centofanti is not deemed to be an “independent director” because of his employment as an executive officer of the Company.

COMPENSATION AND STOCK OPTION COMMITTEE

The Compensation and Stock Option Committee (the “Compensation Committee”) reviews and recommends to the Board the compensation and benefits of all of the Company’s officers and reviews general policy matters relating to compensation and benefits of the Company’s employees. The Compensation Committee also administers the Company’s stock option plans. The Compensation Committee has the sole authority to retain and terminate a compensation consultant, as well as to approve the consultant’s fees and other terms of engagement. It also has the authority to obtain advice and assistance from internal or external legal, accounting or other advisors. No compensation consultant was employed during 2022. Members of the Compensation Committee during 2022 were Joseph T. Grumski (Chairperson), Zach P. Wamp and Mark A. Zwecker. None of the members of the Compensation Committee has been or is an officer or employee of the Company or has had or has any relationship with the Company requiring disclosure under applicable Commission regulations.

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STRATEGIC ADVISORY COMMITTEE

We have a separately designated Strategic Advisory Committee (the “Strategic Committee”). The primary functions of the Strategic Committee are to investigate and evaluate strategic alternatives available to the Company and to work with management on long-range strategic planning and identification of potential new business opportunities. The members of the Strategic Advisory Committee are Dr. Louis Centofanti (who became a member and Chairperson of the committee to replace Stanley Robert Cochran, who resigned as a board member effective October 18, 2019)(Chairperson), Kerry C. Duggan, Joe R. Reeder and Mark A. Zwecker,Zwecker.

The Board has adopted a written charter for each of the Audit Committee, the Compensation Committee, the Nominating Committee, and Larry M. Shelton. Thethe Strategic Advisory Committee, does not have a charter.each of which is available on our website at https://ir.perma-fix.com/governance-docs.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth, as of the date hereof, information concerning our executive officers:

NAME AGE POSITION
Mr. Mark Duff 5760 President and CEO
Mr. Ben Naccarato 5760 CFO, EVP, and Secretary; CFO of PF MedicalSecretary
Dr. Louis Centofanti 7679 EVP of Strategic Initiatives; President of PF MedicalInitiatives
Mr. Andrew Lombardo 6063 EVP of Nuclear and Technical Services Supervisory Board
Mr. Richard Grondin64EVP of PF MedicalWaste Treatment Operations

Mr. Mark Duff

Mr. Mark Duff was appointedhas held the position of President and CEO by the Company’s Board on September 8, 2017, succeeding Dr. Louis Centofanti. In September 2016, Mr. Duff was named as the Chief Operating Officer (“COO”) of the Company and continued to serve as EVP of the Company, a position he had held since September 2017. Since joining the Company in June 2016.2016, Mr. Duff has developed and implemented strategies to meet aggressive growth objectives in both the Treatment and Services Segments. In the Treatment Segment, he continues to upgrade each facility to increase efficiency and modernize treatment capabilities to meet the changing markets associated with the waste management industry. This growth includes expansion into additional market sectors including development of new clients in the commercial power and oil and gas industries. In the Services Segment, which encompasses all field operations, he has completed the revitalization of business development programs, which has resulted in increased competitive procurement effectiveness and broadened the market penetration within both the commercial and government sectors. Within the Services Segment, Mr. Duff has established a team of professionals with experience in conducting safe and efficient field operations while addressing complex technical challenges associated with removal of radioactive and hazardous contamination. Mr. Duff has over 3038 years of management and technical experience in the U.S Department of Energy (“DOE”)DOE and U.S. Department of Defense (“DOD”)DOD environmental and construction markets as a corporate officer, senior project manager, co-founder of a consulting firm, and federal employee. For the immediate five years prior to joining the Company in June 2016, Mr. Duff was responsible for the successful completion of over 70 performance-based projects at the Paducah Gaseous Diffusion Plant (“PGDP”) in Paducah, KY. At the PGDP, he served as the Project Manager for the Paducah Remediation Contract, which was a five-year project with a total value of $458 million. Prior to the PGDP project, Mr. Duff was a senior manager supporting Babcock and Wilcox (“B&W”), leading several programs that included building teams to solve complex technical problems. These programs included implementation of the American Recovery and Reinvestment Act (“ARRA”) at the DOE Y-12 facility with a $245 million budget for new cleanup projects completed over a two-year period. During this period, Mr. Duff served as project manager leading a team of senior experts in support of Toshiba Corporation in Tokyo, Japan to integrate United States technology in the recovery of the Fukushima Daiichi Nuclear Reactor disaster. Prior to joining B&W, Mr. Duff served as the president of Safety and Ecology Corporation (“SEC”). As President of SEC, he helped grow the company from $50 million to $80 million in annual revenues with significant growth in infrastructure, marketing, and client diversification. Mr. Duff has an MBA from the University of Phoenix and received his B.S. from the University of Alabama.

Mr. Ben Naccarato

Mr. Naccarato has served as the Company’s CFO since February 26, 2009. On January 16, 2020, the Company’s Board, with the approval of the Compensation Committee, promoted Mr. Naccarato to EVP and CFO from Vice President and CFO. Mr. Naccarato joined the Company in September 2004, and served asholding the positions of Vice President of Finance offor the Company’s Industrial Segment until May 2006, when he was named Vice President, Corporate Controller/Treasurer. Since July 2015 and December 2015, Mr. Naccarato has served as the CFO of PF Medical and a member of the Management Board of PF Medical, respectively. Mr. Naccarato has over 3034 years of experience in senior financial positions in the waste management and used oil industries. From December 2002 to September 2004, Mr. Naccarato was the CFO of a privately held company in the fuel distribution and used waste oil industry.industry from 2002 to 2004 and prior to that served in numerous senior financial roles in the waste management industry in both the US and Canada. Mr. Naccarato is a graduate of the University of Toronto with a Bachelor of Commerce and Finance Degree and is a Chartered Professional Accountant, Certified Management Accountant (CPA, CMA).

Since March 2021, Mr. Naccarato has served as an independent director and as a member of both the Audit Committee and the Compensation Committee of PyroGenesis Canada, Inc., a high-tech company involved in the design, development, manufacture and commercialization of advanced plasma processes and products and whose stock is listed for trading on the Toronto Stock Exchange and the NASDAQ Stock Exchange under the trading symbol “PYR.”

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Dr. Louis Centofanti

See “Director – Dr. Louis F. Centofanti” in this section for information on Dr. Centofanti.

Mr. Andrew (“Andy”) Lombardo

On January 16, 2020, the Company’s Board elected Mr. Lombardo tohas held the position of EVP of Nuclear and Technical Services and an executive officer of the Company.since January 2020. Since joining the Company in 2011, Mr. Lombardo has held various positions within the Company’s Services Segment, including Senior Vice PresidentSVP of Nuclear and Technical Services. Since May 2, 2019, Mr. Lombardo has served as a member of the Supervisory Board of PF Medical.

Mr. Lombardo, a Certified Health Physicist (“CHP”), has over 3540 years of management and technical experience in the commercial nuclear reactor market, and the DOE and DOD environmental and construction markets as a senior director, senior project manager, senior CHP and chemist. Prior to joining the Company, Mr. Lombardo held the position of Vice President of Technical Services for Safety and Ecology Corporation (“SEC”), a subsidiary of Homeland Security Capital Corporation, a publicly traded environmental services company, prior to the acquisition of SEC by the Company in 2011. In his positions with both the Company and SEC, Mr. Lombardo procured and performed greater than $20M$30 million a year in health physics and radioactive material management projects across the DOE and DOD complex while managing a professional staff of engineers and health physicists and an instrumentation laboratory. Prior toAmong his employment with the Company and SEC, he managed decommissioning projects for two engineering firms which included the successful deployment of soil segregation technology, resulting in client savings of more than $100M in transportation and disposal costs. During this time, hemany accomplishments, Mr. Lombardo has developed an expertise characterizing and managing naturally occurring radioactive material (“NORM”) and technologically enhanced NORM (“TENORM”) waste streams across multiple industries including oil and gas exploration and production. As a result of his expertise, he was recently appointed to a scientific committee of the National Council on Radiation Protection and Measurement Committee to provide a commentary on the generation and disposal of TENORM waste. Mr. Lombardo began his career as a chemist and health physicist for the Duquesne Light Company at two commercial reactor sites and one joint DOE/Naval Reactors Duquesne Light test reactor in Shippingport, PA. Mr. Lombardo is certified in comprehensive practice of health physics, and has a M.S. degree in Health Physics from the University of Pittsburgh and a B.S. in Natural Sciences from Indiana University of Pennsylvania.

Mr. Richard Grondin

Mr. Grondin has held the position of EVP of Waste Treatment Operations since July 2020. Since joining the Company in 2002, Mr. Grondin has held various positions within the Company’s Treatment Segment, including Vice President of Technical Services, Vice President/General Manager of the Perma-Fix Northwest Richland, Inc. Facility and Vice President of Western Operations. Mr. Grondin, a Project Management Professional, has over 35 years of management and technical experience in the highly regulated and specialized radioactive/hazardous waste management industry with the majority of his experience concentrated on managing start-up waste management processing and disposal facilities for four different organizations in the commercial and government sectors. Prior to joining the Company, Mr. Grondin held the position of Vice President of Mixed Waste Operations for Allied Technology Group in Richland, Washington; Vice President of Operations for Waste Control Specialists in Andrews Texas; and Technical Manager/Director of Operations for Rollins Environmental Services Facility in Deer Trail, Colorado. Mr. Grondin is recognized in the United States and Canada as an authority in hazardous and mixed waste treatment. Mr. Grondin has a Diploma of Collegial Studies in Pure and Applied Sciences from CEGEP of Amiante (Thetford-Mines, Canada) and Analytical Chemistry Techniques from CEGEP of Ahuntsic (Montreal, Canada), a Geography minor from Montreal University (Montreal, Canada) and a Certificate of Business Management from the School of Higher Commercial Studies from Montreal University (Montreal, Canada).

Certain Relationships

There are no family relationships between any of the directors or executive officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, and the regulations promulgated thereunder require our executive officers and directors and beneficial owners of more than 10% of our Common Stock to file reports of ownership and changes of ownership of our Common Stock with the Commission, and to furnish us with copies of all such reports. Based solely on a review of the copies of such reports furnished to us and written information provided to us, we believe that during 20192022 none of our executive officers, directors, or beneficial owners of more than 10% of our Common Stock failed to timely file reports under Section 16(a).

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Schelhammer Capital Bank–Grawe GruppeBank AG, (“Capital Bank”) has advised us that it is a banking institution regulated by the banking regulations of Austria, whichhas represented to the Company that as of February 1, 2023, it holds of record as a nominee for, and as an agent of, certain accredited investors, 1,897,794 shares of our Common Stock as agent on behalf of numerous investors.Stock. Schelhammer Capital Bank AG has also represented that all of its investors are accredited investors under Rule 501 of Regulation D promulgated underto the Act. In addition, Capital Bank has advised usCompany that none of itsthe investors, individually or as a group, as the term “group” is defined under Rule 13d-5(b) of the Exchange Act, beneficially ownowns more than 4.9% of our Common Stock as calculated in accordance with Rule 13d-3 ofStock. Additionally, the Exchange Act.investors for whom Schelhammer Capital Bank has further informed us that its clients (and not Capital Bank)AG acts as nominee with respect to such shares maintain full voting and dispositive power over the Common Stock beneficially owned by such investors, and Schelhammer Capital Bank AG has neither voting nor investment power over such shares. Consequently,Accordingly, Schelhammer Capital Bank has advised usAG believes that it believes(i) it is not the beneficial owner, as such term is defined in Rule 13d-3 of the Exchange Act, of the shares of our Common Stock registered in the name ofSchelhammer Capital Bank AG’s name because it(a) Schelhammer Capital Bank AG holds the Common Stock as a nominee only, (b) Schelhammer Capital Bank AG has neither voting nor investment power as such terms are defined in Rule 13d-3, over such shares.shares, and (c) Schelhammer Capital Bank AG has informed us that itnot nominated or sought to nominate, and does not believe thatintend to nominate in the future, any person to serve as a member of our Board; and (ii) it is not required to file and has not filed, (a) reports under Section 16(a) of the Exchange Act or (b)to file either Schedule 13D or Schedule 13G in connection with the shares of our Common Stock registered in the name of Schelhammer Capital Bank.Bank AG.

If the representations of, or information provided by Schelhammer Capital Bank AG, are incorrect or Schelhammer Capital Bank AG was historically acting on behalf of its investors as a group, rather than on behalf of each investor independent of other investors, then Schelhammer Capital Bank AG and/or the investor group would have become a beneficial owner of more than 10% of our Common Stock on February 9, 1996, as a result of the acquisition on such date of 1,100 shares of our Preferred Stock that were convertible into a maximum of 256,560 shares of our Common Stock. If either Schelhammer Capital Bank AG or a group of Schelhammer Capital Bank’sBank AG’s investors became a beneficial owner of more than 10% of our Common Stock on February 9, 1996, or at any time thereafter, and thereby required to file reports under Section 16(a) of the Exchange Act, then Schelhammer Capital Bank AG has failed to file a Form 3 or any Forms 4 or 5 since February 9, 1996. (See “Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MatterMatters – Security Ownership of Certain Beneficial Owners” for a discussion of Schelhammer Capital Bank’sBank AG’s current record ownership of our securities).

Code of Ethics

Our Code of Business Conduct and Ethics (“Code of Ethics”), which applies to our Board and all our executiveemployees, including our CEO and our senior financial officers, complies with applicable SEC rules and Nasdaq listing standards. and is available on our website atwww.perma-fix.com.https://ir.perma-fix.com/governance-docs. The provisions of the Code of Ethics that apply to the CEO and our senior financial officers, including our CFO and our chief accounting officer, complies with the requirements imposed by the Sarbanes-Oxley Act of 2002 and the rules issued thereunder for codes of ethics applicable to such officers. If any amendments are made to the Code of Ethics, or any grants of waivers are made to any provision of the Code of Ethics, that are applicable to any of our executiveCEO and our senior financial officers, we will promptly disclose the amendment or waiver and nature of such amendment or waiver on our website at the same web address.

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ITEM 11.EXECUTIVE COMPENSATION

Summary Compensation

The following table summarizes the total compensation paid or earned by each of the Company’s named executive officers (“NEOs”) for the fiscal years ended December 31, 20192022 and 2018 and includes Mr. Andrew Lombardo, who became an executive officer of the Company, effective January 16, 2020.2021.

Name and Principal Position Year Salary Bonus Option Awards Non-Equity Incentive Plan Compensation All other Compensation Total Compensation  Year Salary Bonus Option Awards Non-Equity Incentive Plan Compensation All other Compensation Total Compensation 
   ($) ($) ($)(2) ($)(3) ($)(4) ($) 
                  ($) ($) ($) (1) ($) ($) (2) ($) 
Mark Duff 2019  287,000      35,564   110,699   29,680   462,943  2022  374,870               –   41,270   416,140 
President and CEO 2018  275,125            29,555   304,680  2021  350,341      175,518      37,121   562,980 
                                                    
Ben Naccarato 2019  235,231      21,338   81,070   40,861   378,500  2022  304,772            51,484   356,256 
EVP and CFO 2018  229,494            40,732   270,226  2021  284,830      87,759      45,440   418,029 
                                                    
Dr. Louis Centofanti 2019  228,985      21,338   78,918   32,264   361,505  2022  253,980            38,776   292,756 
EVP of Strategic Initiatives 2018  223,400            32,177   255,577  2021  237,361      70,207      35,836   343,404 
                                                    
Andy Lombardo(1) 2019  258,662      14,225   89,147   5,168   367,202 
Andy Lombardo 2022  304,772            15,088   319,860 
EVP of Nuclear & Technical Services 2018  252,353            5,047   257,400  2021  284,830      87,759      15,500   388,089 
                          
Richard Grondin 2022  261,233            38,240   299,473 
EVP of Waste Treatment Operations 2021  244,140      87,759      33,943   365,842 

(1)On January 16, 2020, the Board elected Mr. Lombardo to the position of EVP of Nuclear and Technical Services and an executive officer of the Company. Previously Mr. Lombardo held the position of Senior Vice President (“SVP”) of Nuclear and Technical Services (within the Services Segment). The information as noted in the table above reflects compensation for Mr. Lombardo as SVP of Nuclear and Technical Services.
(2)Reflects the aggregate grant date fair value of awards computed in accordance with ASC 718, “Compensation – Stock Compensation.” Assumptions used in the calculation of this amount are included in “Note“Part II – Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements - Note 6 – Capital Stock, Stock Plans, Warrants and Stock Based Compensation” to “Notes to Consolidated Financial Statement.Compensation.
(3)Represents performance compensation earned under the Company’s Management Incentive Plan (“MIP”). As discussed above, Mr. Lombardo was named an executive officer of the Company effective January 16, 2020. The MIP for each individual in the table is described under the heading “2019 MIPs” which includes Mr. Lombardo’s MIP as the SVP of Nuclear and Technical Services, prior to his election as an executive officer by the Board. Mr. Lombardo’s MIP as SVP of Nuclear and Technical Services was subject to the approval of the CEO. No compensation was earned by any NEO under his respective MIP for 2018. Mr. Lombardo also did not earn any compensation under his MIP for 2018 as the SVP of Nuclear and Technical Services. Compensation earned under the 2019 MIP is to be paid on or about 90 days after year-end, or upon finalization of the Company’s audited financial statement for 2019.
  
(4)(2)The amount shown includes a monthly automobile allowance, of $750, insurance premiums (health, disability and life) paid by the Company on behalf of the executive,NEO, and 401(k) matching contributions.

  Insurance          
Name Premium  Auto Allowance  401(k) match  Total 
Mark Duff $25,770  $9,000  $6,500  $41,270 
Ben Naccarato $35,734  $9,000  $6,750  $51,484 
Dr. Louis Centofanti $24,705  $9,000  $5,071  $38,776 
Andy Lombardo $ –  $9,000  $6,088  $15,088 
Richard Grondin $24,705  $6,785  $6,750  $38,240 

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Pay Versus Performance Table

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company.

Year Summary Compensation Table (SCT) Total for Principal Executive Officer (PEO)(1)  Compensation Actually Paid to PEO (2)  Average Summary Compensation Table Total for Non- PEO NEOs (3)  Average Compensation Actually Paid to Non-PEO NEOs (4)  Value of Initial Fixed $100 Investment Based On Total Shareholder Return (5)  Net (loss) income (6) 
(a) (b)  (c)  (d)  (e)  (f)  (g) 
2022 $416,140  $276,985  $317,086  $250,745  $59  $(3,816,000)
                         
2021 $562,980  $526,242  $378,841  $364,503  $106  $671,000 

(1)Reflect amount for Mark Duff, President and CEO for each corresponding year in the “Total Compensation” column of the Summary Compensation Table above.

(2)The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Duff, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Duff during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Duff’s total compensation for each year to determine the compensation actually paid:

  Reported          
  Summary
Compensation
Table
  Reported
Value of Equity
  Equity Award  Compensation
Actually
 
  Total for PEO  Awards (a)  Adjustments (b)  Paid to PEO 
Year ($)  ($)  ($)  ($) 
             
2022 $416,140  $-  $(139,155) $276,985 
                 
2021 $562,980  $(175,518) $138,780  $526,242 

(a) The grant date fair value of equity awards represents the total of the amounts reported in the “Option Awards” column in the Summary Compensation Table for the applicable year.

(b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:

Year Year End Fair
Value of
Outstanding and
Unvested Equity
Awards Granted
in the Year
($)
  Year over Year
Change in Fair
Value of
Outstanding and
Unvested Equity
Award Granted in
Prior Years
($)
  Fair Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the
Year
($)
  Year over Year
Change in Fair
Value of Equity
Award Granted in
Prior Years
that Vested in the
Year
($)
  Fair Value at the
End of the Prior
Year of Equity
Awards that
Failed to Meet
Vesting
Conditions in the
Year
($)
  Value of Dividends or
other Earnings Paid
on Stock or Option
Awards not Otherwise
Reflected in Fair
Value or Total
Compensation
($)
  Total
Equity
Award
Adjustments
($)
 
                      
2022 $-  $(99,870) $-  $(39,285) $-  $-  $(139,155)
                             
2021 $147,050  $(3,860) $-  $(4,410) $-  $-  $138,780 

(3)Reflect the average of the amounts reported for the Company’s NEO as a group (excluding Mr. Duff) in the “Total Compensation” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Duff) included for purposes of calculating the average amounts in each applicable year were Ben Naccarato, CFO; Dr. Louis Centofanti, EVP of Strategic Initiatives; Andy Lombardo, EVP of Nuclear and Technical Services; and Richard Grondin, EVP of Waste Treatment Operations.

 

  Insurance  Auto       
Name Premium  Allowance  401(k) match  Total 
Mark Duff $14,430  $9,000  $6,250  $29,680 
Ben Naccarato $27,109  $9,000  $4,752  $40,861 
Dr. Louis Centofanti $18,687  $9,000  $4,577  $32,264 
Andy Lombardo $  $  $5,168  $5,168 
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(4)The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Duff), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to NEOs as a group (excluding Mr. Duff) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Duff) for each year to determine the compensation actually paid, using the same methodology described in Note (2):

   Average Reported        Average 
   Summary
Compensation Table
  Average Reported  Average Equity  Compensation
Actually
 
   Total for Non-PEO NEOs  Value of Equity
Awards
  Award
Adjustments (a)
  Paid to Non-PEO
NEOs
 
Year  ($)  ($)  ($)  ($) 
              
2022  $317,086  $-  $(66,341) $250,745 
                  
2021  $378,841  $(83,371) $69,033  $364,503 

(a) The amount deduced or added in calculating the total average equity adjustments are as follows:

Year Average Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year
($)
  Average Year over Year Change in Fair Value of Outstanding and Unvested Equity Award Granted in Prior Years
($)
  Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year
($)
  Average Year over Year Change in Fair Value of Equity Award Granted in Prior Years that Vested in the Year
($)
  Fair Value at the Average End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year
($)
  Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation
($)
  Average Total Equity Award Adjustments
($)
 
                      
2022 $-  $(48,134) $-  $(18,207) $-  $     -  $(66,341)
                             
2021 $69,849  $(1,127) $-  $311  $-  $-  $69,033 

(5)Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends (which is none for the Company) for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period.
(6)The dollar amounts reported represent the amount of net (loss) income reflected in our consolidated audited financial statements for the applicable year.

All information provided in the “Pay Versus Performance” table above and the related disclosures will not be deemed to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth unexercised options held by the NEOs as of the fiscal year-end and also includes Mr. Andy Lombardo, who was named a NEO effective January 16, 2020 as discussed previously.year-end.

Outstanding Equity Awards at December 31, 20192022

 Option Awards Option Awards
Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#)(1) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
 Option
Exercise Price
($)
 Option
Expiration Date
 Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) (1) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date
                   
Mark Duff  50,000   (2)     3.97  5/15/2022  100,000(2)  (2)          —   3.650  7/27/2023
  40,000(3)  60,000(3)     3.65  7/27/2023  15,000(3)  10,000(3)      3.150  1/17/2025
  (4)  25,000(4)      3.15  1/17/2025  10,000(5)  40,000(5)      7.005  10/14/2027
                                   
Ben Naccarato  20,000(3)  30,000(3)     3.65  7/27/2023  50,000(2)  (2)     3.650  7/27/2023
  (4)  15,000(4)      3.15  1/17/2025  9,000(3)  6,000(3)      3.150  1/17/2025
                   5,000(5)  20,000(5)      7.005  10/14/2027
                  
Dr. Louis Centofanti  20,000(3)  30,000(3)     3.65  7/27/2023  50,000(2)  (2)     3.650  7/27/2023
  9,000(3)  6,000(3)      3.150  1/17/2025
  (4)  15,000(4)      3.15  1/17/2025  4,000(5)  16,000(5)      7.005  10/14/2027
                                   
Andy Lombardo  (5)  12,000(5)     3.60  10/19/2023  12,000(4)  (4)     3.600  10/19/2023
  (4)  10,000(4)      3.15  1/17/2025  4,000(3)  4,000(3)      3.150  1/17/2025
  5,000(5)  20,000(5)      7.005  10/14/2027
                  
Richard Grondin  20,000(4)  (4)     3.600  10/19/2023
  6,000(3)  4,000(3)      3.150  1/17/2025
  5,000(5)  20,000(5)      7.005  10/14/2027

(1)Pursuant to each of the employment agreements between the Company and, respectively, Mark Duff, Ben Naccarato, Dr. Louis Centofanti, Andy Lombardo, and Richard Grondin, each dated July 22, 2020, in the event of a change in control, death of the executive officer, the executive officer terminates his employment for “good reason” or the executive officer is terminated by the Company without cause, each outstanding option and award shall immediately become exercisable in full (see “Employment Agreements” below for further discussion of the events pursuant to which accelerated exercise of the respective NEO’s outstanding options can arise).

(2)

Pursuant to each of the NEO’s employment agreements with the Company for Dr. Centofanti, Ben Naccarato, and Mark Duff, each dated September 9, 2017, in the event of a change in control, death of the executive officer, the executive officer terminates his employment for “good reason” or the executive officer is terminated by the Company without cause, each outstanding option and award shall immediately become exercisable in full (see “Employment Agreements” below for further discussion of the exercisability terms of the option under these events). In the case of options held by Mr. Lombardo, vesting of option awards ceases upon termination of employment and exercise right of the vested options amount ceases upon three months from termination of employment except in the case of retirement (subject to a six-month limitation), disability (subject to a one-year limitation), and death (subject to a six-month limitation by personal representative) pursuant to the stock option plans.
(2)Incentive stock option granted on July 27, 2017 under the Company’s 2017 Stock Option Plan. The option has a contractual term of six years with one-fifth yearly vesting over a five-year period.

(3) Incentive stock option granted on January 17, 2019 under the Company’s 2017 Stock Option Plan. The option has a contractual term of six years with one-fifth yearly vesting over a five-year period.

(4) Incentive stock option granted on October 19, 2017 under the Company’s 2017 Stock Option Plan. The option has a contractual term of six years with one-fifth yearly vesting over a five-year period.

(5) Incentive stock option granted on October 14, 2021 under the Company’s 2017 Stock Option Plan. The option has a contractual term of six years with one-fifth yearly vesting over a five-year period.

Option Exercises

The table below reflects options exercised by our NEO in 2022.

  Number of
Shares
  Value Realized 
Name Acquired on
Exercise (#)(1)
  on Exercise
($) (2)
 
Mark Duff  16,526  $98,000 

(1)On May 9, 2022, Mr. Duff exercised 100% of an ISO granted to him on May 15, 2016 under the Company’s 2010 Stock Option Plan. The option has a contractual termPlan for the purchase of six years with one-third yearly vesting over a three-year period.
(3)Incentive stock option granted on July 27, 2017 underup to 50,000 shares of the Company’s 2017Common Stock at $3.97 per share. As permitted by the 2010 Stock Option Plan. The option hasPlan, Mr. Duff elected to pay the exercise price of the Option Shares by having the Company withhold from the Option Shares a contractual termnumber of six years with one-fifth yearly vesting overshares having a five-year period.
(4)Incentive stock option granted on January 17, 2019 underfair market value equal to the aggregate exercise price of $198,500. Since the fair market value of the Company’s 2017Common Stock on May 9, 2022 (as determined in accordance with the 2010 Stock Option Plan. ThePlan) was $5.93 per share, the Company withheld 33,474 shares of Common Stock ($198,500 divided by $5.93) to pay the aggregate exercise price of the option has a contractual term of six years with one-fifth yearly vesting over a five-year period.
(5)Incentive stock option granted on October 19, 2017 under the Company’s 2017 Stock Option Plan. The option has a contractual term of six years with one-fifth yearly vesting over a five-year period.and issued 16,526 shares to Mr. Duff.

87

Option Exercise

None of the Company’s NEOs exercised options during 2019. As discussed above, Mr. Lombardo was named an executive officer of the Company effective January 16, 2020. The table below reflects options exercised by Mr. Lombardo in 2019 as the SVP of Nuclear and Technical Services, prior to his election as an executive officer by the Board.

  Number of Shares  Value 
Name Acquired on Exercise (#)  Realized on Exercise ($) (1) 
Andy Lombardo  18,000  $50,800 

(1)(2)Realized value determined based on the difference between the (a) exercise price ($3.97) per share of the total proceeds receivedOption Shares multiplied by the Company from the exercise of options for the purchase of 10,000 shares of the Company’s Common Stock at $5.00 per share and the exercise of options for the purchase of 8,000 shares of the Company’s Common Stock at $3.60 per share,50,000 Option Shares exercised, and (b) the market value ($7.20 per share) of the 18,000 shares of the Company’s Common Stock acquired by Mr. Lombardo5.93) on the date of the exercise of the options.Option Shares times the 50,000 Option Shares exercised.

90

Employment Agreements

Each of Messrs. Duff, Centofanti and Naccarato havethe NEOs entered into an employment agreementsagreement with the Company dated July 22, 2020 (each, an “Employment Agreement” and, collectively, the “Employment Agreements”), effective September 8, 2017, with annual base salaries. Each of $267,000, $223,400, and $229,494, respectively. Eachthe Employment Agreements, which are substantially identical, provides for a specified annual base salary, is subjectwhich annual salary may be increased from time to adjustmenttime, but not reduced, as determined by the Compensation Committee. In addition, each of these executive officersthe NEOs is entitled to participate in the Company’s broad-based benefits plans and to certain performance compensation payable under separate MIPsManagement Incentive Plans (“MIPs”) as approved by the Company’s Compensation Committee and Board. The Company’s Compensation Committee and the Board approved individual 20192022 MIPs on January 17, 201920, 2022 (which were effective January 1, 20192022 and applicable for year 2019)the 2022 fiscal year) for each of Mark Duff, Dr. Louis Centofanti, and Ben Naccaratothe executive officers (see discussion of each of the 20192022 MIPs below under “2019“2022 MIPs”).

Each of the Employment Agreements is effective for three years from September 8, 2017July 22, 2020 (the “Initial Term”) unless earlier terminated by the Company or by the executive officer.respective NEO. At the end of the Initial Term of each Employment Agreement, each Employment Agreement will automatically be extended for one additional year, unless at least six months prior to the expiration of the Initial Term, the Company or the executive officerrespective NEO provides written notice not to extend the terms of the Employment Agreement.

Pursuant toEach of the Employment Agreements provides that, if the executive officer’san NEO’s employment is terminated due to death/disability or for cause (as defined in the agreements), the Company will pay to the executive officerNEO or to his estate an amount equal to the sum of any unpaid base salary, accrued unused vacation time through the date of termination, any benefits due to the executive officerNEO under any employee benefit plan (the “Accrued Amounts”) and any performance compensation payable pursuant to the MIP.MIP applicable to such NEO.

If the executive officerNEO terminates his employment for “good reason” (as defined in the agreements) or is terminated by the Company without cause (including any such termination for “good reason” or without cause within 24 months after a Change in Control (as defined in the agreement))agreements), the Company will pay the executive officerNEO the Accrued Amounts, (a) two years of full base salary, andplus (b) (i) two times the performance compensation (under the NEO’s MIP) earned with respect to the fiscal year immediately preceding the date of termination provided the performance compensation earned with respect to the fiscal year immediately preceding the date of termination has not yet been paid. Ifpaid, or (ii) if performance compensation earned with respect to the fiscal year immediately preceding the date of termination has already been madepaid to the executive officer,NEO, the executive officerNEO will be paid an additional year of the performance compensation earned with respect to the fiscal year immediately preceding the date of termination. If the executiveNEO terminates his employment for a reason other than for good reason, the Company will pay to the executive an amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP.MIP applicable to such NEO.

If there is a Change in Control (as defined in the agreements), all outstanding stock options to purchase the common stock held by the executive officerNEO will immediately become exercisable in full commencing on the date of termination through the original term of the options. In the event of the death of an executive officer,NEO, all outstanding stock options to purchase common stock held by the executive officerNEO will immediately become exercisable in full commencing on the date of death, with such options exercisable for the lesser of the original option term or twelve months from the date of the executive officer’sNEO’s death. In the event an executive officerNEO terminates his employment for “good reason” or is terminated by the Company without cause, all outstanding stock options to purchase common stock held by the executive officerNEO will immediately become exercisable in full commencing on the date of termination, with such options exercisable for the lesser of the original option term or within 60 days from the date of the executive’sNEO’s date of termination. Severance benefits payable with respect to a termination (other than Accrued Amounts) shall not be payable until the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h)).

91

Potential Payments Upon Termination or Change in Control

The following table sets forth the potential (estimated) payments and benefits to which certain of our NEOs - Mark Duff, Ben Naccarato, and Dr. Centofanti -each NEO would be entitled upon termination of employment by the NEO for “good reason” or by the Company “without cause,” or following a Change in Control of the Company, as specified under each of their respective employment agreementsEmployment Agreements with the Company, assuming each circumstance described below occurred on December 31, 2019,2022, the last day of our most recent fiscal year. Such potential payments include any Accrued Amounts (accrued base salary earned for 2022 but paid in 2023, as well as accrued unused vacation/sick time and other vested benefits under the Company plans in which he participates). The NEO is not entitled to payment of any benefits upon termination for cause or resignation without good reason other than for Accrued Amounts.

Name and Principal Position
Potential Payment/Benefit
 By Executive for
Good Reason or by
Company Without
Cause
  Change in Control
of the Company
 
       
Mark Duff        
President and CEO        
Base salary and Accrued Amounts $773,867(1) $773,867(1)
Performance compensation $(2) $(2)
Stock Options $9,500(3) $9,500(3)
         
Ben Naccarato        
EVP and CFO        
Base salary and Accrued Amounts $668,286(1) $668,286(1)
Performance compensation $(2) $(2)
Stock Options $5,700(3) $5,700(3)
         
Dr. Louis Centofanti        
EVP of Strategic Initiatives        
Base salary and Accrued Amounts $666,448(1) $666,448(1)
Performance compensation $(2) $(2)
Stock Options $5,700(3) $5,700(3)
         
Andy Lombardo        
EVP of Nuclear and Technical Services        
Base salary and Accrued Amounts $624,667(1) $624,667(1)
Performance compensation $(2) $(2)
Stock Options $3,040(3) $3,040(3)
         
Richard Grondin        
EVP of Waste Treatment Operations        
Base salary and Accrued Amounts $615,343(1) $615,343(1)
Performance compensation $(2) $(2)
Stock Options $3,800(3) $3,800(3)

 

           By Executive for    
           Good Reason or by    
Name and Principal Position Disability/        Company Without  Change in Control of the 
Potential Payment/Benefit Retirement  For Cause  Death  Cause  Company 
                
Mark Duff                    
President and CEO                    
Accrued Amounts $15,454(6) $15,454(6) $15,454(6) $589,454(1) $589,454(1)
Performance compensation $110,699(2) $110,699(2) $110,699(2) $221,398(3) $221,398(3)
Stock Options $474,500(5) $474,500(5) $950,250(5) $950,250(4) $950,250(4)
                     
Ben Naccarato                    
EVP and CFO                    
Accrued Amounts $38,225(6) $38,225(6) $38,225(6) $508,687(1) $508,687(1)
Performance compensation $81,070(2) $81,070(2) $81,070(2) $162,140(3) $162,140(3)
Stock Options $109,000(5) $109,000(5) $361,750(5) $361,750(4) $361,750(4)
                     
Dr. Louis Centofanti                    
EVP of Strategic Initiatives                    
Accrued Amounts $168,987(6) $168,987(6) $168,987(6) $626,957(1) $626,957(1)
Performance compensation $78,918(2) $78,918(2) $78,918(2) $157,836(3) $157,836(3)
Stock Options $109,000(5) $109,000(5) $361,750(5) $361,750(4) $361,750(4)

(1)Represents two times the base salary of the NEO at December 31, 20192022 plus “Accrued Amounts” noted in footnote (6) below.Amounts.”

(2)Represents performance compensation earned for fiscal year 2019 (see “2019 MIPs” below). Pursuant to the MIP, performance compensation is to be paid about 90 days after fiscal year-end, or sooner based on final Form 10-K filing.
(3)Represents two times the performance compensation earned for fiscal year 20192022 which was $0 (see “2019“2022 MIPs” below). Pursuant to the MIP, performance compensation is to be paid about 90 days after fiscal year-end, or sooner based on final Form 10-K filing.

(3)
(4)Benefit is calculated based on the difference between the exercise price of each option and the market value of the Company’s Common Stock per share (as reported on the NASDAQ) at December 31, 20192022 times the number of options outstanding at December 31, 2019.
(5)2022. Benefit is calculated based on the difference between the exercise price of each option and the market value of the Company’s Common Stock per share (as reported on the NASDAQ)excludes options which were out-of-the-money at December 31, 2019 times the number of options vested at December 31, 2019.
(6)Represents accrued base salary earned for 2019 but paid in 2020, as well as accrued unused vacation/sick time and benefits (defined as “Accrued Amount” per the employment agreement).2022.

2019

2022 Executive Compensation Components

 

For the fiscal year ended December 31, 2019,2022, the principal components of compensation for executive officers were:

base salary;
performance-based incentive compensation;
long term incentive compensation;
retirement and other benefits; and
perquisites.

Based on the amounts set forth in the Summary Compensation table, during 2019,2022, salary accounted for approximately 62.4%89.0% of the total compensation of our NEOs, (excluding Mr. Lombardo, who was named an executive officer effective January 16, 2020), while equity option awards, MIP compensation, and other compensation accounted for approximately 37.6%11.0% of the total compensation of the NEOs.

92

Base Salary

 

Base Salary

The NEOs, other officers, and other employees of the Company receive a base salary during the fiscal year.annual salary. Base salary ranges for executive officers are determined for each executive based on his or her position and responsibility by using market data and comparisons to similar companies within the Peer Group.business segments in which the Company operates.

During its review of base salaries for executives, the Compensation Committee primarily considers:

market data and Peer Group comparisons;comparisons to similar companies within the business segments in which the Company operates;
   
internal review of the executive’s compensation, both individually and relative to other officers; and
   
individual performance of the executive.

Salary levels are typically considered annually as part of the performance review process as well as upon a promotion or other change in job responsibility. Merit-based salary increases for executives are based on the Compensation Committee’s assessment of the individual’s performance. The base salary and potential annual base salary adjustments for the NEOs are set forth in their respective employment agreements. On January 16, 2020, the Compensation Committee and the Board approved a base salary increase for the following individuals which became effective January 1, 2020: (a) approximately $57,400 increase from $287,000 to $344,400 for Mark Duff, CEO and President; (b) approximately $44,769 increase from $235,231 to $280,000 for Ben Naccarato who was named EVP and CFO from VP and CFO; and (c) approximately $21,338 increase from $258,662 to $280,000 for Andy Lombardo, who was appointed to EVP of Nuclear and Technical Services from SVP of Nuclear and Technical Services and named an executive officer of the Company, effective January 16, 2020. Lou Centofanti, EVP of Strategic Initiatives, was approved a base salary increase of 1.9%, effective January 1, 2020 (from $228,985 to $233,336).

Performance-Based Incentive Compensation

The Compensation Committee has the latitude to design cash and equity-based incentive compensation programs to promote high performance and achievement of our corporate objectives by directors and the NEOs, encourage the growth of stockholder value and enable employees to participate in our long-term growth and profitability. The Compensation Committee may grant stock options and/or performance bonuses. In granting these awards, the Compensation Committee may establish any conditions or restrictions it deems appropriate. In addition, the CEO has discretionary authority to grant stock options to certain high-performing executives or officers, subject to the approval of the Compensation Committee. The exercise price for each stock optionsoption granted is at or above the market price of our Common Stock on the date of grant. Stock options may be awarded to newly hired or promoted executives at the discretion of the Compensation Committee. Grants of stock options to eligible newly hired executive officers are generally made at the next regularly scheduled Compensation Committee meeting following the hire date.

2019

2022 MIPs

On January 17, 2019, the Board and20, 2022, the Compensation Committee and the Board approved individual MIPMIPs for our CEO, CFO and EVPthe calendar year 2022 for each of Strategic Initiatives. Thethe NEOs. Each of the MIPs werewas effective January 1, 2019 and applicable for fiscal 2019. Each2022.

The performance compensation payable under each MIP provides guidelines forwas based upon meeting certain of the calculationCompany’s separate target objectives during 2022 as described in each of annual cash incentive-based compensation, subject tothe MIPs below. The Compensation Committee oversight and modification. Each MIP awards cashbelieves performance compensation payable under each of the MIPs should be based on achievement of at least 75% of EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP financial measurement, as the Company believes that this target provides a better indicator of operating performance thresholds, withas it excludes certain non-cash items. EBITDA has certain limitations as it does not reflect all items of income or cash flows that affect the amount of suchCompany’s financial performance under GAAP. No performance compensation established as a percentagewas earned for each of the executive’s 2019 annual base salary. The potential target performance compensation for fiscal 2019 ranged from 5% to 150%objectives under any of the base salaryMIPs for the CEO ($14,350 to $430,500), 5% to 100%2022 since a minimum of 75% of the base salary for the CFO ($11,762 to $235,231) and 5% to 100%EBITDA target was not achieved.

Certain targets set forth in each of the base salary2022 MIPs took into account the Board-approved budget for 2022 as well as the EVPCompensation Committee’s expectation for performance that in its estimation would warrant payment of Strategic Initiatives ($11,449 to $228,985).incentive cash compensation. In formulating certain targets, the Compensation Committee and the Board considered 2021 results, economic conditions, potential continued impact of COVID-19 and forecasts for 2022 government spending.

93

Performance compensation, isif any, was to be paid on or about 90 days after year-end, or sooner, based on finalization of ourthe Company’s audited financial statements for 2019.included in the Company’s Form 10-K filed with the SEC. The Compensation Committee retainsretained the right to modify, change or terminate each MIP and may adjust the various target amounts described below, at any time and for any reason.

The total performance compensation that was to be paid to the CEO, CFO and EVP of Strategic Initiatives as a group isNEOs under the MIPs was not to exceed 50% of the Company’s pre-tax net income (exclusive of PF Medical) prior to the calculation of performance compensation.

The following describes the principal terms of each 2019 MIP as approved on January 17, 2019:

CEO MIP:

Theschedules reflect performance compensation plan for the CEO for fiscal 2019that was based upon meeting corporate revenue, EBITDA (earnings before interest, taxes, depreciation and amortization), health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2019, all with respect to continuing operations (excluding PF Medical). The Compensation Committee believes performance compensation payable under each of the 2019 MIPs, as discussed herein and below should be based on achievement of an EBITDA target, which excludes certain non-cash items, as this target providesalong with a better indicator of operating performance. However, EBITDA has certain limitations as it does not reflect all items of income or cash flows that affect the Company’s financial performance under accounting principles generally accepted in the United States of America (“U.S. GAAP”). At achievement of 60% to 110% of eachdescription of the revenue and EBITDA targets, the potentialtarget objectives. As noted above, no performance compensation was payable at 5% to 50%earned under any of the 2019 base salary, weighted 60% based on EBITDA goal, 10% on the revenue goal, and 15% on the numberMIPs for 2022 since a minimum of health and safety claim incidents that occurred during fiscal 2019, with the remaining 15% based on the number of notices alleging environmental, health or safety violations under the Company’s permits or licenses that occurred during fiscal 2019. Upon achievement of 111% to 150%+ of each75% of the revenue and EBITDA targets, the potential performance compensationtarget was payable at 75% to 150%not achieved.

CEO MIP:

Annualized Base Pay: $374,870 
Performance Incentive Compensation Target (at 100% of Plan): $187,435 
Total Annual Target Compensation (at 100% of Plan): $562,305 

Perma-Fix Environmental Serivces, Inc.
2022 Management Incentive Plan
CEO MIP MATRIX
 
  
Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $9,372  $18,744  $32,132  $45,520  $72,297 
                     
EBITDA (2)  56,229   112,461   192,790   273,120   433,778 
                     
Health & Safety (3) (6)  14,058   28,115   28,115   28,115   28,115 
                     
Permit & License Violations (4) (6)  14,058   28,115   28,115   28,115   28,115 
  $93,717  $187,435  $281,152  $374,870  $562,305 

CFO MIP:

Annualized Base Pay: $304,772 
Performance Incentive Compensation Target (at 100% of Plan): $152,386 
Total Annual Target Compensation (at 100% of Plan): $457,158 

Perma-Fix Environmental Serivces, Inc.
2022 Management Incentive Plan
CFO MIP MATRIX
 
  
Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $7,619  $15,239  $25,035  $33,743  $40,273 
                     
EBITDA (2)  57,146   114,289   150,209   202,455   241,641 
                     
Health & Safety (3) (6)  5,714   11,429   11,429   11,429   11,429 
                     
Permit & License Violations (4) (6)  5,714   11,429   11,429   11,429   11,429 
  $76,193  $152,386  $198,102  $259,056  $304,772 

EVP of the CEO’s 2019 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved revenue target and EBITDA target. The 2019 target performance incentive compensation for the CEO was as follows:Strategic Initiatives MIP:

Annualized Base Pay: $287,000  $253,980 
Performance Incentive Compensation Target (at 100% of Plan): $143,500  $126,990 
Total Annual Target Compensation (at 100% of Plan): $430,500  $380,970 

9194
 

Perma-Fix Environmental Services, Inc.

Perma-Fix Environmental Serivces, Inc.

2022 Management Incentive Plan

EVP OF STRATEGIC INITIATIVES MIP MATRIX

 
  
Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $6,350  $12,699  $20,863  $28,119  $33,562 
                     
EBITDA (2)  47,621   95,243   125,176   168,716   201,370 
                     
Health & Safety (3) (6)  4,762   9,524   9,524   9,524   9,524 
                     
Permit & License Violations (4) (6)  4,762   9,524   9,524   9,524   9,524 
  $63,495  $126,990  $165,087  $215,883  $253,980 

2019 Management Incentive PlanEVP of Waste Treatment Operations MIP:

CEO MIP MATRIX

Annualized Base Pay: $261,233 
Performance Incentive Compensation Target (at 100% of Plan): $130,617 
Total Annual Target Compensation (at 100% of Plan): $391,850 

 

  Performance Target Achieved 
  <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                      
Revenue (1) (5) $   -  $1,435  $7,175  $14,350  $24,600  $34,850  $55,350 
                             
EBITDA (2)  -   8,609   43,049   86,100   147,600   209,100   332,100 
                             
Health & Safety (3) (5)  -   2,153   10,763   21,525   21,525   21,525   21,525 
                             
Permit & License Violations (4) (5)  -   2,153   10,763   21,525   21,525   21,525   21,525 
 $-  $14,350  $71,750  $143,500  $215,250  $287,000  $430,500 

Perma-Fix Environmental Serivces, Inc.

2022 Management Incentive Plan

EVP OF WASTE TREATMENT OPERATIONS MIP MATRIX

 
Target Objectives  Performance Target Achieved
   75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                 
Revenue (1) (6)  $6,531  $13,062  $18,660  $26,123  $31,721 
                     
EBITDA (2)  39,185   78,371   111,958   156,741   190,328 
                     
Health & Safety (3) (6)  9,796   19,592   19,592   19,592   19,592 
                     
Permit & License Violations (4) (6)  9,796   19,592   19,592   19,592   19,592 
   $65,308  $130,617  $169,802  $222,048  $261,233 

EVP of Nuclear and Technical Services MIP:

Annualized Base Pay: $304,772 
Performance Incentive Compensation Target (at 100% of Plan): $152,386 
Total Annual Target Compensation (at 100% of Plan): $457,158 

95

Perma-Fix Environmental Serivces, Inc.

2022 Management Incentive Plan

EVP OF NUCLEAR & TECHNICAL SERVICES MIP MATRIX

 
  
Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $7,619  $15,239  $21,769  $30,477  $37,008 
                     
EBITDA (2)  45,716   91,431   130,617   182,863   222,048 
                     
Health & Safety (3) (6)  11,429   22,858   22,858   22,858   22,858 
                     
Cost Performance Incentive (5) (6)  11,429   22,858   22,858   22,858   22,858 
  $76,193  $152,386  $198,102  $259,056  $304,772 

1)(1)Revenue was defined as the total consolidated third-party top line revenue from continuing operations (excluding PF Medical) as publicly reported in the Company’s 20192022 financial statements. The percentage achieved was determined by comparing the actual consolidated revenue from continuing operationsfor 2022 to the Board-approved revenueBoard approved Revenue target from continuing operations, which was $63,124,000. The Board reserved the right to modify or change the revenue targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.for 2022.

2)(2)EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations (excluding PF Medical). The percentage achieved was determined by comparing the actual EBITDA to the Board-approved EBITDA target for 2019, which was $6,777,000. The Board reserved the right to modify or change the EBITDA targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The health and safety incentive target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholds was established for the annual incentive compensation plan calculation for 2019.

Work Comp.
Claim Number
Performance
Target Payable Under Column
460%-74%
375%-89%
290%-110%
1111%-129%
1130%-150%
1>150%

4)Permits or license incentive was earned/determined according to the scale set forth below: An “official notice of non-compliance” was defined as an official communication during 2019 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which resulted in a facility’s implementation of corrective action(s).
Permit and
License Violations
Performance
Target Payable Under Column
460%-74%
375%-89%
290%-110%
1111%-129%
1130%-150%
1>150%

5)No performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of 60% of the EBITDA target was achieved.

CFO MIP:

The performance compensation plan for the CFO for fiscal 2019 was based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2019, all with respect to continuing operations (excluding PF Medical). At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the CFO’s 2019 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, 7.5% on the number of health and safety claim incidents that occurred during fiscal 2019, and the remaining 7.5% on the number of notices alleging environmental, health or safety violations under the Company’s permits or licenses that occurred during fiscal 2019. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation was payable at 65% to 100% of the CFO’s 2019 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved revenue target and EBITDA target. The 2019 target performance incentive compensation for the CFO was as follows:

Annualized Base Pay: $235,231 
Performance Incentive Compensation Target (at 100% of Plan): $117,616 
Total Annual Target Compensation (at 100% of Plan): $352,847 

Perma-Fix Environmental Services, Inc.

2019 Management Incentive Plan

CFO MIP MATRIX

  Performance Target Achieved 
  <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                      
Revenue (1) (5) $-  $1,175  $5,881  $11,762  $19,323  $26,043  $31,084 
                             
EBITDA (2)  -   8,821   44,105   88,212   115,935   156,261   186,505 
                             
Health & Safety (3) (5)  -   883   4,411   8,821   8,821   8,821   8,821 
                             
Permit & License Violations (4) (5)  -   883   4,411   8,821   8,821   8,821   8,821 
  $-  $11,762  $58,808  $117,616  $152,900  $199,946  $235,231 

1)Revenue was defined as the total consolidated third-party top line revenue from continuing operations (excluding Medical) as publicly reported in the Company’s 2019 financial statements. The percentage achieved was determined by comparing the actual consolidated revenue from continuing operations to the Board-approved revenue target from continuing operations, which was $63,124,000. The Board reserved the right to modify or change the revenue targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations (excluding PF Medical). The percentage achieved was determined by comparing the actual EBITDA to the Board-approved EBITDA target for 2019, which was $6,777,000. The Board reserved the right to modify or change the EBITDA targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The health and safety incentive target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholds was established for the annual incentive compensation plan calculation for 2019.

Work Comp.
Claim Number
Performance
Target Payable Under Column
460%-74%
375%-89%
290%-110%
1111%-129%
1130%-150%
1>150%

4)Permits or license incentive was earned/determined according to the scale set forth below: An “official notice of non-compliance” was defined as an official communication during 2019 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which resulted in a facility’s implementation of corrective action(s).

Permit and
License Violations
Performance
Target Payable Under Column
460%-74%
375%-89%
290%-110%
1111%-129%
1 130%-150%
1>150%

5)No performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of 60% of the EBITDA target was achieved.

94

EVP of Strategic Initiatives MIP:

The performance compensation plan for the EVP of Strategic Initiatives for fiscal 2019 was based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2019, all with respect to continuing operations (excluding PF Medical). At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the 2019 base salary, weighted 75% based on EBITDA goal, 10% on revenue goal, and 7.5% on the number of health and safety claim incidents that occurred during fiscal 2019, with the remaining 7.5% based on the number of notices alleging environmental, health or safety violations under the Company’s permits or licenses that occurred during fiscal 2019. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation was payable at 65% to 100% of the EVP of Strategic Initiative’s 2019 base salary. based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved revenue target and EBITDA target. The 2019 target performance incentive compensation for the EVP of Strategic Initiatives was as follows:

Annualized Base Pay: $228,985 
Performance Incentive Compensation Target (at 100% of Plan): $114,493 
Total Annual Target Compensation (at 100% of Plan): $343,478 

Perma-Fix Environmental Services, Inc.

2019 Management Incentive Plan

EVP OF STRATEGIC INITIATIVES MIP MATRIX

  Performance Target Achieved 
  <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                      
Revenue (1) (5) $-  $1,145  $5,725  $11,449  $18,809  $25,352  $30,259 
                             
EBITDA (2)  -   8,586   42,935   85,870   112,857   152,111   181,552 
                             
Health & Safety (3) (5)  -   859   4,293   8,587   8,587   8,587   8,587 
                             
Permit & License Violations (4) (5)  -   859   4,293   8,587   8,587   8,587   8,587 
  $-  $11,449  $57,246  $114,493  $148,841  $194,637  $228,985 

1)Revenue was defined as the total consolidated third-party top line revenue from continuing operations (excluding PF Medical) as publicly reported in the Company’s 2019 financial statements. The percentage achieved was determined by comparing the actual consolidated revenue from continuing operations to the Board-approved revenue target from continuing operations, which was $63,124,000. The Board reserved the right to modify or change the revenue targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations (excluding PF Medical). The percentage achieved was determined by comparing the actual EBITDA to the Board-approved EBITDA target for 2019, which was $6,777,000. The Board reserved the right to modify or change the EBITDA targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The health and safety incentive target was based upon the actual number of Worker’s Compensation Lost Time Accidents, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholds was established for the annual incentive compensation plan calculation for 2019.
Work Comp.
Claim Number
Performance
Target Payable Under Column
460%-74%
375%-89%
290%-110%
1111%-129%
1130%-150%
1>150+

4)Permits or license incentive was earned/determined according to the scale set forth below: An “official notice of non-compliance” was defined as an official communication during 2019 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which resulted in a facility’s implementation of corrective action(s).

Permit and
License Violations
Performance
Target Payable Under Column
460%-74%
375%-89%
290%-110%
1111%-129%
1130%-150%
1>150%

5)No performance incentive compensation was payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of 60% of the EBITDA target was achieved.

The below reflects the 2019 MIP for Mr. Lombardo, who, as previously discussed, was elected to EVP of Nuclear and Technical Services and an executive officer of the Company effectiveJanuary 16, 2020. Mr. Lombardo’s MIP for 2019 as SVP of Nuclear and Technical Services (prior to named an executive officer) was only subject to the approval of Mark Duff, CEO and President.

SVP of Nuclear and Technical Services MIP:

The performance compensation plan for the SVP of Nuclear and Technical Services for fiscal 2019 was based upon meeting corporate revenue, EBITDA, health and safety compliance, and cost performance index (“CPI”) metric (for project performance evaluation) objectives for fiscal 2019, all with respect to continuing operations (excluding PF Medical). At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation was payable at 5% to 50% of the 2019 base salary, weighted 75% based on the EBITDA goal, 10% on the revenue goal, and 7.5% on the number of health and safety claim incidents that occurred during fiscal 2019, with the remaining 7.5% based on CPI metric goals. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation was payable at 65% to 100% of the SVP of Nuclear and Technical Services’ 2019 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components was based on the Board-approved revenue target and EBITDA target. The 2019 target performance incentive compensation for the SVP of Nuclear and Technical Services was as follows:

Annualized Base Pay: $258,662 
Performance Incentive Compensation Target (at 100% of Plan): $129,331 
Total Annual Target Compensation (at 100% of Plan): $387,993 

Perma-Fix Environmental Serivces, Inc.

2019 Management Incentive Plan

SVP OF NUCLEAR & TECHNICAL SERVICES MIP MATRIX

    Performance Target Achieved 
  Weights <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                        
Revenue (1) (5)    $     -  $1,292  $6,466  $12,933  $21,247  $28,638  $34,180 
                               
EBITDA (2)    -   9,700   48,500   96,998   127,483   171,825   205,082 
                               
Health & Safety (3) (5)    -   970   4,850   9,700   9,700   9,700   9,700 
                               
Cost Performance Incentive (4) (5)    -   970   4,850   9,700   9,700   9,700   9,700 
    $-  $12,933  $64,666  $129,331  $168,130  $219,863  $258,662 

1)Revenue was defined as the total consolidated third-party top line revenue from continuing operations (excluding PF Medical for 2019) as publicly reported in the Company’s 2019 financial statements. The percentage achieved was determined by comparing the actual consolidated revenue from continuing operations to the Board approved Revenue Target from continuing operations, which was $63,124,000. The Board reserved the right to modify or change the Revenue Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing operations, excluding PF Medical.discontinued operations. The percentage achieved was determined by comparing the actual EBITDA to the Board approved EBITDA Targettarget for 2019, which was $6,777,000. The Board reserved the right to modify or change the EBITDA Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.2022.

3)(3)The Health and Safety Incentive target was based upon the actual number of Worker’s Compensation Lost Time Accidents in the Company’s Services Segment, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller submitted a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims were identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholdsperformance target thresholds was established for the annual Incentive Compensation Plan calculation for 2019.2022.

Work Comp.

Claim Number
 Performance

Target Achieved
460%-74%
3 75%-89%
2 90%-110%
1 111%-129%
1 130%-150%
1 >150%)

 

4)Cost (4)Permits or License Violations incentive was earned/determined according to the scale set forth below: An “official notice of non-compliance” was defined as an official communication during 2022 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which resulted in a facility’s implementation of corrective action(s) which included a material financial obligation, as determined by the Company’s Board of Directors in their sole discretion, to the Company.

Permit and
License Violations
Performance
Target Achieved
375%-89%
290%-110%
1111%-129%
1130%-150%
1>150%

(5)CPI incentive was earned/determined by maintaining project performance metrics for all Firm Fixed Price task orders and projects to include monitoring Cost Performance Index (CPI)CPI based on recognized earned value calculations. As defined through monthly project reviews, all CPI metrics should exceed 1.0 for Nuclear Services Projects. A cumulative CPI (CCPI) was calculated from all fixed cost contracts. The following CCPI and corresponding Performance Target Thresholdsperformance target thresholds were established for annual incentive compensation plan calculation for 2019.2022.
CPI

(if CCPI is)
 Performance

Target Achieved
<.0.60(n/a)
0.60-0.7460%-74%
$0.75-0.89 75%-89%
0.90-1.10 90%-110%
1.11-1.29 111%-129%
1.30-1.50 130%-150%
>1.50 >150%

5)(6)No performance incentive compensation was payable for achieving the health and safety, and CPI, and revenue targetstarget objective unless a minimum of 60%75% of the EBITDA Target wastarget objective is achieved.

2019 MIP Targets2023 MIPs

As discussed above, 2019 MIPs approved by the Board andOn January 19, 2023, the Compensation Committee and the Board approved individual MIPs for the CEO, CFO and EVPcalendar year 2023 for each of Strategic Initiatives providethe NEOs. Each of the MIPs is effective January 1, 2023.

The performance compensation payable under each MIP is based upon meeting certain of the Company’s separate target objectives during 2023 as described in each of the MIPs below, provided, however, no performance compensation will be paid for attaining any of the awardCompany’s separate target objectives unless a minimum of cash compensation based on achievement75% of performance targets which included revenue and EBITDA targets as approved by our Board. The 2019 MIP revenue target of $63,124,000 andthe EBITDA target objective is achieved.

Certain targets set forth in each of $6,777,000 were set by the Compensation Committee taking2023 MIPs take into account the Board-approved budget for 20192023 as well as the committee’s expectationsCompensation Committee’s expectation for performance that in its estimation would warrant payment of incentive cash compensation. In formulating certain targets, the revenue target of $63,124,000,Compensation Committee and the Board considered 20182022 results, economic conditions, potential continued impact of COVID-19 and forecasts for 20192023 government (U.S DOE) spending. The Compensation Committee believed

Performance compensation amounts under the performance targets were likely to be achieved, but not assured. The 2019 MIP described above for the SVP of Technical and Nuclear Services also utilized the revenue and EBITDA as approved by our Board.

The following tables set forth the MIP compensation earned by the CEO, CFO, EVP of Strategic Initiatives for fiscal year 2019. Also included below is a table reflecting MIP compensation earned by the SVP of Nuclear and Technical Services for fiscal year 2019, who was elected to EVP of Nuclear and Technical Services and named an executive officer effective January 16, 2020.

CEO MIP:     
  Performance Target MIP Compensation 
Target Objectives: Threshold Achieved Earned 
Revenue 111%-129% $24,600 
EBITDA 75%-89%  43,049 
Health & Safety 130%-150%  21,525 
Permit & License Violations 111%-129%  21,525 
Total Performance Compensation   $110,699 

CFO MIP:     
  Performance Target MIP Compensation 
Target Objectives: Threshold Achieved Earned 
Revenue 111%-129% $19,323 
EBITDA 75%-89%  44,105 
Health & Safety 130%-150%  8,821 
Permit & License Violations 111%-129%  8,821 
Total Performance Compensation   $81,070 

98

EVP of Strategic Initiatives

  Performance Target MIP Compensation 
Target Objectives: Threshold Achieved Earned 
Revenue 111%-129% $18,809 
EBITDA 75%-89%  42,935 
Health & Safety 130%-150%  8,587 
Permit & License Violations 111%-129%  8,587 
Total Performance Compensation   $78,918 

SVP of Nuclear and Technical Services

  Performance Target MIP Compensation 
Target Objectives: Threshold Achieved Earned 
Revenue 111%-129% $21,247 
EBITDA 75%-89%  48,500 
Health & Safety 130%-150%  9,700 
CPI 90%-110%  9,700 
Total Performance Compensation   $89,147 

2020 MIPs

On January 16, 2020, the Board and the Compensation Committee approved individual MIPs for the CEO, CFO, EVP of Strategic Initiatives and EVP of Nuclear and Technical Services. The2023 MIPs are effective January 1, 2020 and applicable for fiscal 2020. Each MIP provides guidelines for the calculation of annual cash incentive-based compensation, subject to Compensation Committee oversight and modification. Each MIP awards cash compensation based on achievement of performance thresholds, with the amount of such compensation established as a percentage of the executive’s 2020 annual base salary. The potential target performance compensation ranges from 5% to 150% of the base salary for the CEO ($17,220 to $516,600), 5% to 100% of the base salary for the CFO ($14,000 to $280,000), 5% to 100% of the base salary for the EVP of Strategic Initiatives ($11,667 to $233,336) and 5% to 100% of the base salary for the EVP of Nuclear and Technical Services ($14,000 to $280,000).

Performance compensation, if any, isbe paid on or about 90 days after year-end, or sooner, based on finalization of our audited financial statements for 2020. 2023.

The Compensation Committee retains the right to modify, change or terminate each MIP and may adjust the various target amounts described below, at any time and for any reason.

The total performance compensationto be paid to the CEO, CFO, EVP of Strategic Initiatives and EVP of Nuclear and Technical Services as a group isNEOs under the MIPs shall not to exceed 50% of the Company’s pre-tax net income computed prior to the calculation of performance compensation.

The following describes the principal terms of each 2020 MIP as approved on January 16, 2020:

CEO MIP:

CEO performance compensation for fiscal 2020 is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2020, all with respect to the Company’s operations. The Compensation Committee believesschedules reflect performance compensation payable under each of the 2020 MIPs, as discussed herein and below should be based on achievement of an EBITDA target, which excludes certain non-cash items, as this target providesalong with a better indicator of operating performance. However, EBITDA has certain limitations as it does not reflect all items of income or cash flows that affect the Company’s financial performance under GAAP. At achievement of 60% to 110% of eachdescription of the revenue and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the 2020 base salary, weighted 60% based on the EBITDA goal, 10% on the revenue goal, and 15% on the number of health and safety claim incidents that occur during fiscal 2020, with the remaining 15% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal 2020. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 75% to 150% of the CEO’s 2020 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and EBITDA target. The 2020 target performance incentive compensation for the objectives.

CEO is as follows:MIP:

Annualized Base Pay: $374,870 
Performance Incentive Compensation Target (at 100% of Plan): $187,435 
Total Annual Target Compensation (at 100% of Plan): $562,305 

 

Annualized Base Pay: $344,400 
Performance Incentive Compensation Target (at 100% of Plan): $172,200 
Total Annual Target Compensation (at 100% of Plan): $516,600 

Perma-Fix Environmental Serivces, Inc.

2020
2023
Management Incentive Plan


CEO MIP MATRIX

 

 Performance Target Achieved 
Target Objectives Performance Target Achieved 
 <60% 60%-74% 75%-89% 90%-110% 111%-129% 130%-150% >150%  75%-89% 90%-110% 111%-129% 130%-150% >150% 
                          
Revenue (1) (5)(6) $-  $1,722  $8,610  $17,220  $29,520  $41,820  $66,420  $9,372  $18,744  $32,132  $45,520  $72,297 
                                                
EBITDA (2)  -   10,332   51,660   103,320   177,120   250,920   398,520   56,229   112,461   192,790   273,120   433,778 
                                                
Health & Safety (3) (5)(6)  -   2,583   12,915   25,830   25,830   25,830   25,830   14,058   28,115   28,115   28,115   28,115 
                                                
Permit & License Violations (4) (5)(6)  -   2,583   12,915   25,830   25,830   25,830   25,830   14,058   28,115   28,115   28,115   28,115 
 $-  $17,220  $86,100  $172,200  $258,300  $344,400  $516,600  $93,717  $187,435  $281,152  $374,870  $562,305 

CFO MIP:

Annualized Base Pay: $304,772 
Performance Incentive Compensation Target (at 100% of Plan): $152,386 
Total Annual Target Compensation (at 100% of Plan): $457,158 

Perma-Fix Environmental Serivces, Inc.
2023 Management Incentive Plan
CFO MIP MATRIX

Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $7,619  $15,239  $25,035  $33,743  $40,273 
                     
EBITDA (2)  57,146   114,289   150,209   202,455   241,641 
                     
Health & Safety (3) (6)  5,714   11,429   11,429   11,429   11,429 
                     
Permit & License Violations (4) (6)  5,714   11,429   11,429   11,429   11,429 
  $76,193  $152,386  $198,102  $259,056  $304,772 

EVP of Strategic Initiatives MIP:

Annualized Base Pay: $253,980 
Performance Incentive Compensation Target (at 100% of Plan): $126,990 
Total Annual Target Compensation (at 100% of Plan): $380,970 

Perma-Fix Environmental Serivces, Inc.
2023 Management Incentive Plan
EVP OF STRATEGIC INITIATIVES MIP MATRIX

Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $6,350  $12,699  $20,863  $28,119  $33,562 
                     
EBITDA (2)  47,621   95,243   125,176   168,716   201,370 
                     
Health & Safety (3) (6)  4,762   9,524   9,524   9,524   9,524 
                     
Permit & License Violations (4) (6)  4,762   9,524   9,524   9,524   9,524 
  $63,495  $126,990  $165,087  $215,883  $253,980 

98

EVP of Waste Treatment Operations MIP:

Annualized Base Pay: $261,233 
Performance Incentive Compensation Target (at 100% of Plan): $130,617 
Total Annual Target Compensation (at 100% of Plan): $391,850 

Perma-Fix Environmental Serivces, Inc.
2023 Management Incentive Plan

EVP OF WASTE TREATMENT OPERATIONS MIP MATRIX

Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $6,531  $13,062  $18,660  $26,123  $31,721 
                     
EBITDA (2)  39,185   78,371   111,958   156,741   190,328 
                    
Health & Safety (3) (6)  9,796   19,592   19,592   19,592   19,592 
                     
Permit & License Violations (4) (6)  9,796   19,592   19,592   19,592   19,592 
  $65,308  $130,617  $169,802  $222,048  $261,233 

EVP of Nuclear and Technical Services MIP:

Annualized Base Pay: $304,772 
Performance Incentive Compensation Target (at 100% of Plan): $152,386 
Total Annual Target Compensation (at 100% of Plan): $457,158 

Perma-Fix Environmental Serivces, Inc.
2023 Management Incentive Plan

EVP OF NUCLEAR & TECHNICAL SERVICES MIP MATRIX

Target Objectives Performance Target Achieved 
  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                
Revenue (1) (6) $7,619  $15,239  $21,769  $30,477  $37,008 
                     
EBITDA (2)  45,716   91,431   130,617   182,863   222,048 
                     
Health & Safety (3) (6)  11,429   22,858   22,858   22,858   22,858 
                     
Cost Performance Incentive (5) (6)  11,429   22,858   22,858   22,858   22,858 
  $76,193  $152,386  $198,102  $259,056  $304,772 

1)(1)Revenue is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 20202023 financial statements. The percentage achieved is determined by comparing the actual consolidated revenue for 20202023 to the Board approved Revenue Targettarget for 2020, which is $86,201,000. The Board reserves the right to modify or change the Revenue Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.2023.

2)(2)EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations, including PF Medical.operations. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Targettarget for 2020, which is $6,913,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2020.2023.

Work Comp.

Claim Number

(3)

Performance

Target Achieved

460%-74%
375%-89%
2 90%-110%
1 111%-129%
1130%-150%
1>150%
4)Permits or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of non-compliance” is defined as an official communication during 2020 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which results in a facility’s implementation of corrective action(s).

Permit and
License Violations
Performance
Target Achieved
460%-74%
375%-89%
2 90%-110%
1111%-129%
1130%-150%
1>150%

5)No performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of 60% of the EBITDA Target is achieved.

CFO MIP:

CFO performance compensation for fiscal 2020 is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2020, all with respect to the Company’s operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the 2020 base salary, weighted 75% based on EBITDA goal, 10% on the revenue goal, and 7.5% on the number of health and safety claim incidents that occur during fiscal 2020, with the remaining 7.5% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occur during the fiscal 2020. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the CFO’s 2020 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and EBITDA target. The 2020 target performance incentive compensation for the CEO is as follows:

Annualized Base Pay: $280,000 
Performance Incentive Compensation Target (at 100% of Plan): $140,000 
Total Annual Target Compensation (at 100% of Plan): $420,000 

Perma-Fix Environmental Serivces, Inc.

2020 Management Incentive Plan

CFO MIP MATRIX

  Performance Target Achieved 
  <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                      
Revenue (1) (5) $-  $1,400  $7,000  $14,000  $23,000  $31,000  $37,000 
                             
EBITDA (2)  -   10,500   52,500   105,000   138,000   186,000   222,000 
                             
Health & Safety (3) (5)  -   1,050   5,250   10,500   10,500   10,500   10,500 
                             
Permit & License Violations (4) (5)  -   1,050   5,250   10,500   10,500   10,500   10,500 
  $-  $14,000  $70,000  $140,000  $182,000  $238,000  $280,000 
1)Revenue is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2020 to the Board approved Revenue Target for 2020, which is $86,201,000. The Board reserves the right to modify or change the Revenue Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations, including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target for 2020, which is $6,913,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2020.

Work Comp.
Claim Number
Performance
Target Achieved
460%-74%
375%-89%
2 90%-110%
1 111%-129%
1130%-150%
1>150%

4)Permits or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of non-compliance” is defined as an official communication during 2020 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which results in a facility’s implementation of corrective action(s).

Permit and
License Violations
Performance
Target Achieved
460%-74%
375%-89%
2 90%-110%
1111%-129%
1130%-150%
1>150%

5)No performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of 60% of the EBITDA Target is achieved.

EVP of Strategic Initiatives MIP:

The 2020 performance compensation plan for the EVP of Strategic Initiative is based upon meeting corporate revenue, EBITDA, health and safety, and environmental compliance (permit and license violations) objectives for fiscal 2020, all with respect to the Company’s operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the 2020 base salary, weighted 75% based on EBITDA goal, 10% on revenue goal, and 7.5% on the number of health and safety claim incidents that occur during fiscal 2020, with the remaining 7.5% on the number of notices alleging environmental, health or safety violations under our permits or licenses that occur during fiscal 2020. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the EVP of Strategic Initiative’s 2020 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and EBITDA target. The 2020 target performance incentive compensation for the EVP of Strategic Initiatives is as follows:

Annualized Base Pay: $233,336 
Performance Incentive Compensation Target (at 100% of Plan): $116,668 
Total Annual Target Compensation (at 100% of Plan): $350,004 

Perma-Fix Environmental Serivces, Inc.

2020 Management Incentive Plan

EVP OF STRATEGIC INITIATIVES MIP MATRIX

    Performance Target Achieved 
  Weights <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                        
Revenue (1) (5)   $-  $1,167  $5,833  $11,667  $19,167  $25,834  $30,834 
                               
EBITDA (2)    -   8,750   43,751   87,501   115,001   155,002   185,002 
                               
Health & Safety (3) (5)    -   875   4,375   8,750   8,750   8,750   8,750 
                               
Permit & License Violations (4) (5)    -   875   4,375   8,750   8,750   8,750   8,750 
    $-  $11,667  $58,334  $116,668  $151,668  $198,336  $233,336 

1)Revenue is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2020 to the Board approved Revenue Target for 2020, which is $86,201,000. The Board reserves the right to modify or change the Revenue Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations, including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target for 2020, which is $6,913,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The Health and Safety Incentive Target is based upon the actual number of Worker’s Compensation Lost Time Accidents, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholds has been established for the annual Incentive Compensation Plan calculation for 2020.

Work Comp.

Claim Number

Performance

Target Achieved

460%-74%
375%-89%
2 90%-110%
1 111%-129%
1130%-150%
1>150%

4)Permits or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of non-compliance” is defined as an official communication during 2020 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which results in a facility’s implementation of corrective action(s).

Permit and
License Violations
Performance
Target Achieved
460%-74%
375%-89%
2 90%-110%
1111%-129%
1130%-150%
1>150%

5)No performance incentive compensation will be payable for achieving the health and safety, permit and license violation, and revenue targets unless a minimum of 60% of the EBITDA Target is achieved.

EVP of Nuclear and Technical Services MIP:

The 2020 performance compensation plan for the EVP of Nuclear and Technical Services is based upon meeting corporate revenue, EBITDA, health and safety compliance, and cost performance index (“CPI”) (a metric used in measuring project performance) objectives for fiscal 2020, all with respect to the Company’s operations. At achievement of 60% to 110% of each of the revenue and EBITDA targets, the potential performance compensation is payable at 5% to 50% of the 2020 base salary, weighted 60% based on the EBITDA goal, 10% on the revenue goal, and 15% on the number of health and safety claim incidents that occur during fiscal 2020, with the remaining 15% on CPI metric goals. Upon achievement of 111% to 150%+ of each of the revenue and EBITDA targets, the potential performance compensation is payable at 65% to 100% of the SVP of Nuclear and Technical Services’ 2020 base salary, based on the four objectives noted above, with the payment of such performance compensation being weighted more heavily toward the EBITDA objective. Each of the revenue and EBITDA components is based on the Board-approved revenue target and the EBITDA target. The 2020 target performance incentive compensation for the EVP of Nuclear and Technical Services is as follows:

Annualized Base Pay: $280,000 
Performance Incentive Compensation Target (at 100% of Plan): $140,000 
Total Annual Target Compensation (at 100% of Plan): $420,000 

Perma-Fix Environmental Serivces, Inc.

2020 Management Incentive Plan

EVP OF NUCLEAR & TECHNICAL SERVICES MIP MATRIX

  Performance Target Achieved 
  <60%  60%-74%  75%-89%  90%-110%  111%-129%  130%-150%  >150% 
                      
Revenue (1) (5) $-  $1,400  $7,000  $14,000  $20,000  $28,000  $34,000 
                             
EBITDA (2)  -   8,400   42,000   84,000   120,000   168,000   204,000 
                             
Health & Safety (3) (5)  -   2,100   10,500   21,000   21,000   21,000   21,000 
                             
Cost Performance Incentive (4) (5)  -   2,100   10,500   21,000   21,000   21,000   21,000 
  $-  $14,000  $70,000  $140,000  $182,000  $238,000  $280,000 

1)Revenue is defined as the total consolidated third-party top line revenue as publicly reported in the Company’s 2020 financial statements. The percentage achieved is determined by comparing the actual consolidated revenue for 2020 to the Board approved Revenue Target for 2020, which is $86,201,000. The Board reserves the right to modify or change the Revenue Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
2)EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing and discontinued operations, including PF Medical. The percentage achieved is determined by comparing the actual EBITDA to the Board approved EBITDA Target for 2020, which is $6,913,000. The Board reserves the right to modify or change the EBITDA Targets as defined herein in the event of the sale or disposition of any of the assets of the Company or in the event of an acquisition.
3)The Health and Safety Incentive target is based upon the actual number of Worker’s Compensation Lost Time Accidents in the Company’s Services Segment, as provided by the Company’s Worker’s Compensation carrier. The Corporate Controller will submit a report on a quarterly basis documenting and confirming the number of Worker’s Compensation Lost Time Accidents, supported by the Worker’s Compensation Loss Report provided by the company’s carrier or broker. Such claims will be identified on the loss report as “indemnity claims.” The following number of Worker’s Compensation Lost Time Accidents and corresponding Performance Target Thresholdsperformance target thresholds has been established for the annual Incentive Compensation Plan calculation for 2020.2023.

99

Work Comp.

Claim Number

Performance

Target Achieved

375%-89%
290%-110%
1111%-129%
1130%-150%
1>150%

 

Work Comp.

Claim Number

(4)Permits or License Violations incentive is earned/determined according to the scale set forth below: An “official notice of non-compliance” is defined as an official communication during 2023 from a local, state, or federal regulatory authority alleging one or more violations of an otherwise applicable Environmental, Health or Safety requirement or permit provision, which results in a facility’s implementation of corrective action(s) which includes a material financial obligation, as determined by the Company’s Board of Directors in their sole discretion, to the Company.

Permit and
License Violations
Performance


Target Achieved

4360%-74%75%-89%
3275%-89% 90%-110%
2190%-110%111%-129%
1111%-129%130%-150%
1130%-150%
1>150%>150%)

4)Cost Performance(5)CPI incentive is earned/determined by maintaining project performance metrics for all Firm Fixed Price task orders and projects to include monitoring Cost Performance Index (CPI)CPI based on recognized earned value calculations. As defined through monthly project reviews, all CPI metrics should exceed 1.0 for Nuclear Services Projects. A cumulative CPI (CCPI) will be calculated from all fixed cost contracts. The following CCPI and corresponding Performance Target Thresholdsperformance target thresholds have been established for annual incentive compensation plan calculation for 2020.2023.

 

CPI


(if CCPI is)

Performance

Target Achieved

Performance

Target Achieved

<.0.600.75-0.89(n/a)75%-89%
0.60-0.740.90-1.1060%-74%90%-110%
0.75-0.891.11-1.2975%-89%111%-129%
0.90-1.101.30-1.5090%-110%130%-150%
1.11-1.29>1.50111%-129%
1.30-1.50>150%130%-150%
>1.50>150%

5)(6)No performance incentive compensation will be payable for achieving the health and safety, and CPI, and revenue targetstarget objective unless a minimum of 60%75% of the EBITDA Targettarget objective is achieved.

2020 MIP Targets

100

As discussed above, 2020 MIPs approved by the Board and the Compensation Committee for the CEO, CFO, EVP of Strategic Initiatives and EVP of Nuclear and Technical Services provide for the award of cash compensation based on achievement of performance targets which include revenue and EBITDA targets as approved by our Board. The 2020 MIP revenue target of $86,201,000 and EBITDA target of $6,913,000 were set by the Compensation Committee taking into account the Board-approved budget for 2020 as well as the committee’s expectations for performance that in its estimation would warrant payment of incentive cash compensation. In formulating the revenue target of $86,201,000, the Board considered 2019 results, economic conditions, and forecasts for 2020 government (U.S DOE) spending. The Compensation Committee believes the performance targets are likely to be achieved, but not assured.

Long-Term Incentive Compensation

Employee Stock Option Plans

The 2010 Stock Option Plan and the 2017 Stock Option Plan (together, the “Option Plans”(“2017 Option Plan”) encourageencourages participants to focus on long-term performance and provides an opportunity for executive officers and certain designated key employees to increase their stake in the Company. Stock options succeed by delivering value to executives only when the value of our stock increases. The 2017 Option Plans authorizePlan authorizes the grant of Non-Qualified Stock Options (“NQSOs”)NQSOs and Incentive Stock Options (“ISOs”)ISOs for the purchase of our Common Stock.

The 2017 Option Plans assistPlan assists the Company to:

 enhance the link between the creation of stockholder value and long-term executive incentive compensation;
   
 provide an opportunity for increased equity ownership by executives; and
   
 maintain competitive levels of total compensation;

Stock option award levels are determined based on market data, vary among participants based on their positions with the Company and are granted generally at the Compensation Committee’s regularly scheduled July or August meeting. Newly hired or promoted executive officers who are eligible to receive options are generally awarded such options at the next regularly scheduled Compensation Committee meeting following their hire or promotion date.

Options are awarded with an exercise price equal to or not less than the closing price of the Company’s Common Stock on the date of the grant as reported on the NASDAQ. In certain limited circumstances, the Compensation Committee may grant options to an executive at an exercise price in excess of the closing price of the Company’s Common Stock on the grant date.

The Company’s NEOs including Andy Lombardo, who was elected to EVP of Nuclear and Technical Services and an executive officer of the Company effective January 16, 2020, have outstanding options from the Company’s Option Plans. See2017 Plan (See “Item 11 – Executive Compensation – Outstanding Equity Awards at Fiscal Year-End -Outstanding- Outstanding Equity Awards at December 31, 2019”2022” for outstanding options for each of our NEOs.NEOs). On January 19, 2023, the Company’s Board and Compensation Committee approved 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 CEO; 40,000 shares for the CFO; 30,000 shares for the 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 the 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.

In cases of termination of an executive officer’s employment due to death, by the executive for “good reason”,reason,” by the Company without cause, and due to a “change of control,” all outstanding stock options to purchase common stock held by the executive officer will immediately become exercisable in full (see further discussion of the exercisability term of these options in each of these circumstances in “Item 11 – EXECUTIVE“EXECUTIVE COMPENSATION – Employment Agreements”). Otherwise, vesting of option awards ceases upon termination of employment and exercise right of the vested option amount ceases upon three months from termination of employment except in the case of retirement (subject to a six-month limitation) and disability (subject to a one-year limitation).

Accounting for Stock-Based Compensation

We account for stock-based compensation in accordance with Accounting Standards Codification (“ASC”)ASC 718, “Compensation – Stock Compensation.” ASC 718 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. ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes option-pricing model to determine the fair-value of stock-based awards which requires subjective assumptions. 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. We recognize stock-based compensation expense using a straight-line amortization method over the requisite period, which is the vesting period of the stock option grant.

101

Retirement and Other Benefits

401(k) Plan

The Company adopted the Perma-Fix Environmental Services, Inc. 401(k) Plan (the “401(k) Plan”) in 1992, which is intended to comply with Section 401 of the Internal Revenue Code and the provisions of the Employee Retirement Income Security Act of 1974. All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) Plan. Eligibility is immediate upon employment but enrollment is only allowed during four quarterly open periods of January 1, Apri1 1, July 1, and October 1. Participating employees may make annual pretax contributions to their accounts up to 100% of their compensation, up to a maximum amount as limited by law. We, atAt our discretion, we may make matching contributions based on the employee’s elective contributions. Company contributions vest over a period of five years. In 2019,2022, the Company contributed approximately $395,000$575,000 in 401(k) matching funds, of which approximately $21,000$31,000 was for our NEOs (including Andy Lombardo, who was elected to EVP of Nuclear and Technical Services and an executive officer effective January 16, 2020) (see the “Summary Compensation” table in this section for 401(k) matching fund contributions made for the NEOs for 2019)2022).

Perquisites and Other Personal Benefits

The Company provides executive officers with limited perquisites and other personal benefits (health/disability/life insurance) that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to executive officers. The executive officers are provided an auto allowance.

107

Consideration of Stockholder Say-On-Pay Advisory Vote.

At the Annual Meeting of Stockholders held on July 25, 2019, the Company’s stockholders voted, on a non-binding, advisory basis, on the compensation of the Company’s NEOs for 2018. A substantial majority (approximately 95%) of the total votes cast on the say-on-pay proposal at the Annual Meeting approved the compensation of the Company’s NEOs for 2018 on a non-binding, advisory basis. The Compensation Committee and the Board believes that this affirms the stockholders’ support of their approach to executive compensation. The Compensation Committee expects to continue to consider the results of future stockholder say-on-pay advisory votes when making future compensation decisions for the Company’s NEOs. The Company will hold an advisory vote on the compensation of its NEOs for 2019 at the 2020 annual meeting of stockholders.

Compensation of Directors

Directors who are employees receive no additional compensation for serving on the Board or its committees.committee(s). In 2019,2022, the Company provided the following annual compensation to each non-employee directors:director and the committee(s) for which he/she serves:

options to purchase 2,400 sharesa quarterly fee of Common Stock with each option having a 10-year term and being fully vested after six months from grant date;$11,500;
a quarterly director fee of $8,000;
an additional quarterly fee of $5,500 and $7,500$8,750 to the Chairman of the Board;
an additional quarterly fee of $6,250 to the Chairman of the Audit Committee;
an additional quarterly fee of $3,125 to the Chairman of each of the Compensation Committee, the Governance and Nominating Committee, and the Strategic Committee. The Chairman of the Board (non-employee), respectively; andwas not eligible to receive a quarterly fee for serving as the Chairman of any the aforementioned committees;
an additional $1,250 to each Audit Committee member (excluding the Chairman of the Audit Committee);
an additional quarterly fee of $500 to each member of the Compensation Committee, the Governance and Nominating Committee, and the Strategic Committee. Such fee was payable only if the member did not also serve as the Chairman of any other standing committees or as the Chairman of the Board; and
a fee of $1,000 for each in-person board meeting attendanceattended and a $500 fee for meeting attendance via conference call.call;

Each director may elect to have either 65% or 100% of such fees payable in Common Stock under the 2003 Outside Directors Stock Plan (“2003 Outside Directors Plan”), with the balance, if any, payable in cash.

102

Each non-employee director was also granted an option to purchase 10,000 shares of Common Stock upon reelection with vesting period of 25% per year, beginning on the first anniversary date of the grant, with each option having a 10-year term.

Dr. Louis Centofanti, a current member of the Board, is not eligible to receive compensation for his service as a director of the Company as he is an employee of the Company (see “Summary Compensation” table in this section for Dr. Centofanti’s annual salary and other compensation as an employee of the Company).

The table below summarizes the director compensation expenses recognized by the Company for the director options and stock awards (resulting from fees earned) for the year ended December 31, 2019.2022. The terms of the 2003 Outside Directors Plan are further described below under “2003 Outside Directors Plan.”

Director Compensation

Name Fees Earned or Paid
In Cash
 Stock Awards Option Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All Other Compensation Total  Fees Earned or Paid In Cash Stock Awards Option Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All Other Compensation Total 
 ($)(1) ($)(2) ($)(3) ($) ($) ($) ($)  ($)(1) ($)(2) ($)(4) ($)  ($)  ($)  ($) 
               
S. Robert Cochran(4)     39,305   5,458            44,763 
Thomas P. Bostick     68,664   36,100(3)          104,764 
Kerry C. Duggan  18,550   45,935   36,100(3)          100,585 
Joseph T. Grumski     89,999   36,100(3)          126,099 
Joe R. Reeder     49,337   5,458            54,795      82,663   36,100(3)          118,763 
Larry M. Shelton  23,800   58,928   5,458            88,186   31,500   77,999   36,100(3)          145,599 
Zach P. Wamp  13,125   32,503   5,458            51,086   18,725   46,369   36,100(3)          101,194 
Mark A. Zwecker  20,825   51,567   5,458            77,850   26,250   65,000   36,100(3)          127,350 

(1)Under the 2003 Outside Directors Plan, each director elects to receive 65% or 100% of the director’s fees in shares of our Common Stock. The amounts set forth above represent the portion of the director’s fees paid in cash and exclude the value of the directors’director’s fee elected to be paid in Common Stock under the 2003 Outside Directors Plan, which values are included under “Stock Awards.”

(2)The number of shares of Common Stock comprising stock awards granted under the 2003 Outside Directors Plan is calculated based on 75% of the closing market value of the Common Stock as reported on the NASDAQ on the business day immediately preceding the date that the quarterly fee is due. Such shares are fully vested on the date of grant. The value of the stock award is based on the market value of our Common Stock at each quarter end times the number of shares issuable under the award. The amount shown is the fair value of the Common Stock on the date of the award.

(3)OptionsReflects options granted under the Company’s 2003 Outside Directors Plan resulting from re-election to the Board of Directors on July 25, 2019.21, 2022. Options are for a 10-year period with an exercise price of $3.31$5.15 per share and are fully vested in six months from grant date.vest 25% per year, beginning on the first anniversary date of the grant. The value of the option award for each outside director is calculated based on the fair value of the option per share (approximately $2.27)$3.61) on the date of grant times the number of options granted, which was 2,40010,000 for each director, pursuant to ASC 718, “Compensation – Stock Compensation.”.

(4)The following table reflects the aggregate number of outstanding non-qualified stock optionsNQSO held by the Company’s directors at December 31, 2019.2022. As an employee of the Company or its subsidiaries, Dr. Centofanti is not eligible to participate in the 2003 Outside Directors Plan. Options reflected below for Dr. Centofanti were granted from the 2017 Stock Option Plan as discussed previously:

Name Options Outstanding
at
NameDecember 31, 20192022 
Dr. Louis Centofanti  65,00085,000
Thomas P. Bostick26,000
Kerry C. Duggan26,000
Joseph T. Grumski28,400 
Joe R. Reeder  24,00039,200 
Larry M. Shelton  24,00039,200 
Zach P. Wamp  10,80033,200 
Mark A. Zwecker  24,00039,200 
Total  147,800316,200 


(4)Mr. Cochran resigned from the Board effective October 18, 2019.103

2003 Outside Directors Plan

We believe that it is important for our directors to have a personal interest in our success and growth and for their interests to be aligned with those of our stockholders; therefore, under our 2003 Outside Directors Stock Plan, as amended (“2003 Outside Directors Plan”), each outside director is granted a 10-year optionNQSO to purchase up to 6,00020,000 shares of Common Stock on the date such director is initially elected to the Board, and receives on each re-election date an optiona NQSO to purchase up to another 2,40010,000 shares of our Common Stock, with the exercise price being the fair market value of the Common Stock preceding the option grant date. NoCommon Stock shares subject to option granted undervest at 25% per year, beginning on the 2003 Outside Directors Plan is exercisable until afterfirst anniversary date of the expiration of six months from the date the option is grantedgrant and no option shall be exercisable after the expiration of ten years from the date the option is granted. At December 31, 2019,2022, options to purchase 136,000262,400 shares of Common Stock were outstanding under the 2003 Outside Directors Plan, of which 124,800139,900 were vested at December 31, 2019.2022.

As a member of the Board, each director may elect to receive either 65% or 100% of his director’s fee in shares of our Common Stock. The number of shares received by each director is calculated based on 75% of the fair market value of the 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. In 2019,2022, the fees earned by our outside directors totaled approximately $289,000. Reimbursements of expenses for attending meetings of the Board are paid in cash at the time of the applicable Board meeting. As a management director, Dr. Centofanti is not eligible to participate in the 2003 Outside Directors Plan.$572,000.

As of December 31, 2019, we have issued 680,488 shares of our Common Stock in payment of director fees since the inception of the 2003 Outside Directors Plan.

In the event of a “change of control” (as defined in the 2003 Outside Directors Plan), each outstanding stock option and stock award shall immediately become exercisable in full notwithstanding the vesting or exercise provisions contained in the stock option agreement.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners

The table below sets forth information as to the shares of Common Stock beneficially owned as of February 18, 202014, 2023 by each person known by us to be the beneficial owners of more than 5% of any class of our voting securities.

Name of Beneficial Owner 

Title

Of Class

 

Amount and

Nature of

Ownership

 

Percent

Of

Class(1)

  Title
Of Class
 Amount and
Nature of
Ownership
  

Percent
Of Class (1)

 
Heartland Advisors, Inc.(2)  Common   1,448,430   11.9% Common  1,110,500   8.3%

(1)The number of shares and the percentage of outstanding Common Stock shown as beneficially owned by a person are based upon 12,123,00613,358,075 shares of Common Stock outstanding on February 18, 2020,14, 2023, and the number of shares of Common Stock which such person has the right to acquire beneficial ownership of within 60 days. Beneficial ownership by our stockholders has been determined in accordance with the rules promulgated under Section 13(d) of the Exchange Act.

(2)This information is based on the Schedule 13D of Heartland Advisors, Inc., an investment advisor, filed with the Commission on January 10, 2020,2023, disclosing that at December 31, 2019,2022, each of Heartland Advisors, Inc., Heartland Holdings, Inc. and Mr. William Nasgovitz, as a control person of Heartland Advisors, Inc., had shared dispositive power over all shares shown above butand shared voting power over 1,290,7301,015,500 of such shares and no voting power over 157,700 of the shares. The address of Heartland Advisors, Inc. is 789790 North Water Street, Milwaukee, WI 53202.

As of February 18, 2020,

104

Additionally, Schelhammer Capital Bank–Grawe GruppeBank AG, (“Capital Bank”), a banking institution regulated by the banking regulations of Austria, has represented to the Company that as of February 1, 2023, it holds of record as a nominee for, and as an agent of, certain accredited investors, 2,201,6681,897,794 shares of our Common Stock. None of the Common Stock held by Schelhammer Capital Bank’s investors beneficially ownBank AG for the account of any single investor represents more than 4.9% of our Common Stock and, to itsthe best knowledge of Schelhammer Capital Bank AG, as far as stocks held by such investors in accounts with Schelhammer Capital Bank AG, none of Capital Bank’ssuch investors act together as a group or otherwise act in concert for the purpose of voting on matters subject to the vote of our stockholders or for purpose of disposition or investment of such stock. Additionally, the investors for whom Schelhammer Capital Bank’s investorsBank AG acts as nominee with respect to such shares maintain full voting and dispositive power over the Common Stock beneficially owned by such investors, and Schelhammer Capital Bank AG has neither voting nor investment power over such shares. Accordingly, Schelhammer Capital Bank AG believes that (i) it is not the beneficial owner, as such term is defined in Rule 13d-3 of the Exchange Act, of the shares of Common Stock registered in Schelhammer Capital Bank’sBank AG’s name because (a) Schelhammer Capital Bank AG holds the Common Stock as a nominee only, (b) Schelhammer Capital Bank AG has neither voting nor investment power over such shares, and (c) Schelhammer Capital Bank AG has not nominated or sought to nominate, and does not intend to nominate in the future, any person to serve as a member of our Board; and (ii) it is not required to file reports under Section 16(a) of the Exchange Act or to file either Schedule 13D or Schedule 13G in connection with the shares of our Common Stock registered in the name of Schelhammer Capital Bank.Bank AG.

Notwithstanding the previous paragraph, if Schelhammer Capital Bank’sBank AG’s representations to us described above are incorrect or if the investors for whom Schelhammer Capital Bank’s investorsBank AG acts as nominee are acting as a group, then Schelhammer Capital Bank AG or a group of Capital Bank’ssuch investors could be a beneficial owner of more than 5% of our voting securities. If Schelhammer Capital Bank AG was deemed the beneficial owner of such shares, the following table sets forth information as to the shares of voting securities that Schelhammer Capital Bank AG may be considered to beneficially own on February 18, 2020:1, 2023:

Name of
Record Owner

Title

Of Class

Amount and

Nature of

Ownership

Percent

Of

Class(*)

Capital Bank-Grawe GruppeCommon2,201,668(+)18.2%
Name of
Record Owner
 Title
Of Class
 Amount and
Nature of
Ownership
  

Percent
Of Class (*)

 
Schelhammer Capital Bank AG Common  1,897,794(+)  14.2%

(*)This calculation is based upon 12,123,00613,358,75 shares of Common Stock outstanding on February 18, 2020,14, 2023, plus the number of shares of Common Stock which Schelhammer Capital Bank AG, as agent for certain accredited investors has the right to acquire within 60 days, which is none.

110

(+)This amount is the number of shares that Schelhammer Capital Bank AG has represented to us that it holds of record as nominee for, and as an agent of, certain of its accredited investors. As of February 1, 2023, the date of this report,Schelhammer Capital Bank AG’s representations to us, Schelhammer Capital Bank AG has no warrants or options to acquire, as agent for certain investors, additional shares of our Common Stocks.Stock. Although Schelhammer Capital Bank AG is the record holder of the shares of Common Stock described in this note, Schelhammer Capital Bank AG has advised us that it does not believe it is a beneficial owner of the Common Stock or that it is required to file reports under Section 16(a) or Section 13(d) of the Exchange Act. BecauseSchelhammer Capital Bank (a)AG has advised us that it (a) holds the Common Stock as a nominee only and that it does not exercise voting or investment power over the Common Stock held in its name and that no one investor of Capital Bank for which it holds our Common Stock holds more than 4.9% of our issued and outstanding Common Stock and (b) has not nominated, and has not sought to nominate, and does not intend to nominate in the future, any person to serve as a member of our Board,Board. Accordingly, we do not believe that Schelhammer Capital Bank AG is our affiliate. Schelhammer Capital Bank’sBank AG’s address is Burgring 16, A-8010 Graz,Goldschmiedgasse 3, A-1010 Wien, Austria.

105

Security Ownership of Management

The following table sets forth information as to the shares of voting securities beneficially owned as of February 18, 2020,14, 2023, by each of our directors and NEOs and by all of our directors and NEOs as a group. Beneficial ownership has been determined in accordance with the rules promulgated under Section 13(d) of the Exchange Act. A person is deemed to be a beneficial owner of any voting securities for which that person has the right to acquire beneficial ownership within 60 days.

Name of Beneficial Owner (2) Amount and Nature of Beneficial Owner (1)  Percent of Class (1) 
Thomas P. Bostick (3)  36,548(3)  * 
Kerry C. Duggan (4)  23,115(4)  * 
Dr. Louis F. Centofanti (5)  303,025(5)  2.26%
Joseph T. Grumski (6)  50,910(6)  * 
Joe R. Reeder (7)  246,483(7)  1.84%
Larry M. Shelton (8)  179,087(8)  1.34%
Zack P. Wamp (9)  53,420(9)  * 
Mark A. Zwecker (10)  237,893(10)  1.78%
Mark Duff (11)  170,984(11)  1.27%
Richard Grondin (12)  34,036(12)  * 
Andy Lombardo (13)  29,900(13)  * 
Ben Naccarato (14)  71,393(14)  * 
Directors and Executive Officers as a Group (12 persons)  1,436,794(15)  10.42%

  Amount and Nature    
Name of Beneficial Owner(2) of Beneficial Owner(1)  Percent of Class(1) 
Dr. Louis F. Centofanti(3)  251,525(3)  2.07%
Joseph T. Grumski(4)  -(4)  * 
Joe R. Reeder(5)  210,256(5)  1.73%
Larry M. Shelton(6)  141,183(6)  1.16%
Zack P. Wamp(7)  26,187(7)  * 
Mark A. Zwecker(8)  205,524(8)  1.69%
Ben Naccarato(9)  25,500(9)  * 
Mark Duff(10)  108,551(10)  * 
Andy Lombardo(11)  3,400(11)  * 
Directors and Executive Officers as a Group (9 persons)  972,126(12)  7.87%

*Indicates beneficial ownership of less than one percent (1%).

(1)See footnote (1) of the table under “Security Ownership of Certain Beneficial Owners.”

 

(2)The business address of each person, for the purposes hereof, is c/o Perma-Fix Environmental Services, Inc., 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.

(3)Mr. Bostick has sole and voting and investment power over all shares shown, which include: (i) 28,048 shares of Common Stock held of record by Mr. Bostick, and (ii) immediately exercisable options to purchase 8,500 shares.

(4) Ms. Duggan has sole and voting and investment power over all shares shown, which include: (i) 14,615 shares of Common Stock held of record by Ms. Duggan, and (ii) immediately exercisable options to purchase 8,500 shares.

(5)These shares include (i) 165,725174,225 shares held of record by Dr. Centofanti, (ii) immediately exercisable options to purchase 23,00066,000 shares, which are immediately exercisable, and (iii) 62,800 shares held by Dr. Centofanti’s wife. Dr. Centofanti has sole voting and investment power of theseover all such shares, except for the shares held by Dr. Centofanti’s wife, over which Dr. Centofanti shares voting and investment power. Dr. Centofanti also owns 700

(6) Mr. Grumski has sole and voting and investment power over all shares shown, which include: (i) 40,010 shares of PF Medical’s Common Stock.

(4)Stock held of record by Mr. Grumski, does not beneficially own any of the Company’sand (ii) immediately exercisable options to purchase 10,900 shares.

(5)(7) Mr. Reeder has sole voting and investment power over theseall shares shown, which include: (i) 186,256224,783 shares of Common Stock held of record by Mr. Reeder, and (ii) immediately exercisable options to purchase 24,000 shares, which are immediately exercisable.21,700 shares.

(6)(8) Mr. Shelton has sole voting and investment power over theseall shares shown, which include: (i) 117,183157,387 shares of Common Stock held of record by Mr. Shelton, and (ii) immediately exercisable options to purchase 24,000 shares, which are immediately exercisable. Mr. Shelton also owns 750 shares of PF Medical’s Common Stock.21,700 shares.

 

(7)(9)Mr. Wamp has sole voting and investment power over theseall shares shown, which include: (i) 15,38737,720 shares of Common Stock held of record by Mr. Wamp, and (ii) immediately exercisable options to purchase 10,800 shares, which are immediately exercisable.15,700 shares.

106

(8)(10) Mr. Zwecker has sole voting and investment power over theseall shares shown, which include: (i) 181,524216,193 shares of Common Stock held of record by Mr. Zwecker, and (ii) immediately exercisable options to purchase 24,000 shares, which are immediately exercisable.21,700 shares.

(9)Mr. Naccarato has sole voting and investment power over all these shares which include: (i) 2,500 shares of Common Stock held of record by Mr. Naccarato, and (ii) options to purchase 23,000 shares which are immediately exercisable. Mr. Naccarato also owns 100 shares of PF Medical’s Common Stock.

(10)(11) Mr. Duff has sole voting and investment power over all shares shown, which include: (i) 13,55140,984 shares of Common Stock held of record by Mr. Duff, and (ii) immediately exercisable options to purchase 95,000130,000 shares.

(12)Mr. Grondin has sole voting and investment power over all shares shown, which areinclude: (i) 1,036 shares of Common Stock held of record by Mr. Grondin, and (ii) immediately exercisable.exercisable options to purchase 33,000 shares.

(11)(13)Mr. Lombardo has sole voting and investment power over all theseshares shown, which include: (i) 6,900 shares of Common Stock held of record by Mr. Lombardo, and (ii) immediately exercisable options to purchase 23,000 shares.

(12)(14)Mr. Naccarato has sole voting and investment power over all shares shown, which include: (i) 4,393 shares of Common Stock held of record by Mr. Naccarato, and (ii) immediately exercisable options to purchase 67,000 shares.

(15)Amount includes 223,800 options, which are427,700 immediately exercisable.exercisable options.

Equity Compensation Plans

The following table sets forth information as of December 31, 2019,2022, with respect to our equity compensation plans.

 Equity Compensation Plan  Equity Compensation Plan 
Plan Category Number of securities to
be issued upon exercise
of outstanding options
warrants and rights
 Weighted average
exercise price of
outstanding
options, warrants
and rights
 Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)
  Number of securities to be issued upon exercise of outstanding options warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) 
  (a)   (b)   (c)  (a) (b) (c) 
Equity compensation plans approved by stockholders  681,300  $3.84   289,812   1,018,400  $5.02   801,534 
Equity compensation plans not approved by stockholders                  
Total  681,300  $3.84   289,812   1,018,400  $5.02   801,534 

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

We describe below transactions to which we were a party during our last two fiscal years or to which we currently propose to be a party in the future, and in which:

the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years; and
any of our directors, executive officers or beneficial owners of more than 5% of any class of our voting securities, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.

112107
 

Audit Committee Review

Our Audit Committee Charter provides for the review by the Audit Committee of any related party transactions, other than transactions involving an employment relationship with the Company, which are reviewed by the Compensation Committee. Although we do not have written policies for the review of related party transactions, the Audit Committee reviews transactions between the Company and its directors, executive officers, holders of more than 5% of any class of the Company’s voting securities, and their respective immediate family members. In reviewing a proposed transaction, the Audit Committee takes into account, among other factors it deems appropriate:

(1)the extent of the related person’s interest in the transaction;
(2)whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances;
(3)the cost and benefit to the Company;
(4)the impact or potential impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer;
(5)the availability of other sources for comparable products or services;
(6)the terms of the transaction; and
(7)the risks to the Company.

In addition, as applicable, the Audit Committee considers Section 144 of the Delaware General Corporation Law (“DGCL”) and the Company’s Code of Ethics.

The provisions of Section 144 of the DGCL apply to transactions between the Company and any of its officers or directors, or any organization in which any such individual has a financial interest or serves as a director or officer (individually, a “Section 144 Related Party,” and, collectively, “Section 144 Related Parties”). Section 144 provides that a transaction between a corporation and any Section 144 Related Party will not be void or voidable solely because such transaction involves the corporation and the Section 144 Related Party, or solely because the Section 144 Related Party is present at or participates or votes in the meeting of the board or committee which authorizes the transaction, if the transaction (a) is approved in good faith after full disclosure of the material facts of the transaction by a majority vote of (i) the disinterested directors, or (ii) the stockholders, and (b) is fair as to the corporation as of the time it is authorized, approved, or ratified by the board, a committee or the stockholders.

Our Code of Ethics, which applies to our Board and all our employees, including the executive officers identified under the heading “Named Executive Officers” and our senior financial officers, provide that such individuals must exhibit and promote honest and ethical conduct in connection with the performance of his or her duties for and on behalf of the Company, including the ethical handling of actual or apparent conflicts of interest involving such individual and the Company, by, among other considerations:

not entering into a transaction that would result in a conflict of interest with what is in the best interest of the Company and that is reasonably likely to result in material personal gain to any such individuals or their affiliates;
not having a personal financial interest in any of the Company’s suppliers, customers or competitors that could cause divided loyalty as a result of having the ability to influence the Company’s decisions with that particular supplier or customer or actions to be taken by the Company that could materially benefit a competitor.

Related party transactions are reviewed by the Audit Committee prior to the consummation of the transaction. With respect to a related party transaction arising between Audit Committee meetings, the CFO may present it to the Audit Committee Chairperson, who will review and may approve the related party transaction subject to ratification by the Audit Committee at the next scheduled meeting. Our Audit Committee shall approve only those transactions that, in light of known circumstances, are not inconsistent with the Company’s best interests.

108

Related Party Transactions

David Centofanti

David Centofanti serves as our Vice President of Information Systems. For such position, he received annual compensation of $177,000$187,000 and $173,000$184,000 for 20192022 and 2018,2021, respectively. David Centofanti is the son of Dr. Louis F. Centofanti, our EVP of Strategic Initiatives and a Board member. Dr. Louis Centofanti previously held the position of President and CEO until September 8, 2017.

Employment Agreements and MIPs

We entered into employment agreements with each of our NEOs, Mark Duff (President and CEO), Ben Naccarato (CFO), and Dr. Louis Centofanti, (EVP of Strategic Initiatives), with each employment agreement dated September 8, 2017 (see “Item 11. Executive Compensation – Employment Agreements” for a discussion of these employment agreements). Each of our NEOs, including Andy Lombardo, who was elected to EVP of Nuclear and Technical Services and an executive officer of the Company effective January 16, 2020 by the Company’s Board, has MIPs for fiscal years 2019 and 2020 (see “Item 11. Executive Compensation - Performance-Based Incentive Compensation – 2019 MIPs and 2020 MIPs” for a discussion of these MIPs). Mr. Lombardo’s MIP for fiscal year 2019 was for his position as SVP of Nuclear and Technical Services which was prior to his election by the Board to an executive officer of the Company.

Board Independence

Our Common Stock is listed on the Nasdaq Capital Market. Rule 5605 of the Nasdaq Marketplace Rules requires a majority of a listed company’s board of directors to be comprised of independent directors. In addition, the Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent under applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Audit committee members must also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Nasdaq Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3 under the Exchange Act, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the board must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director; and whether the director is affiliated with the company or any of its subsidiaries or affiliates.

Our Board annually undertakes a review of the composition of our Board of Directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that Ms. Kerry C. Duggan and each of S. Robert Cochran (a director until October 18, 2019),Messrs. Thomas P. Bostick, Joseph T. Grumski, (a director effective February 3, 2020), Joe R. Reeder, Larry M. Shelton, Zach P. Wamp and Mark A. Zwecker is/wasis an “independent director” as defined under the Nasdaq Marketplace Rules. Our Board of Directors has also determined that each member of our Audit Committee, in 2019, consisting of Mark A. Zwecker (Chairperson), S. Robert Cochran (who was a member of the Audit Committee until October 18, 2019), Zach Wamp (who became a member of the Audit Committee effective October 18, 2019),Joseph T. Grumski, and Larry M. Shelton, and each member of our Compensation and Stock Option Committee, in 2019, consisting of Larry M. SheltonJoseph T. Grumski (Chairperson), Joe R. Reeder,Zach P. Wamp and Mark A. Zwecker satisfy/satisfiedsatisfy the independence standards for such committees established by the Commission and the Nasdaq Marketplace Rules, as applicable. In making such determination, our Board of Directors considered the relationships that each such non-employee director has with our Company and all other facts and circumstances our Board of Directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

Our Board of Directors has determined that Dr. Centofanti is not deemed to be an “independent director” because of his employment as a senior executive of the Company.

109

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table reflects the aggregate fees for the audit and other services provided by Grant Thornton LLP, the Company’s independent registered public accounting firm, for fiscal years 20192022 and 2018:2021:

 

Fee Type 2019 2018  2022 2021 
          
Audit Fees(1) $530,000   535,000  $743,000  $968,000 
                
Tax Fees(2)  113,000   110,000   113,000   146,000 
                
Total $643,000   645,000  $856,000  $1,114,000 

(1)Audit fees consist of audit work performed in connection with the annual financial statements, the reviews of unaudited quarterly financial statements, and work generally only the independent registered accounting firm can reasonably provide, such as consents and review of regulatory documents filed with the Securities and Exchange Commission. Audit fees for 2021 included work performed for attestation of the Company’s internal control over financial reporting.

 

(2)Fees for income tax planning, filing, and consulting.

The Audit Committee of the Company’s Board has considered whether Grant Thornton’s provision of the services described above for the fiscal years 2019 and 2018 was compatible with maintaining its independence.

Engagement of the Independent Auditor

TheTo ensure that our independent registered public accounting firm is engaged only to provide audit and non-audit services that are compatible with maintaining its independence, the Audit Committee approveshas a policy that requires the Committee to review and approve in advance all engagements withservices to be provided by the Company’s independent accounting firm before the firm is engaged to perform audit orprovide those services. The Audit Committee considers non-audit services for us.and fees when assessing auditor independence, and determined that tax return preparation and other tax compliance services is compatible with maintaining our accounting firm’s independence. All services under the headings Audit Fees and Tax Fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X of the Exchange Act. The Audit Committee’s pre-approval policy provides as follows:

The Audit Committee will review and pre-approve on an annual basis all audits, audit-related, tax and other services, along with acceptable cost levels, to be performed by the independent accounting firm and any member of the independent accounting firm’s alliance network of firms, and may revise the pre-approved services during the period based on later determinations. Pre-approved services typically include: audits, quarterly reviews, regulatory filing requirements, consultation on new accounting and disclosure standards, employee benefit plan audits, reviews and reporting on management’s internal controls and specified tax matters.
Any proposed service that is not pre-approved on the annual basis requires a specific pre-approval by the Audit Committee, including cost level approval.
The Audit Committee may delegate pre-approval authority to one or more of the Audit Committee members. The delegated member must report to the Audit Committee, at the next Audit Committee meeting, any pre-approval decisions made.

PART IV

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

The following documents are filed as a part of this report:

(a)(1)Consolidated Financial Statements
See Item 8 for the Index to Consolidated Financial Statements.
(a)(2)Financial Statement Schedule
Schedules are not required, are not applicable or the information is set forth in the consolidated financial statements or notes thereto.
(a)(3)Exhibits
The Exhibits listed in the Exhibit Index are filed or incorporated by reference as a part of this report.

SIGNATURES

110

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Perma-Fix Environmental Services, Inc.

By/s/ Mark DuffDateMarch 20, 202023, 2023
Mark Duff
Chief Executive Officer, President and
Principal Executive Officer
By/s/ Ben NaccaratoDateMarch 20, 202023, 2023
Ben Naccarato
Chief Financial Officer and
Principal Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated.

By/s/ Thomas P. BostickDateMarch 23, 2023
Thomas P. Bostick, Director
By/s/ Kerry C. DugganDateMarch 23, 2023
Kerry C. Duggan, Director
By/s/ Dr. Louis F. CentofantiDateMarch 20, 202023, 2023
Dr. Louis F. Centofanti, Director
By/s/Joseph T. GrumskiDateMarch 20, 202023, 2023
Joseph T. Grumski
By/s/ Joe R. ReederDate

March 20, 2020

23, 2023
Joe R. Reeder, Director
By/s/ Larry M. SheltonDateMarch 20, 202023, 2023
Larry M. Shelton, Chairman of the Board
By/s/ Zach P. WampDateMarch 20, 202023, 2023
Zach P. Wamp, Director
By/s/ Mark A. ZweckerDateMarch 20, 202023, 2023
Mark A. Zwecker, Director

111
 

EXHIBIT INDEX

 

Exhibit


No.

 Description
 
3(i) Restated Certificate of Incorporation, as amended, of Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 3(i) to the Company’s 2018 Form 10-K filed10-Q for Quarter ended March 31, 2021filed on April 1, 2019.May 6, 2021.

3(ii)

 Second Amended and Restated Bylaws, as amended effective July 28, 2016,January 21, 2021, of Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 3(ii) to the Company’s 8-K filed on August 1, 2016.January 26, 2021.
4.1 Shareholder RightsFifth Amendment to Second Amended and Restated Revolving Credit, Term Loan and Security Agreement dated and effective as of May 2, 2018 between Perma-Fix Environmental Services, Inc. as the Company and Continental Stock Transfer & Trust Company, as Rights Agent,August 29, 2022, as incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed on May 2, 2018.August 29, 2022.
4.2 FirstRevised Second Amended and Restated Revolving Credit, Term Loan and Security Agreement referenced as Annex A in the Fifth Amendment, to Shareholder Rights Agreement dated May 2, 2019 between Perma-Fix Environmental Services, Inc. and Continental Stock Transfer & Trust Company as Rights Agent, as incorporated by reference from Exhibit 4.2 to the Company’s Form 8-K filed on May 3, 2019.August 29, 2022.
4.3 Amended and Restated Revolving Credit, Term Loan and Security Agreement between Perma-Fix Environmental Services, Inc. and PNC Bank, National Association (as Lender and as Agent), dated October 31, 2011, as incorporated by reference from Exhibit 4.8Sixth Amendment to the Company 2016 Form 10-K filed on March 24, 2017.
4.4First Amendment toSecond Amended and Restated Revolving Credit, Term Loan and Security Agreement dated November 7, 2012,March 21, 2023, between the CompanyPerma-Fix Environmental Services, Inc. and PNC Bank, National Association, as incorporated by reference from Exhibit 4.4 to the Company 2017 Form 10-K filed on March 16, 2018.Association.
4.54.4 Second Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver, dated May 9, 2013, between the Company and PNC Bank, National Association, as incorporated by reference from Exhibit 4.4 to the Company 2018 Form 10-K filed on April 1, 2019.
4.6Third Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated August 2, 2013, as incorporated by reference from Exhibit 4.5 to the Company 2018 Form 10-K filed on April 1, 2019.
4.7Third Amended, Restated and Substituted Revolving Credit Note between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated August 2, 2013 as incorporated by reference from Exhibit 4.6 to the Company 2018 Form 10-K filed on April 1, 2019.
4.8Fourth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated April 14, 2014.
4.9Fifth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated July 25, 2014.
4.10Sixth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated July 28, 2014.

4.11

Seventh Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated March 24, 2016, as incorporated by reference from Exhibit 4.17 to the Company’s 2015 Form 10-K filed on March 24, 2016.
4.12Eighth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated August 22, 2016, as incorporated by reference from Exhibit 4.9 to the Company’s Form 10-Q for the quarter ended June 30, 2016 filed on August 22, 2016.
4.13Ninth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated November 17, 2016, as incorporated by reference from Exhibit 4.10 to the Company’s Form 10-Q for the quarter ended September 30, 2016 filed on November 18, 2016.
4.14Tenth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated July 26, 2018, as incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed on July 30, 2018.
4.15Eleventh Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement and Waiver between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated March 29, 2019, as incorporated by reference from Exhibit 4.14 to the Company’s 2018 Form 10-K filed on April 1, 2019.
4.16Twelfth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated June 20, 2019, as incorporated by reference from Exhibit 4.1 to the Company’s Form 8-K filed on June 21, 2019.
4.17Thirteenth Amendment to Amended and Restated Revolving Credit, Term Loan and Security Agreement between PNC Bank, National Association and Perma-Fix Environmental Services, Inc., dated December 13, 2019.
4.18Loan and Securities Purchase Agreement, dated April 1, 2019 between Robert L. Ferguson and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 4.15 to the Company’s 2018 Form 10-K filed on April 1, 2019.
4.19Common Stock Purchase Warrant dated April 1, 2019 for Robert L. Ferguson, as incorporated by reference from Exhibit 4.16 to the Company’s 2018 Form 10-K filed on April 1, 2019.
10.1 2003 Outside Directors’ Stock Plan of the Company.Company, as incorporated by reference from Exhibit 10.1 to the Company’s 2019 Form 10-K filed on March 20, 2020.
10.2 First Amendment to 2003 Outside Directors Stock Plan.Plan, as incorporated by reference from Exhibit 10.2 to the Company’s 2019 Form 10-K filed on March 20, 2020.
10.3 Second Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit 10.3 to the Company’s 2017 Form 10-K filed on March 16, 2018.
10.4 Third Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit 10.4 to the Company’s 2017 Form 10-K filed on March 16, 2018.
10.5 Fourth Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit A to the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders filed on June 22, 2017.
10.6 Fifth Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from Exhibit A to the Company’s Proxy Statement for its 2021 Annual Meeting of Stockholders filed on June 10, 2021.
10.72017 Stock Option Plan, as incorporated by reference from Exhibit B to the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders filed on June 22, 2017.
10.710.8 First Amendment to 2017 Stock Option Plan, as incorporated by reference from Appendix “A” to the Company’s Proxy Statement for its 2020 Annual Meeting of Stockholders filed on June 12, 2020.
10.9Employment Agreement dated September 8, 2017July 22, 2020 between Mark Duff, Chief Executive Officer, and Perma-Fix Environmental Services, Inc., which isas incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on September 12, 2017.July 27, 2020.
10.810.10 Employment Agreement dated September 8, 2017July 22, 2020 between Dr. Louis Centofanti, Executive Vice President of Strategic Initiatives, and Perma-Fix Environmental Services, Inc., which isas incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on September 12, 2017.July 27, 2020.
10.910.11 Employment Agreement dated September 8, 2017July 22, 2020 between Ben Naccarato, Chief Financial Officer, and Perma-Fix Environmental Services, Inc., which isas incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on September 12, 2017.July 27, 2020.
10.1010.12Employment Agreement dated July 22, 2020 between Andy Lombardo, EVP of Nuclear and Technical Services, Inc. and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on July 27, 2020.

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10.13Employment Agreement dated July 22, 2020 between Richard Grondin, EVP of Waste Treatment Operations and Perma-Fix Environmental Services, Inc., as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on July 27, 2020.
10.14 20192023 Incentive Compensation Plan for Chief Executive Officer, effective January 1, 2019,2023, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on January 23, 2019.2023. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN EXCLUDED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.1110.15 20192023 Incentive Compensation Plan for Chief Financial Officer, effective January 1, 2019,2023, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on January 23, 2019.2023. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN EXCLUDED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.1210.16 

20192023 Incentive Compensation Plan for Executive Vice President of Strategic Initiatives, effective January 1, 2019,2023, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on January 23, 2019.

10.13

2020 Incentive Compensation Plan for Chief Executive Officer, effective January 1, 2020, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on January 22, 2020.2023. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN EXCLUDED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.1410.17 2020 Incentive Compensation Plan for Chief Financial Officer, effective January 1, 2020, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on January 22, 2020.
10.152020 Incentive Compensation Plan for Executive Vice President of Strategic Initiatives, effective January 1, 2020, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on January 22, 2020.
10.1620202023 Incentive Compensation Plan for Executive Vice President of Nuclear and Technical Services, effective January 1, 2020,2023, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on January 22, 2020.23, 2023. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN EXCLUDED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.1710.18 2023 Incentive Compensation Plan for Executive Vice President of Waste Treatment Operations, effective January 1, 2023, as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on January 23, 23. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN EXCLUDED BECAUSE IT IS NOT MATERIAL AND WOULD LLIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.19Incentive Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Chief Executive Officer, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on August 2, 2017.
10.1810.20 Incentive Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Executive Vice President/Chief Operating Officer, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on August 2, 2017.
10.1910.21 Incentive Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Chief Financial Officer, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on August 2, 2017.
10.2010.22 Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Chief Executive Officer, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K filed on January 23, 2019.
10.2110.23 Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Chief Financial Officer, as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K filed on January 23, 2019.
10.2210.24 Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Executive Vice PresidentEVP of Strategic Initiatives, as incorporated by reference from Exhibit 99.6 to the Company’s Form 8-K filed on January 23, 2019.
10.2310.25 Incentive Stock Option Agreement dated October 19, 2017 between Perma-Fix Environmental Services, Inc., and Richard Grondin, as incorporated by reference from Exhibit 99.11 to the Company’s Form 8-K filed on July 27, 2020.
10.26Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix Environmental Services, Inc., and Richard Grondin, as incorporated by reference from Exhibit 99.12 to the Company’s Form 8-K filed July 27, 2020.

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10.27Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc., and Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 10.6 to the Company’s thirdsecond quarter Form 10-Q filed on August 9, 2017.
10.2410.28 First Amendment to Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc. and Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 10.23 to the Company 2018 Form 10-K filed on April 1, 2019.
10.2410.29 Second Amendment to Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc. and Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 99.3 to the Company Form 8-K filed on March 31, 2020.
10.30Third Amendment to Stock Option Agreement dated July 27, 2017 between Perma-Fix Environmental Services, Inc. and Mr. Robert L. Ferguson, as incorporated by reference from Exhibit 99.4 to the Company Form 8-K filed on January 25, 2022.
10.31Task Order Agreement for Small Scales Remediation Package between Canadian Nuclear Laboratories LTD and Perma-Fix Canada Inc., as incorporated by reference from Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2019 filed on May 9, 2019. CERTAIN INFORMATION WITHIN SCHEDULE 2 – PRICE INFORMATION OF THIS EXHIBIT HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.32Solicitation, Offer and Award dated September 17, 2021 issued to Perma-Fix Environmental Services, Inc. by Norfolk Naval Shipyard, as incorporated by reference from Exhibit 10.1 to the Company Form 10- for the Quarter Ended September 30, 2021 filed on November 12, 2021.
10.33Placement Agency Agreement, dated as of September 23, 2021, by and between the Company and Wellington Shields & Co., LLC., as incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed on October 4, 2021.
10.34Form of Subscription Agreement, dated as of September 30, 2021, between the Company and each purchase named in the signature pages of the respective Subscription Agreements, as incorporated by reference from Exhibit 10.2 to the Company’s Form 8-K filed on October 4, 2021.
10.35Joint Venture Term Sheet between Springfields Fuels Limited, an affiliate of Westinghouse, and the Company, as incorporated by reference from Exhibit 10.42 to the Company’s 2021 Form 10-K filed on April 6, 2022. CERTAIN INFORMATION WITHIN THIS EXHIBIT HAS BEEN EXCLUDED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.
10.36Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and Chief Executive Officer, dated October 14, 2021, as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K/A filed on October 20, 2021.
10.37Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and Chief Financial Officer, dated October 14, 2021, as incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K/A filed on October 20, 2021.
10.38Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and EVP of Strategic Initiatives, dated October 14, 2021, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K/A filed on October 20, 2021.
10.39Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and EVP of Waste Treatment Operations, dated October 14, 2021, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-K/A filed on October 20, 2021.
10.40Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and EVP of Nuclear and Technical Services, dated October 14, 2021, as incorporated by reference from Exhibit 99.5 to the Company’s Form 8-K/A filed on October 20, 2021.
10.41Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and Chief Executive Officer, dated January 19, 2023, as incorporated by reference from Exhibit 99.6 to the Company’s Form 8-K filed on January 23, 2023.
10.42Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and Chief Financial Officer, dated January 19, 2023, as incorporated by reference from Exhibit 99.7 to the Company’s Form 8-K filed on January 23, 2023.

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10.43Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and EVP of Strategic Initiatives, dated January 19, 2023, as incorporated by reference from Exhibit 99.8 to the Company’s Form 8-K filed on January 23, 2023.
10.44Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and EVP of Nuclear and Technical Services, dated January 19, 2023, as incorporated by reference from Exhibit 99.9 to the Company’s Form 8-K filed on January 23, 2023.
10.45Incentive Stock Option Agreement between Perma-Fix Environmental Services, Inc. and EVP of Waste Treatment Operations, dated January 19, 2023, as incorporated by reference from Exhibit 99.10 to the Company’s Form 8-K filed on January 23, 2023.
21.1 List of Subsidiaries
23.1 Consent of Grant Thornton, LLP
31.1 Certification by Mark Duff, Chief Executive Officer and Principal Executive Officer of the Company pursuant to Rule 13a-14(a) and 15d-14(a).
31.2 Certification by Ben Naccarato, Chief Financial Officer and Principal Financial Officer of the Company pursuant to Rule 13a-14(a) and 15d-14(a).
32.1 Certification by Mark Duff, Chief Executive Officer and Principal Executive Officer of the Company furnished pursuant to 18 U.S.C. Section 1350.
32.2 Certification by Ben Naccarato, Chief Financial Officer and Principal Financial Officer of the Company furnished pursuant to 18 U.S.C. Section 1350.
101.INS Inline XBRL Instance Document*
101.SCH Inline XBRL Taxonomy Extension Schema Document*
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document*
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document*
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

*Pursuant to Rule 406T of Regulation S-T, the Interactive Data File in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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