2023
Annual
Report
To Our Valued Shareholders,
2023 was a transformative year for the Company, in which we
laid the foundation for several key initiatives that we believe
will be highly impactful to our business, starting in the second
half of 2024 and throughout 2025. At the same time,
I am
pleased to report we achieved solid financial results in 2023, with
revenue increasing by 27.1% and gross profit increasing by 70.4%
for the full year. Despite investments
internal
bidding organization as well as in research and development,
we achieved positive EBITDA(1) and positive net income in 2023.
in both our
in
Within our Treatment Segment, we witnessed an
volume with steady improvement in waste receipts early in the
quarter. This included
increased waste shipments within the
commercial sector along with steady sales from our industrial
waste programs.
increase
joint venture with Campoverde Srl
Within the Services Segment, we realized several new strategic
wins from the Buffalo Corp of Engineers, the U.S. Geological
Survey, the U.S. Navy, and several commercial clients. We also
developed teaming relationships for several large procurements.
In addition, our
received
Joint Research Council project
a formal award of
through the
Italy
the
Union
facility, which represents a total of up to EUR 50 Million over
the next 7 years. Work under this JV is beginning in Q1 2024, and
the scope of work for the Company is expected to ramp up in late
2025. Overall, we believe these strategic awards should help us
further diversify our revenue streams.
European
Ispra,
the
at
In addition to the growth
in our base business, we are
rapidly advancing several initiatives that we believe have the
potential to significantly enhance our long-term backlog in the
is
second half of 2024, and potentially much more in 2025. It
increased
important
bidding opportunities
the U.S.
Department of Energy (DOE) and U.S. Navy, as well as other
mid-size procurement initiatives at DOE, the U.S. Department of
Defense (DOD) and the U.S. Environmental Protection Agency
(EPA) facilities.
from
for large contracts within
are benefiting
to note, we
to provide
Moreover, we believe we are well positioned
extensive waste
support of DOE’s
Hanford closure strategy, including the treatment of effluent from
the DFLAW (Direct-Feed Low-Activity Waste)
it
commences vitrification operations.
facility once
treatment
services
in
We remain optimistic about reports coming from DFLAW in regard
to the startup of the melters and supporting systems, which
continues to progress towards hot commissioning in early 2025.
This waste, estimated by DOE to be over 8,000 cubic meters
annually, would more than double the production of all our plants
combined on an annual basis.
In addition, we have made important advances in a new technology
to treat PFAS (Per-and Polyfluorinated Substances) contamination.
Specifically, we completed pilot plant testing with PFAS destruction
levels exceeding anticipated regulatory requirements. We are now
in the process of final design and fabrication for installation of the
first operational unit and plan to begin accepting commercial waste
for destruction by the end of the year. We have established goals for
additional units to be installed at each of our existing treatment
plants.
Finally, we are expanding our waste treatment offering within the
commercial and international markets, including central Europe,
Mexico, and Canada. These opportunities would generate sustained
receipts beginning in 2025, providing combined annual revenues
estimated at over $10 million, which we expect will begin in late
2024.
The first half of 2024
looks to be below our performance
objectives, with a few temporary headwinds resulting from delays in
procurements, project starts and waste shipments, due in part to
the Continuing Resolution for the 2024 federal budget. However,
we remain encouraged by the long-term outlook for the business
based on the growing project opportunities, sales pipeline,
and potentially company-changing projects discussed above.
We truly believe our best years are ahead and we look forward to
advancing our mission of addressing some of the nation’s most
pressing environmental challenges. I would like to thank our
shareholders, employees and Board of Directors for your ongoing
support.
Sincerely,
Mark Duff
President and Chief Executive Officer
(1) See definition and reconciliation of EBITDA to U.S. GAAP in the “Corporate Information” section.
** See cautionary note regarding forward-looking statements in the “Corporate Information” section**
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 ended December 31, 2023
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)
Delaware
State or other jurisdiction
of incorporation or organization
8302 Dunwoody Place, #250, Atlanta, GA
(Address of principal executive offices)
58-1954497
(IRS Employer Identification Number)
30350
(Zip Code)
(770) 587-9898
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $.001 Par Value
PESI
Nasdaq Capital Market
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes
☒ No
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
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically 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
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 (cid:1) Accelerated Filer (cid:1) Non-accelerated Filer (cid:2) Smaller reporting company (cid:2) Emerging growth company (cid:1)
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 (cid:1)
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. (cid:1)
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). . ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes
☒ No
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, 2023), was approximately $136,122,310). 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 Market.
As of February 12, 2024, there were 13,671,022 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.
Business ................................................................................................................................... 1
Item 1A.
Risk Factors ............................................................................................................................. 7
Item 1B.
Unresolved Staff Comments .................................................................................................... 16
Item 1C.
Cybersecurity ........................................................................................................................... 17
Item 2.
Properties ................................................................................................................................. 18
Item 3.
Legal Proceedings .................................................................................................................... 18
Item 4.
Mine Safety Disclosure ............................................................................................................ 18
PART II
Item 5.
Market for Registrant’s Common Equity and Related Stockholder Matters .......................... 18
Item 6.
Reserved ................................................................................................................................. 19
Item 7.
Management's Discussion and Analysis of Financial Condition
And Results of Operations ..................................................................................................... 19
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk ................................................
30
Special Note Regarding Forward-Looking Statements...........................................................
30
Item 8.
Financial Statements and Supplementary Data .......................................................................
33
Item 9.
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .....................................................................................
72
Item 9A.
Controls and Procedures ........................................................................................................ 72
Item 9B.
Other Information .................................................................................................................. 73
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections……………………… 73
PART III
Item 10.
Directors, Executive Officers and Corporate Governance ...................................................... 73
Item 11.
Executive Compensation ........................................................................................................ 85
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ................................................................................................................ 104
Item 13.
Certain Relationships and Related Transactions, and Director Independence ........................ 107
Item 14.
Principal Accountant Fees and Services ................................................................................. 109
PART IV
Item 15.
Exhibits and Financial Statement Schedules ...................................................................... …110
PART I
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.
The principal element of our business strategy consists of upgrading our facilities within our Treatment
Segment to increase efficiency and modernize and expand treatment capabilities to meet the changing
markets associated with the waste management industry. Within our Services Segment, we continue to
increase competitive procurement effectiveness and broaden the market penetration within both the
commercial and government sectors. We continue to increase our focus on expansion into both commercial
and international markets (see “Foreign Revenue and Initiatives” below for further discussion of a recently
won foreign contract) to supplement government spending in the United States of America (“USA”), from
which a significant portion of our revenue is derived. This includes new services, new customers and
increased market share in our current markets.
We experienced significant improvement in our 2023 financial results as the lingering effects of COVID-19
began to subside starting in the early part of 2022. Our Treatment Segment continued to see steady
improvements in waste receipts from certain customers who had previously delayed waste shipments due, in
part, from the impact of COVID-19. Within our Services Segment, certain projects which were
delayed/curtailed in the first part of 2022 due, in part, from the lingering effects of the COVID-19, achieved
full operational status and improved productivity in 2023 which positively impacted revenue. Revenues
from both of our Segments were also positively impacted from contracts won in 2023 as procurement and
planning on behalf of our government clients continued to progress as the lingering effects of COVID-19
pandemic subsided.
Heading into 2024, we expect to see overall continue steady improvements in waste receipts and increases
in project work from certain existing contracts, contracts won in 2023, and bids submitted in both segments
that are awaiting awards. However, due to our operations which is subject to seasonal factor, we generally
experience lower revenue in the first quarter due to overall reduced activities by our customers from the
usual slowdown in operations due, in part, from returning from the holiday periods and poorer weather
conditions. Additionally, due to Congress’s inability to timely approve FY 2024 budget and the extension of
the continuing resolution, certain of our government related customers have informed us that waste
shipments will likely be delayed. Although we expect to see overall improvements in revenue in 2024 as
disclosed above, if Congress is unable to enact the full FY 2024 appropriation bills or further extend the
continuing resolutions to fund government spending by the late March deadline, the U.S. government will
enter into a partial shutdown. The full impact of any additional continued resolution beyond March or a
partial government shutdown is uncertain. If a partial government shutdown were to occur and were to
continue an extended period, our financial results of operations could be negatively impacted by delays in
procurement actions, waste shipments and project delays on newly awarded projects (See “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations – for a full
discussion of the Company’s results of operations for 2023).
Segment Information and Foreign and Domestic Operations and Sales
For 2023, we have two reportable segments. In accordance with Financial Accounting Standards Board
(“FASB”) Accounting 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.
1
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 four uniquely licensed (Nuclear Regulatory Commission or state equivalent) and permitted
(U.S. Environmental Protection Agency (“EPA”) or state equivalent) treatment and storage facilities
as follow: Perma-Fix of Florida, Inc. (“PFF”), Diversified Scientific Services, Inc., (“DSSI”),
Perma-Fix Northwest Richland, Inc. (“PFNWR”) and Oak Ridge Environmental Waste Operations
Center (“EWOC”); and
- Research & Development (“R&D”) activities to identify, develop and implement innovative waste
processing techniques for problematic waste streams.
For 2023, the Treatment Segment accounted for $43,477,000, or 48.5%, of total revenue, as compared to
$33,358,000, or 47.2%, of total revenue for 2022. See “Dependence Upon a Single or Few Customers” for
further details and a discussion as to our Segments’ contracts with government clients (domestic) or with
others as a subcontractor to government clients.
SERVICES SEGMENT, which includes:
Technical services, which include:
-
o professional radiological measurement and site survey of large government and commercial
installations using advanced methods, technology and engineering;
o health physics services including health physicists, radiological engineers, nuclear
engineers and health physics technicians support to government and private radioactive
materials licensees;
o 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;
o 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
o waste management services to commercial and governmental customers.
- Nuclear services, which include:
o D&D of government and commercial facilities impacted with radioactive material and
hazardous constituents including engineering, technology applications, specialty services,
logistics, transportation, processing and disposal; and
o license termination support of radioactive material licensed and federal facilities over the
entire cycle of the termination process: project management, planning, characterization,
waste stream identification and delineation, remediation/demolition, final status survey,
compliance demonstration, reporting, transportation, disposal and emergency response.
- 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.
For 2023, the Services Segment accounted for $46,258,000, or 51.5%, of total revenue, as compared to
$37,241,000, or 52.8%, of total revenue for 2022. See “Dependence Upon a Single or Few Customers” for
further details and a discussion as to our Segments’ contracts with government clients (domestic) or with
others as a subcontractor to government clients.
Our Treatment and Services Segments provide services primarily to research institutions, commercial
companies, public utilities, and governmental entities, 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.
2
Our corporate office is located at 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.
Foreign Revenue and Initiative
As noted previously, we continue to increase our focus on expansion into international markets.
On December 18, 2023, the joint venture (“JV”) where we and Campoverde Srl (“JV partner”) each owns
50% of the partnership, was awarded a multi-year contract valued up to approximately EUR 50 million by
the European Commission (the “Contracting Authority”) for the treatment of radioactive waste from the
Joint Research Center in Ispra, Italy. Work under this JV has not started as of December 31, 2023. The
scope of work to be performed in the initial phases of this contract will be performed predominately by our
JV partner. Revenue generated by us under the initial phases will be limited to project management support
through 2025. We expect to generate an increase in revenue under this contract starting in 2026 when the
waste treatment phases begin. The Contracting Authority may terminate the contract under certain
conditions as set forth in the contract.
During March 2022, we signed a non-binding 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, 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.
Our consolidated revenue for 2023 and 2022 included approximately $2,066,000, or 2.3%, and $1,226,000,
or 1.7%, respectively, from foreign customers.
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 to fluctuate” for
a discussion of our 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 provide 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. Co-regulated TSCA Polychlorinated Biphenyl (“PCB”)
wastes are also managed for PCB under EPA Approval.
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
3
Tennessee Department of Environment and Conservation, Division of radiological health. Co-regulated
TSCA 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. Co-regulated TSCA PCB wastes are also managed for PCB under EPA
Approval.
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 State
of Tennessee Department of Environmental and Conservation, Division of radiological health.
The combination of RCRA Part B hazardous waste permits, TSCA authorizations, and radioactive material
licenses held by us and our subsidiaries comprising our Treatment Segment is very difficult to obtain for a
single facility and make this 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.
Number of Employees
At December 31, 2023, we employed approximately 297 employees, of whom 288 are full-time employees
and 9 are part-time/temporary employees. None of our current employees are unionized.
The Company entered into a Project Labor Agreement (“PLA”) dated June 21, 2023, with UA Plumbers &
Steamfitters Local 598. The goal of this partnership is to supply our PFNWR facility with the organized
labor force needed to take on the challenges of providing a supplement treatment alternative to include
concrete-like grout for Hanford's Low Activity Tank Waste if and when the DOE grants a contract to
PFNWR to treat the Low Activity Tank Waste. This supplemental capability would support DOE’s
glassifying process provided by the Hanford Vitrification Plant for safe transport and disposal off-site.
Environmental, Social and Governance (“ESG”)
We have a ESG subcommittee under our Corporate Governance and Nominating Committee to provide
guidance on ESG management. Our executive team is responsible for the continuing development of our
ESG strategic roadmap with support from management from key functional areas. The key areas of 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 well as our policies under our ESG as we
continue to improve our ESG initiatives. The information on our website is not part of, or incorporated by
reference in this Form 10-K.
Dependence Upon a Single or Few Customers
Our Treatment and Services Segments have significant relationships with the U.S. governmental authorities.
A significant amount of our revenues from our Treatment and Services Segments are generated indirectly as
subcontractors for others who are prime contractors to government authorities, particularly the DOE and
DOD, or directly as the prime contractor to government authorities. The contracts that we are a party to with
others as subcontractors to the U.S federal government or directly with the U.S federal government
generally provide that the government may terminate the contract at any time for convenience at the
government’s option. Our inability to continue under existing contracts that we have with U.S government
4
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), either indirectly for
others as a subcontractor to government entities or directly as a prime contractor to government entities,
representing approximately $70,642,000 or 78.7%, of our total revenue during 2023, as compared to
$59,658,000, or 84.5%, of our total revenue during 2022.
Our 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.
Competitive Conditions
The Treatment Segment’s largest competitor is EnergySolutions 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, 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 waste 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. 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 relating 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.
As of December 31, 2023, we had total accrued environmental remediation liabilities of $845,000, a
decrease of $16,000 from the December 31, 2022, balance of $861,000. The decrease represents payments
for remediation projects. As of December 31, 2023, $61,000 of the total accrued environmental liabilities
was recorded as current.
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,
5
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.
R&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. R&D totaled $561,000 and $336,000 for 2023 and 2022, respectively.
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
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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 licensing and radiological program of the PFF facility;
the State of Tennessee (with the USNRC oversight), Tennessee Division of Radiological Health, regulates
licensing and the radiological program of the DSSI facility and the EWOC facility; and the State of
Washington (with the USNRC oversight) Department of Health, regulates licensing 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.
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.
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. 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.
Contracts with, or subcontracts involving, the U.S federal government are generally terminable for
convenience at any time at the option of the governmental agency. The multi-year contract that was awarded
to us and our JV partner, Campoverde Srl, by the European Commission (the “Contracting Authority”) on
December 18, 2023, for the treatment of radioactive waste from the Joint Research Center in Ispra, Italy as
discussed previously may be terminated by the Contracting Authority under certain conditions as set forth in
the contract. 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;
government shut-downs;
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. 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 beyond our control 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. 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 impact from public
health events (such as 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 (for example, the annual budget of the DOE) 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 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
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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.
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.
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 our nuclear waste. Currently, there are
only four commercial disposal sites 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 these sites. If one 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.
Direct and indirect macroeconomic impacts resulting from natural disasters, public health events
and/or world conflicts in various regions could continue to and may in the future 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 previously 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 again in the future
impact supply chain, workforce availability, and/or increased costs which could have a downward effect on
our business, financial condition and results of operations. Additionally, world conflicts currently occurring
in various regions may lead to similar macroeconomic effects which could have a downward effect on our
business, financial conditions 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.
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.
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,
regional firms and some 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
9
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.
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, 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 public health events, 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.
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 and DOD 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
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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.
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,
11
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.
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
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
12
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 were
not required to perform testing of our fixed charge coverage ratio (“FCCR”) in the first quarter of 2023 but
otherwise met all of our other financial covenant requirements. We met all of our covenant requirements in
each of the remaining quarters of 2023. In the past, when we 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 waive the non-compliance or 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.
Inability to borrow under our credit facility could adversely affect our operations.
The maximum we can borrow under the revolving part of our 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. As of December
31, 2023, we had no borrowing under the revolving part of our credit facility and borrowing availability of
up to an additional $10,622,000, which included our cash (deposited with our lender) and was based on our
eligible receivables and was net of approximately $3,950,000 in outstanding standby letters of credit and a
$750,000 indefinite reduction in borrowing availability that our lender imposed. 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.
If our financial and operating activities are limited, it could adversely affect our ability to
incur additional debt to fund future needs.
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.
Any 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.
We may be unable to utilize loss carryforwards in the future.
We have approximately $19,450,000 and $72,859,000 in net operating loss carryforwards for federal and
13
state income tax purposes, respectively and expires in various amounts starting in 2023 if not used against
future federal and state income tax liabilities, respectively. All 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. As of December 31, 2023, we
had 13,646,559 shares of Common Stock outstanding. In addition, as of December 31, 2023, we had
outstanding options to purchase 994,500 shares of our Common Stock at exercise prices ranging from $3.15
to $9.81 per share and an outstanding warrant to purchase 30,000 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 Market constantly fluctuates. 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 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, commercial or
international customers.
We must be successful in winning mandates from our government, commercial 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 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
14
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.
Systems failures, interruptions or breaches of security and other cybersecurity 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 operations, result in violations of
applicable privacy and other laws and/or financial loss to us or to our customers or to our employees, and
similar 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.
Climate change could negatively impact the Company’s operations and financial condition.
Climate change may present both immediate and long-term risks to the Company and our customers and
these risks may increase over time. Climate risks can arise from both physical risks (those risks related to
the physical effects of climate change) and transition risks (risks related to governmental regulatory
requirements, legal technology, market and reputational changes from a transition to a low carbon
economy). Climate change could have a material, adverse effect on environmental companies like ours that
are involved in the treatment, disposal and other services related to hazardous waste, radioactive waste
and/or mixed (waste that contain both hazardous and radioactive) waste by changing or restricting how we
perform our services or what services we can perform or taking action that materially increases our costs to
do business in order to regulate or reduce climate change.
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
our steps to protect our proprietary technologies will be adequate to prevent misappropriation of these
technologies by third parties. Such misappropriation could adversely effect on our operations and financial
condition. Changes to current environmental laws and regulations also could limit the use of our proprietary
technology.
Failure 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 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
15
the requirements of Section 404 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, 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.
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 by 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.
At December 31, 2023, out of 30,000,000 shares of our Common Stock authorized, we had 13,646,559
shares of common stock outstanding and 7,642 shares of treasury stock. In addition, at December 31, 2023,
we had outstanding options to purchase 994,500 shares of our common stock at exercise prices ranging from
$3.15 to $9.81 per share, and an outstanding warrant to purchase 30,000 shares of our Common Stock at an
exercise price of $3.51 per share. Assuming the issuance of the Common Stock underlying such options and
warrant, at December 31, 2023, we had available for future issuance 15,321,299 shares of authorized and
unissued Common Stock, and 2,000,000 shares of our preferred stock. Future sales of authorized and
unissued shares could be used by our management to make it more difficult for, and thereby discourage, an
attempt to acquire control of us.
Third 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 business.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not Applicable.
16
ITEM 1C.
CYBERSECURITY
Cybersecurity Risk Management and Strategy
The Company recognizes the importance of identifying, assessing, and managing risks associated with
cybersecurity threats. The Company’s cybersecurity program utilizes components of the National Institute
of Standards and Technology (“NIST”) Cybersecurity Framework. Key components of our cybersecurity
program include governance, risk management, access and authentication controls, change management,
audit and assessment, awareness and training, contingency planning, recovery, media handling, incident
response, personnel and physical security, and communication integrity.
Our program is embedded into Information Technology (“IT”) and Information System (“IS”) operations
across the business with a focus on awareness, transparency, minimizing business impacts, and reducing
enterprise risk, including strategic, compliance, legal and financial risk. The Company has policies and
procedures in place to ensure compliance with its cybersecurity program and cybersecurity controls. Our
program relies on a philosophy of continuous improvement by using periodic self-assessments, 3rd party
assessments, and customer/agency audits to determine cyber control presence, applicability, and
effectiveness. Our program is customized with additional controls that address financial systems risk,
nuclear quality assurance, Sarbanes Oxley, European Union cyber and data protection requirements, and
supply chain risks.
Our risk management process addresses confidentiality, availability, and integrity and includes evaluating
information systems specific threats, vulnerabilities, likelihood, and potential impact. Impact thresholds,
which are reviewed and approved by the Board of Directors (the “Board”) and senior management, are used
to define incident escalation paths from IT operations to management, the Audit Committee and the Board.
This process is used to identify, manage, and communicate material risks to the business. Additional cyber
incident reporting requirements are in place to comply with customers and regulatory agency requirements.
Automated threat and vulnerability management systems are in place and updated per industry standards
and best practices. Our IT team further manages risk by evaluating external providers of threat,
vulnerability, and risk mitigation information. This information is used to proactively implement new
methods or controls for reducing risk associated with a particular emerging threat or vulnerability.
The Company’s cybersecurity program is managed by the Vice President (“VP”) of IS, who has been
employed by the Company for 20 years and has over 35 years of total experience in information systems.
The VP of IS has an extensive career in software development and infrastructure management including
working with Fortune 500 companies in his prior positions. The VP of information system is a participant
in the overall Company strategic process and has aligned the program to best service the strategic objectives
of the business.
Cybersecurity Governance
The Company’s Audit Committee has oversight responsibility for risks and incidents relating to
cybersecurity threats. Our senior management is responsible for the day-to-day management of the material
risks we face. Our VP Of Information System is scheduled to report to the CFO on a weekly basis and the
Audit Committee on a quarterly basis on cybersecurity matters to include updates on cybersecurity threat
management, strategy processes, system updates and cybersecurity risks activities, including but not limited
to any recent cybersecurity incidents and related responses. Our Board is also engaged in discussion with
senior management and the Audit Committee at least on a quarterly basis on cybersecurity matters to
discuss any updates to our cybersecurity risk management and strategy program. Each member of our Board
has a working knowledge and/or experience with cybersecurity, IT strategy and IT risk assessment.
In the past 2 years, the Company does not believe that it has experienced any material cybersecurity
incidents, nor any material costs related to immaterial cyber incidents. Although we have a comprehensive
process for the prevention of material cybersecurity incidents as discussed, we cannot provide assurance that
our results of operations and financial condition and business strategy will not be materially impacted from
cybersecurity risks in the future. For more information on our cybersecurity related risk and potential effects
17
on the Company of a material cybersecurity breach, see under “General Risk Factors” in “Item 1A. Risk
Factors”
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 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, 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 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:
Location
Oak Ridge, TN (Business Center)
Oak Ridge, TN (Services)
Blaydon On Tyne, England (Services)
New Brighton, PA (Services)
Newport, KY (Services)
Atlanta, GA (Corporate)
Oak Ridge, TN (Treatment)
Square Footage (SF)/
Acreage (AC)
16,319 SF
5,000 SF
1,000 SF
3,558 SF
1,566 SF
6,499 SF
8.7 AC, including 17,400 SF
Expiration of Lease
April 30, 2026
September 30, 2024
Monthly
June 30, 2024
Monthly
July 31, 2024
September 30, 2028
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
See “Part II – Item 8 - Financial Statements and Supplementary Data – Notes to Consolidated
Financial Statements – Note 14 – Commitments and Contingencies – Legal Matters” for a discussion
of our legal proceedings.
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 Market (“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.
Common Stock
2023
2022
Low
High
Low
High
$
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
$
3.56
7.52
8.73
6.50
$
12.00
12.60
13.87
10.72
$
4.89
4.91
4.26
3.20
6.52
6.09
5.93
4.57
At February 12, 2024, there were approximately 121 stockholders of record of our Common Stock. The
18
actual number of our stockholders is greater than this number, and includes beneficial owners whose shares
are held in “street name” by banks, brokers, and other nominees.
Since our inception, we have not paid any cash dividends on our Common Stock and have no dividend
policy. Our Loan 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.
No sales of unregistered securities occurred during the first three quarters of 2023. On December 12, 2023,
the Company issued 30,000 shares of its Common Stock resulting from the exercise of a Warrant for the
purchase of up to 30,000 shares of the Company’s Common Stock at an exercise price of $3.51 per share,
resulting in proceeds received by the Company of approximately $105,000. See “Warrant” in “Note 6 -
Capital Stock, Stock Plans, Warrants, and Stock Based Compensation” in “Part II, Item 8, Financial
Statements and Supplementary Data” for further discussion of this warrant exercise.
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 2023.
See “Note 6 - Capital Stock, Stock Plans, Warrants, and Stock Based Compensation” in Part II, Item 8,
“Financial Statements and Supplementary Data” and “Equity Compensation 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.
[Reserved]
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, our audited consolidated financial
statements and includes our accounts and the accounts of our wholly-owned subsidiaries. Our 2022
consolidated financial statements also included the accounts of a variable interest entity (“VIE”) for which
we were the primary beneficiary. During the fourth quarter of 2022, project work under this VIE was
completed.
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.
Overview
We experienced significant improvement in our 2023 financial results as the lingering effects of COVID-19
began to subside starting in the early part of 2022. Our Treatment Segment continued to see steady
improvements in waste receipts from certain customers who had previously delayed waste shipments due, in
part, from the impact of COVID-19. Within our Services Segment, certain projects which were
delayed/curtailed in first part of 2022 due, in part, from the lingering effects of the COVID-19, achieved full
operational status and improved productivity in 2023 which positively impacted revenue. Revenue from
both of our Segments were also positively impacted from contracts won in 2023 as procurement and
planning on behalf of our government clients continued to progress as the lingering effects of COVID-19
pandemic subsided.
19
Revenue increased by $19,136,000 or 27.1% to $89,735,000 for the twelve-months ended December 31,
2023, from $70,599,000 for the corresponding period of 2022. We saw increases in both Segments where
Treatment Segment revenue increased by $10,119,000 or 30.3% to $43,477,000 from $33,358,000 and
Services Segment revenue increased by $9,017,000 or 24.2% to $46,258,000 from $37,241,000. The
increase in revenue in the Treatment Segment was primarily due to overall higher waste volume which was
offset by lower averaged price from waste mix. The increase in revenue in the Services Segment was
primarily due to achievement of full operational status and improved productivity on certain projects which
had been delayed/curtailed in 2022 due, in part, from the lingering effects of the COVID-19 pandemic.
Total gross profit for 2023 increased $6,760,000 or 70.4% due to increased revenue. Selling, General, and
Administrative (“SG&A”) expenses increased $323,000 or 2.2% for the twelve-months ended December 31,
2023, as compared to the corresponding period of 2022.
In March 2023, we received the Employee Retention Credit (“ERC”) of $1,975,000 that we applied for
during the third quarter of 2022 as permitted under the Coronavirus Aid, Relief and Economic Securities
Act, as amended (the “CARES Act”). In addition to the $1,975,000, we also received approximately
$60,000 in interest (recorded within “Interest Income” on our Consolidated Statements of Operations).
We believe we have sufficient liquidity on hand to continue business operations during the next twelve
months. See a discussion of our liquidity overview within this MD&A – “Liquidity and Capital Resources.”
Heading into 2024, we expect to see overall continue steady improvements in waste receipts and increases
in project work from certain existing contracts, contracts won in 2023, and bids submitted in both segments
that are awaiting awards. However, due to our operations which is subject to seasonal factor, we generally
experience lower revenue in the first quarter due to overall reduced activities by our customers from the
usual slowdown in operations due, in part, from returning from the holiday periods and poorer weather
conditions. Additionally, due to Congress’s inability to timely approve FY 2024 budget and the extension of
the continuing resolution, certain of our government related customers have informed us that waste
shipments will likely be delayed. Although we expect to see overall improvements in revenue in 2024 as
disclosed above, if Congress is unable to enact the full FY 2024 appropriation bills or further extend the
continuing resolutions to fund government spending by the late March deadline, the U.S. government will
enter into a partial shutdown. The full impact of any additional continued resolution beyond March or a
partial government shutdown is uncertain. If a partial government shutdown were to occur and were to
continue an extended period, our financial results of operations could be negatively impacted by delays in
procurement actions, waste shipments and project delays on newly awarded projects.
Business Environment
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 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 and the manner in which the applicable government will be required to spend funding
to remediate various sites and a potential partial government shutdown. In addition, our governmental
contracts and subcontracts relating to activities at governmental sites in the United States are generally
subject to termination for convenience at any time at the government’s option. Significant reductions in the
level of governmental funding or specifically mandated levels for different programs that are important to
our business could have a material adverse impact on our business, financial position, results of operations,
and cash flows.
We are continually reviewing methods to raise additional capital to supplement our liquidity requirements,
when needed, and reducing our operating costs. We continue to aggressively bid on various contracts,
including potential contracts within the international markets. On December 18, 2023, the JV where we and
Campoverde Srl (“JV partner”) each owns 50% of the partnership, was awarded a multi-year contract
valued up to approximately EUR 50 million by the European Commission (the “Contracting Authority”) for
the treatment of radioactive waste from the Joint Research Center in Ispra, Italy. Work under this JV has not
started as of December 31, 2023. The scope of work to be performed in the initial phases of this contract
will be performed predominately by our JV partner. Revenue generated by us under the initial phases will
20
be limited to project management support through 2025. We expect to generate an increase in revenue under
this contract starting in 2026 when the waste treatment phases begin. The Contracting Authority may
terminate the contract under certain conditions as set forth in the contract. Once activities commence under
this JV, we will consolidate the operations of this JV into our financial statements.
Results of Operations
The reporting of financial results and pertinent discussions are tailored to our two reportable segments: The
Treatment Segment and Services Segment.
Summary - Years Ended December 31, 2023 and 2022
Below are the results of continuing operations for years ended December 31, 2023, and 2022 (amounts in
thousands):
(Consolidated)
Net revenues
Cost of goods sold
Gross profit
Selling, general and administrative
Research and development
Loss on disposal of property and equipment
Income (loss) from operations
Interest income
Interest expense
Interest expense – financing fees
Other (expense) income
Income (loss) from continuing operations before taxes
Income tax expense (benefit)
Income (loss) from continuing operations
$
2023
89,735
73,366
16,369
14,975
561
77
756
606
(323)
(93)
(11)
935
17
%
100.0
81.8
18.2
16.7
.6
.1
.8
.7
(.4)
(.1)
1.0
$
2022
70,599
60,990
9,609
14,652
336
18
(5,397)
99
(175)
(61)
1,945
(3,589)
(378)
$
918
1.0
$
(3,211)
%
100.0
86.4
13.6
20.8
.4
(7.6)
.1
(.3)
(.1)
2.8
(5.1)
(.6)
(4.5)
Revenue
Consolidated revenues increased $19,136,000 for the year ended December 31, 2023, compared to the year
ended December 31, 2022, as follows:
(In thousands)
Treatment
Government waste
Hazardous/non-hazardous (1)
Other nuclear waste
Total
Services
Nuclear
Technical
Total
Total
2023
%
Revenue
2022
%
Revenue
Change
%
Change
$
29,506
6,260
7,711
43,477
43,121
3,137
46,258
32.9
7.0
8.6
48.5
48.0
3.5
51.5
$
21,946
5,062
6,350
33,358
35,952
1,289
37,241
31.1
7.1
9.0
47.2
50.9
1.9
52.8
$
7,560
1,198
1,361
10,119
7,169
1,848
9,017
34.4
23.7
21.4
30.3
19.9
143.4
24.2
$
89,735
100.0
$
70,599
100.0
$
19,136
27.1
1) Includes wastes generated by government clients of $2,943,000 and $2,380,000 for the twelve months ended
December 31, 2023, and 2022, respectively.
Treatment Segment revenue increased by $10,119,000 or 30.3% for the twelve-months ended December 31,
2023 over the same period in 2022. The overall increase was primarily due to higher waste volume offset by
lower averaged price from waste mix. As previously disclosed, starting in the latter part of the second
quarter of 2022, our Treatment Segment began to see steady improvements in waste receipts from certain
customers who had previously delayed waste shipments due, in part, from the lingering effects of COVID-
21
19. Services Segment revenue increased by approximately $9,017,000 or 24.2%. primarily due to
achievement of full operational status and improved productivity on certain projects which had been
delayed/curtailed in the early part of 2022 due, in part, from the lingering effects of the COVID-19
pandemic. 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. Revenues from both of our segments were also positively impacted from contracts won in
2023.
Cost of Goods Sold
Cost of goods sold increased $12,376,000 for the year ended December 31, 2023, as compared to the year
ended December 31, 2022, as follows:
(In thousands)
Treatment
Services
Total
2023
$ 36,601
36,765
$ 73,366
%
Revenue
84.2
79.5
81.8
2022
$ 28,115
32,875
$ 60,990
%
Revenue
84.3
88.3
86.4
Change
$ 8,486
$
3,890
$
12,376
Cost of goods sold for the Treatment Segment increased by approximately $8,486,000 or 30.2%. Treatment
Segment’s variable costs increased by approximately $6,189,000 primarily due to higher material and
supplies, disposal, lab, outside services costs and higher employee incentives. Treatment Segment’s overall
fixed costs were higher by approximately $2,297,000 resulting from the following: salaries and payroll
related expenses were higher by approximately $1,483,000 due to higher headcount; depreciation expenses
were higher by approximately $393,000 due to depreciation for asset retirement obligations in connection
with our EWOC facility; general expenses were higher by approximately $279,000 primarily due to higher
utility costs; maintenance costs were higher by approximately $235,000; travel expenses were higher by
approximately $90,000; and regulatory expenses were lower by approximately $183,000. Services Segment
cost of goods sold increased $3,890,000 or 11.8% due to higher revenue. The overall increase in cost of
goods sold was primarily due to the following: aggregated higher salaries/payroll related, outside services,
and travel costs totaling approximately $4,356,000; higher depreciation expenses of $63,000; lower material
and supplies, lab, regulatory and disposal expenses totaling approximately $444,000; and lower general
expenses by approximately $85,000 in various categories. Included within cost of goods sold is depreciation
and amortization expense of $2,484,000 and $2,027,000 for the twelve months ended December 31, 2022,
and 2021, respectively.
Gross Profit
Gross profit for the year ended December 31, 2023, was $6,760,000 higher than 2022 as follows:
(In thousands)
Treatment
Services
Total
2023
$ 6,876
9,493
$ 16,369
%
Revenue
15.8
20.5
18.2
2022
$ 5,243
4,366
$ 9,609
%
Revenue
15.7
11.7
13.6
Change
$ 1,633
$
5,127
$
6,760
Treatment Segment gross profit increased by $1,633,000 or 31.1% primarily due to higher revenue as
discussed previously. Despite the slight increase in gross margin, Treatment Segment gross margin was
negatively impacted by higher variable costs from waste mix and the impact of overall increase in fixed
costs. Services Segment gross profit increased by $5,127,000 or 117.4% and gross margin increased from
11.7% to 20.5% primarily due to higher revenue and improved margin projects. Our overall Services
Segment gross margin is impacted by our current projects which are competitively bid and therefore have
varying margin structures.
SG&A
SG&A expenses increased $323,000 for the year ended December 31, 2023, as compared to the
corresponding period for 2022 as follows:
22
(In thousands)
Administrative
Treatment
Services
Total
2023
$
7,230
4,249
3,496
14,975
$
%
Revenue
9.8
7.6
16.7
2022
$
6,882
4,419
3,351
14,652
$
%
Revenue
13.2
9.0
20.8
Change
$
348
(170)
145
323
$
Administrative SG&A expenses were higher primarily due to the following: payroll-related expenses were
higher by approximately $660,000 primarily due to higher accrued employee incentives (including our
management incentive plans (“MIPs”)) and higher 401(k) matching expenses as payroll expenses in 2022
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; outside services expenses were lower by approximately
$256,000 as a result of fewer audit/consulting matters; and general expenses were lower by approximately
$56,000 in various categories. Treatment Segment SG&A expenses were lower primarily due to the
following: outside services expenses were lower by approximately $110,000 due to fewer consulting
matters; salaries and payroll related expenses were lower by approximately $212,000; travel expenses were
lower by approximately $24,000; and general expenses were higher by approximately $176,000 in various
categories. The increase in SG&A expenses within our Services Segment was primarily due to the
following: salaries/payroll-related expenses were higher by approximately $92,000 due to more
administrative support functions required as the result of higher revenue; travel expenses were higher by
approximately $43,000; credit losses on accounts receivable were higher by approximately $59,000, as in
the first quarter of 2022 our Services Segment collected on certain accounts that were previously deemed to
be uncollectible; outside services expenses were lower by approximately $41,000 due to fewer consulting
matters; and general expenses were lower slightly by $8,000. Included in SG&A expenses is depreciation
and amortization expense of $84,000 and $82,000 for the twelve months ended December 31, 2023 and
2022, respectively.
Interest Income
Interest income increased by approximately $507,000 for the twelve-months ended December 31, 2023,
respectively, as compared to the corresponding period of 2022 primarily due to higher interest earned from
the finite risk sinking fund. Interest income for 2023 also included approximately $60,000 received in
March 2023 under the ERC program under the CARES Act.
Interest Expense
Interest expense increased by approximately $148,000 for the twelve-months ended December 31, 2023, as
compared to the corresponding period of 2022 due to interest incurred on the new $2,500,000 term loan
dated July 31, 2023, under our credit facility. Interest expense was also higher in 2023 from higher interest
rate on our term loan dated May 8, 2020, which was offset by the declining term loan balance. Additionally,
the increase in interest expense in 2023 was also the result of interest incurred from advances made in May
of 2022 from the capital line under our credit facility.
Income Taxes
We had income tax expense of $17,000 and income tax benefit of $378,000 for continuing operations for
the twelve-months ended December 31, 2023 and 2022, respectively. Our effective tax rates were
approximately 1.8% and 10.5% for the twelve- month ended December 31, 2023 and 2022, respectively.
Our effective tax rates for the twelve-months ended December 31, 2023, and 2022 were impacted by non-
deductible expenses and state taxes.
Backlog
Our Treatment Segment 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. As of December 31, 2023, our Treatment Segment had a
backlog of approximately $8,702,000, as compared to approximately $9,156,000 as of December 31, 2022.
Additionally, the time it takes to process waste from the time it arrives may increase due to the types and
23
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 first or fourth quarters.
Discontinued Operations and Environmental Contingencies
Our discontinued operations consist of all our subsidiaries included in our Industrial Segment which
encompasses subsidiaries divested in 2011 and earlier, as well as three previously closed locations.
Our discontinued operations had no revenue for the twelve-months ended December 31, 2023 and 2022.
We incurred net losses of $433,000 (net of tax benefit of $117,000) and $605,000 (net of tax benefit of
$199,000) for our discontinued operations for the twelve-months ended December 31, 2023, and 2022,
respectively. In 2022, we incurred additional costs in connection with management of administrative and
regulatory matters related to our remediation projects. 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 the twelve-months ended December 31, 2023, were primarily financed
by our operations, cash on hand (which included the ERC, along with interest, that we received in March
2023 and proceeds from a new term loan dated July 31, 2023, in the amount of $2,500,000 provided to us
under an amendment to our existing credit facility), and credit facility availability. 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, cash on hand and collections of
unpaid receivables (See “Known Trends and Uncertainties – Perma-Fix Canada, Inc. (“PF Canada”)” for a
discussion of unpaid receivables due to our Perma-Fix Canada, Inc. subsidiary from a certain customer in
which a settlement agreement has been reached, subject to meeting certain conditions/terms precedent and a
partial payment received in January 2024). Our ability to utilize our credit facility from our lender is subject
to meeting our quarterly financial covenant requirements, among other things. We continue to explore all
sources of increasing our capital and/or liquidity and to improve our revenue and working capital, including,
but not limited to entering into equity transactions. There are no assurances that we will be successful in
increasing our liquidity through our efforts. We are continually reviewing operating costs and reviewing the
possibility of further reducing operating costs and non-essential expenditures to bring them in line with
revenue levels, when necessary. As of December 31, 2023, our borrowing availability under our revolving
part of our credit facility was approximately $10,622,000, which included our cash (deposited with our
lender) and was based on our eligible receivables and was net of approximately $3,950,000 in outstanding
standby letters of credit and a $750,000 indefinite reduction in borrowing availability that our lender
imposed pursuant to the July 31, 2023 amendment of our Loan Agreement. We believe that our cash flows
from operations, our available liquidity from our credit facility, and our cash on hand should be sufficient to
fund our operations for the next twelve months.
The following table reflects the cash flow activity for the year ended December 31, 2023, and the
corresponding period of 2022:
(In thousands)
Cash provided by operating activities of continuing operations
Cash used in operating activities of discontinued operations
Cash used in investing activities of continuing operations
Cash provided by (used in) financing activities of continuing operations
Effect of exchange rate changes on cash
Increase (decrease) in cash and finite risk sinking fund (restricted cash)
2023
$
2022
$
6,745
(597)
(1,714)
1,696
8
6,138
164
(717)
(997)
(921)
(4)
(2,475)
$
$
As of December 31, 2023, we were in a positive cash position with no revolving credit balance. As of
December 31, 2023, we had cash on hand of approximately $7,500,000.
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Operating Activities
Accounts receivable, net of credit losses, totaled $9,722,000 as of December 31, 2023, an increase of
$358,000 from the December 31, 2022, balance of $9,364,000. The increase was attributed to increased
revenue, timing of invoicing, and our accounts receivable collection. Our contracts with our customers are
subject to various payment terms and conditions. Our accounts receivable at December 31, 2023, included
invoices for work performed for a certain Canadian project that remained outstanding which a settlement
agreement has been reached, subject to meeting certain conditions/terms precedent (See discussion under
“Known Trends and Uncertainties - Perma-Fix Canada Inc. (“PF Canada”)” below for a discussion of the
accounts receivable and a partial payment made by the customer on January 22, 2024).
Prepaid and other assets totaled $3,738,000 as of December 31, 2023, a decrease of $1,667,000 from the
December 31, 2022, balance of $5,405,000. The decrease was primarily due to receipt of the ERC of
$1,975,000 in March 2023 that we applied for during the third quarter of 2022.
Accounts payable totaled $9,582,000 as of December 31, 2023, a decrease of $743,000 from the December
31, 2022, balance of $10,325,000. 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 our
segments.
Accrued expenses totaled $6,560,000 as of December 31, 2023, an increase of $1,967,000 from the
December 31, 2022, balance of $4,593,000. The increase was primarily due to higher employee incentive
and commission accruals totaling approximately $1,346,000. Our employee incentive accruals included an
aggregate of approximately $750,000 recorded under our 2023 Management Incentive Plans (“MIPs”) for
our executives.
We had working capital of $4,613,000 (which included working capital of our discontinued operations) as
of December 31, 2023, as compared to working capital of $818,000 as of December 31, 2022. The
improvement in our working capital was primarily due to increases in our cash and unbilled receivables
from improved operations. In 2023, our cash was also increased from the receipt of the ERC in March 2023
and the additional Term Loan 2 dated July 31, 2023, that we entered into with our lender under our Loan
Agreement (see a discussion of the Term Loan 2 below under “Financing Activities). The overall
improvement in our working capital was offset by the increases in our accrued expenses and deferred
revenues.
See discussion of a multi-year contract valued up to approximately EUR 50 million awarded to us and our
JV partner by the European Commission on December 18, 2023, for the treatment of radioactive waste from
the Joint Research Center in Ispra, Italy under “Business Environment” within this MD&A.
Investing Activities
During 2023, our purchases of capital equipment totaled approximately $2,498,000, of which $784,000 was
subject to financing, with the remaining funded from cash from operations and our credit facility. We have
budgeted approximately $2,000,000 for 2024 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, collections of unpaid receivables, borrowing
availability under our credit facility 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 non-binding 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, completion and
execution of a definitive agreement and facility design, granting of required regulatory, lender or permitting
25
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 a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement,
dated May 8, 2020 (“Loan Agreement”), with PNC National Association (“PNC” and “lender”), acting as
agent and lender. The Loan Agreement, as amended (including the two amendments that we entered into
with our lender in 2023 described below), provides us with the following credit facility with a maturity date
of May 15, 2027: (a) up to $12,500,000 revolving credit (“revolving credit”), with the maximum that we can
borrow under the revolving credit based on a percentage of eligible receivables (as defined) at any one time
reduced by outstanding standby letters of credit and borrowing reductions that our lender may impose from
time to time; (b) a term loan (“Term Loan 1”) dated May 8, 2020, of approximately $1,742,000, requiring
monthly installments of $35,547; (c) a term loan (“Term Loan 2”) of $2,500,000 dated July 31, 2023,
requiring monthly installments of $41,667; and (d) a capital expenditure line (“Capital Line”) of up to
$1,000,000 with advances on the line, subject to certain limitations, permitted for up to twelve months
starting May 4, 2021 (the “Borrowing Period”), with interest only payable on advances during the
Borrowing Period. Amounts advanced under the Capital Line at the end of the Borrowing Period totaled
approximately $524,000, requiring monthly installments of principal of approximately $8,700 plus interest,
commencing June 1, 2022.
On March 21, 2023, we entered into an amendment to our Loan Agreement, as amended, with our lender
which provided, among other things, the following:
removed the quarterly fixed charge coverage ratio (“FCCR”) testing requirement for the fourth
quarter of 2022 and removed the FCCR testing requirement for the first quarter of 2023;
reduced the maximum revolving credit line under the credit facility from $18,000,000 to
$12,500,000;
reinstated the quarterly FCCR testing requirement starting in the second quarter of 2023 using a
trailing twelve-months period (with no change to the minimum 1.15:1 ratio requirement for each
quarter); and
required maintenance of a minimum of $3,000,000 in borrowing availability under the revolving
credit until the minimum FCCR requirement for the quarter ended June 30, 2023 has been met and
certified to the lender (we met our FCCR requirement in the second quarter of 2023 which was
certified to our lender and therefore, this requirement is no longer applicable under our Loan
Agreement, as amended).
In connection with the March 2023 amendment, we paid our lender a fee of $25,000 which is being
amortized over the remaining term of the Loan Agreement, as amended, as interest expense-financing fees.
On July 31, 2023, we entered into a further amendment of the Loan Agreement, as amended, with our
lender which provided, among other things, the following:
extended the maturity date of the Loan Agreement, as amended, to May 15, 2027, from May 15,
2024;
an additional term loan (“Term Loan 2”) to us in the amount of $2,500,000, requiring monthly
installments of approximately $41,667. The annual rate of interest due on Term Loan 2 is at prime
(8.50% at December 31, 2023) plus 3.00% or Secured Overnight Finance Rate (“SOFR”) (as
defined in the Loan Agreement, as amended) plus 4.00% plus an SOFR Adjustment applicable for
an interest period selected by us. A SOFR Adjustment rate of 0.10% and 0.15% is applicable for a
one-month interest period and three-month period, respectively, that may be selected by us;
removed the minimum Tangible Adjusted Net Worth (as defined in the Loan Agreement, as
amended) covenant requirement;
placed an indefinite reduction in borrowing availability of $750,000; and
allows for up to $2,500,000 in capital expenditure made in fiscal year 2023 and thereafter to be
26
treated as financed capital expenditure in the Company’s quarterly FCCR covenant calculation
requirement.
At maturity of the Loan Agreement, as amended, any unpaid principal balance plus interest, if any, will
become due.
Pursuant to the amendment dated July 31, 2023, we have agreed to pay PNC 1.0% of the total financing
under the Loan Agreement, as amended, in the event we pay off our obligations on or before July 31, 2024,
and 0.5% of the total financing if we pay off our obligations after July 31, 2024, to and including July 31,
2025. No early termination fee shall apply if we pay off our obligations under the amended Loan Agreement
after July 31, 2025.
In connection with amendment dated July 31, 2023, we paid our lender a fee of $100,000 which is being
amortized over the remaining term of the Loan Agreement, as amended, as interest expense-financing fees.
Pursuant to the Loan Agreement, as amended, the annual rate of interest due on the revolving credit is at
prime plus 2% or SOFR plus 3.00% plus an SOFR Adjustment applicable for an interest period selected by
us. The annual rate of interest due on Term Loan 1 and the Capital line is at prime plus 2.50% or SOFR plus
3.50% plus an SOFR Adjustment applicable for an interest period selected by us. SOFR Adjustment rates of
0.10% and 0.15% are applicable for a one-month interest period and three-month period, respectively, that
may be selected by us. See payment of annual rate of interest due on Term Loan 2 under the amendment
dated July 31, 2023, as discussed above.
Our credit facility under our Loan Agreement, as amended, contains certain financial covenants, along with
customary representations and warranties. A breach of any of these financial covenants, unless waived by
our lender, 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. We were not required to perform testing of the FCCR requirement in the first quarter of 2023
pursuant to the March 21, 2023, amendment as discussed above. We otherwise met all of our other financial
covenant requirements. We met all of our covenant requirements in each of the second to fourth quarters of
2023 and we expect to meet our covenant requirements in the next twelve months.
On May 19, 2023, 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 June 1, 2023. 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 our 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 in an accompanying prospectus or prospectus supplement relating to the
offering. At this time, we do 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.
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 31, 2023, the total
amount of standby letters of credit outstanding totaled approximately $3,950,000 and the total amount of
bonds outstanding totaled approximately $36,674,000. We also provide closure and post-closure
requirements through a financial assurance policy for certain of our Treatment Segment facilities through
American International Group, Inc. (“AIG”). At December 31, 2023, the closure and post-closure
requirements for these facilities were approximately $22,461,000.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared based upon the selection and application of US GAAP,
which may require us to make estimates, judgments and assumptions that affect amounts reported in our
financial statements and accompanying notes. The accounting policies below are those we believe affect the
27
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 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”):
Revenues. Our revenues are generated from our two segments, Treatment and Services. Certain contracts
within our Services Segment are generated from long-term fixed price contracts. 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 input method. For the input method,
revenue is recognized based on costs incurred on the project relative to the total estimated costs of the
project.
Our contracts generally do not give rise to variable consideration. However, from time to time, we may
submit requests for equitable adjustments under certain of our government contracts for price or other
modifications that are determined to be variable consideration. We estimate 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.
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, 2023, and 2022
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.
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
28
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.
Income Taxes. The provision for income tax is determined in accordance with ASC 740, “Income Taxes.”
As 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 regularly 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 realized. 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 valuation allowance which could
materially impact our results of operations.
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 will be adopted in future periods.
Known Trends and Uncertainties
Economic Conditions. Our business continues to be heavily dependent on services that we provide to
governmental clients (domestic), primarily as subcontractors for others who are prime contractors to
government authorities (particularly the DOE and DOD) or directly as the 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 and the manner in which the government
entity will be required to spend funding to remediate various sites. In addition, our U.S. governmental
contracts and subcontracts relating to activities at governmental sites are generally subject to termination for
convenience at any time at the option of the government. 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
governmental authorities through contracts entered into indirectly as subcontractors for others who are
29
prime contractors or directly as the prime contractor to government authorities. Our inability to continue
under existing contracts that we have with the U.S government (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), either directly as a
prime contractor or indirectly for others as a subcontractor to government entities, representing
approximately $70,642,000, or 78.7%, of our total revenue during 2023, as compared to $59,658,000, or
84.5%, of our total revenue during 2022.
See discussion of a multi-year contract valued up to approximately EUR 50 million awarded to us and our
JV partner by the European Commission on December 18, 2023, for the treatment of radioactive waste from
the Joint Research Center in Ispra, Italy under “Business Environment” within this MD&A.
Our 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.
Perma-Fix Canada Inc. (“PF Canada”). During the fourth quarter of 2021, PF Canada received a Notice of
Termination (“NOT”) from Canadian Nuclear Laboratories, LTD. (“CNL”) on a Task Order Agreement
(“TOA”) that PF Canada entered into with CNL in May 2019 for remediation work within Ontario, Canada
(“Agreement”). The NOT was received after work under the TOA was substantially completed and work
under the TOA has since been completed. CNL may terminate the TOA at any time for convenience. As of
December 31, 2023, PF Canada has approximately $2,389,000 in unpaid receivables due from CNL as a
result of work performed under the TOA. CNL and PF Canada have reached a settlement agreement on
payment of the receivables to PF Canada by CNL, subject to certain conditions/terms precedents being met,
including release of certain liens. On January 22, 2024, we received a partial payment of approximately
$741,000 from CNL, with the remaining receivables to be paid by CNL upon completion of the settlement
conditions/terms, which we believe should occur during 2024.
Potential Partnership with Springfields Fuels Limited. As discussed above, we have signed a non-binding
term sheet addressing plans to partner with Springfields Fuels Limited, an affiliate of Westinghouse Electric
Company LLC, to develop and manage a nuclear waste-materials treatment facility in the United Kingdom.
See “Liquidity and Capital Resources – Investing Activities” of this MD&A for a discussion of this
transaction.
Inflation and Supply Chain. Our financial results have been negatively
impacted by various
macroeconomic factors, including the effects of inflation, supply chain issues, labor shortages, and higher
interest rates, due, in part, to the impact of COVID-19 (which has mostly subsided). Continued increases in
any of our operating costs, including utility, transportation, wage rates, and supply costs, may further
increase our overall cost of goods sold or operating expenses. We may attempt to increase our service and
treatment prices in order to maintain satisfactory margin from the effect of these factors as discussed above;
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.
Related Party Transactions
See a discussion of our related party transactions in “Item 8 – Financial Statements and Supplementary Data
– Notes to Consolidate Financial Statements – Note 16 – Related Party Transactions.”
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
30
Forward-looking Statements
Certain statements contained within this report may be deemed "forward-looking statements" within the
meaning of 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;
partial U.S. government shutdown or additional continued resolution;
delay waste shipment by government related customers;
reductions in the level of government funding in future years;
reducing operating costs and non-essential expenditures;
ability to meet loan agreement quarterly covenant requirements;
cash flow requirements;
receipt of remaining Canadian receivable upon completion of conditions/terms of the settlement
agreement in 2024;
sufficient liquidity to fund operations for the next twelve months;
revenue under the Italian project;
future results of operations and liquidity;
effect of macroeconomic concerns, such as inflation and higher interest rates, on our business;
manner in which the applicable government will be required to spend funding to remediate various sites;
finalization of non-binding partnership agreement with Springfields Fuels Limited;
successful on international bids;
continued increases in operating costs;
funding of capital expenditures from cash from operations, collections of unpaid receivables, borrowing
availability under our credit facility and/or financing;
steady improvement in waste shipments and work under projects in 2024;
funding of remediation expenditures for sites from funds generated internally;
compliance with environmental regulations;
potential effect of being a PRP;
potential violations of environmental laws and attendant remediation at our facilities; and
our ability to effect increases in the prices of the services we offer.
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;
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;
31
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;
management retention and development;
financial valuation of intangible assets is substantially more/less than expected;
the need to use internally generated funds for purposes not presently anticipated;
inability of the Company to maintain the listing of its Common Stock on the NASDAQ;
terminations of contracts with government agencies or subcontracts involving government agencies
or reduction in amount of waste delivered to the Company under the contracts or subcontracts;
failure of joint venture partner to perform its requirements in connection with the Italian project;
failure to approve 2024 budget by the U.S. government;
partial government shutdown;
Changes in the scope of work relating to existing contracts;
occurrence of an event similar to COVID-19 having adverse effects on the U.S. and world
economics;
renegotiation of contracts involving government agencies;
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;
economic uncertainties;
new governmental regulations; and
risk factors contained in Item 1A of this report.
32
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Consolidated Financial Statements
Page No.
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the years ended
December 31, 2023 and 2022
Consolidated Statements of Comprehensive Income (Loss) for the
years ended December 31, 2023 and 2022
Consolidated Statements of Stockholders’ Equity for the years ended
December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years
ended December 31, 2022 and 2022
Notes to Consolidated Financial Statements
34
36
38
39
40
41
42
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, 2023 and 2022, the related
consolidated statements of operations, comprehensive 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, 2023 and 2022, 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.
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 regarding 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 matter
The critical audit matter communicated below is a matter arising from the current period audit of the
financial statements that was communicated or required to be communicated to the audit committee and
that: (1) relates 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 matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Realizability of deferred tax assets
As described further in Note 13 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 judgement 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, 2023, management concluded that sufficient positive evidence exists to ensure the
realizability of the net deferred tax assets that are recorded on the balance sheet.
The principal consideration for our determination that the realizability of the net deferred tax assets is a
critical audit matter is that the projected financial information related to the profitability of the Company,
which is primarily reliant on the ability to predict future revenue, subject to significant management
34
judgement in determining whether the net deferred tax assets are more likely than not to be realized in the
future. This, 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 the net deferred tax
assets.
Our audit procedures related to the realizability of the net 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 net deferred tax assets
We tested the completeness and accuracy of the underlying data used in management’s assessment
We evaluated
the prospective financial
to future profitability
information related
including
consideration of:
o The current and past performance of the Company
o The consistency with external market and industry data
o The consistency with evidence obtained in other areas of the audit
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2014.
Atlanta, Georgia
March 13, 2024
35
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
As of December 31,
(Amounts in Thousands, Except for Share and Per Share Amounts)
2023
2022
ASSETS
Current assets:
Cash
Accounts receivable, net of allowance for credit
losses of $30 and $57, respectively
Unbilled receivables
Inventories
Prepaid and other assets
Current assets related to discontinued operations
Total current assets
Property and equipment:
Buildings and land
Equipment
Vehicles
Leasehold improvements
Office furniture and equipment
Construction-in-progress
Total property and equipment
Less accumulated depreciation
Net property and equipment
Property and equipment related to discontinued operations
Operating lease right-of-use assets
Intangibles and other long term assets:
Permits
Other intangible assets - net
Finite risk sinking fund (restricted cash)
Deferred tax assets
Other assets
Total assets
$
7,500
$
1,866
9,722
8,432
1,155
3,738
13
30,560
24,311
22,809
434
8
1,130
1,010
49,702
(30,693)
19,009
81
1,990
9,364
6,062
814
5,405
15
23,526
24,021
21,242
442
23
1,299
727
47,754
(28,797)
18,957
81
1,971
9,905
461
12,074
4,299
370
78,749
$
9,610
629
11,570
4,116
438
70,898
$
The accompanying notes are an integral part of these consolidated financial statements.
36
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS, CONTINUED
As of December 31,
(Amounts in Thousands, Except for Share and per Share Amounts)
2023
2022
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued expenses
Disposal/transportation accrual
Deferred revenue
Accrued closure costs - current
Current portion of long - term debt
Current portion of operating lease liabilities
Current portion of finance lease liabilities
Current liabilities related to discontinued operations
Total current liabilities
Accrued closure costs
Long-term debt, less current portion
Long-term operating lease liabilities, less current portion
Long-term finance lease liabilities, less current portion
Long-term liabilities related to discontinued operations
Total long-term liabilities
Total liabilities
Commitments and Contingencies (Note 14 )
Stockholders' Equity:
Preferred Stock, $.001 par value; 2,000,000 shares authorized,
no shares issued and outstanding
Common Stock, $.001 par value; 30,000,000 shares authorized;
13,654,201 and 13,332,398 shares issued, respectively;
13,646,559 and 13,324,756 shares outstanding, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Less Common Stock in treasury, at cost; 7,642 shares
Total stockholders' equity
$
9,582
6,560
1,198
6,815
79
773
380
291
269
25,947
8,051
1,975
1,670
776
953
13,425
39,372
$
10,325
4,593
887
4,813
682
476
416
154
362
22,708
7,284
563
1,584
318
908
10,657
33,365
14
116,502
(76,951)
(100)
(88)
39,377
13
115,209
(77,436)
(165)
(88)
37,533
Total liabilities and stockholders' equity
$
78,749
$
70,898
The accompanying notes are an integral part of these consolidated financial statements.
37
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
(Amounts in Thousands, Except for Per Share Amounts)
2023
2022
Net revenues
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Research and development
Loss on disposal of property and equipment
Income (loss) from operations
Other income (expense):
Interest income
Interest expense
Interest expense-financing fees
Other (Note 10)
Income (loss) from continuing operations before taxes
Income tax expense (benefit)
Income (loss) from continuing operations, net of taxes
Loss from discontinued operations (Note 8)
Net income (loss)
Net income (loss) per common share - basic and diluted:
Continuing operations
Discontinued operations
Net income (loss) per common share
Number of common shares used in computing
net income (loss) per share:
Basic
Diluted
$
$
$
$
89,735
73,366
16,369
14,975
561
77
756
606
(323)
(93)
(11)
935
17
918
(433)
485
.07
(.03)
.04
$
$
$
$
70,599
60,990
9,609
14,652
336
18
(5,397)
99
(175)
(61)
1,945
(3,589)
(378)
(3,211)
(605)
(3,816)
(.24)
(.05)
(.29)
13,506
13,739
13,280
13,280
The accompanying notes are an integral part of these consolidated financial statements.
38
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31,
(Amounts in Thousands)
2023
2022
Net income (loss)
Other comprehensive income (loss):
Foreign currency translation adjustments
Total other comprehensive income (loss)
Comprehensive income (loss)
$
$
485
$
(3,816)
65
65
(137)
(137)
550
$
(3,953)
The accompanying notes are an integral part of these consolidated financial statements.
39
PERMA-FIX ENVIRONMENTAL SERVICES, INC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31,
(Amounts in Thousands, Except for Share Amounts)
Balance at December 31, 2021
Net loss
Foreign currency translation
Issuance of Common Stock for services
Stock-Based Compensation
Issuance of Common Stock upon exercise
of options
Balance at December 31, 2022
Net income
Foreign currency translation
Issuance of Common Stock for services
Stock-Based Compensation
Issuance of Common Stock upon exercise
of options
Issuance of Common Stock upon exercise
of warrant
Balance at December 31, 2023
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Common
Stock Held
In Treasury
Accumulated Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders'
Equity
13,222,552 $
13
$
114,307
$
(88)
$
(28)
$
(73,620)
$
90,920
481
408
(137)
(3,816)
18,926
13,332,398 $
13
$
13
115,209
$
(88)
$
(165)
$
(77,436)
$
65,854
225,949
1
477
548
163
65
485
40,584
(3,816)
(137)
481
408
13
37,533
485
65
477
548
164
30,000
13,654,201 $
14
$
105
116,502
$
(88)
$
(100)
$
(76,951)
$
105
39,377
The accompanying notes are an integral part of these consolidated financial statements.
40
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
(Amounts in Thousands)
Cash flows from operating activities:
Net income (loss)
Less: loss on discontinued operations (Note 8)
Income (loss) income from continuing operations
Adjustments to reconcile net income (loss) income from continuing operations to cash provided by operating activities:
Depreciation and amortization
Amortization of debt issuance costs
Deferred tax benefit
Provision for (recovery of) credit losses on accounts receivable
Loss on disposal of property and equipment
Issuance of common stock for services
Stock-based compensation
Changes in operating assets and liabilities of continuing operations:
Accounts receivable
Unbilled receivables
Prepaid expenses, inventories and other assets
Accounts payable, accrued expenses and unearned revenue
Cash provided by continuing operations
Cash used in discontinued operations
Cash provided by (used in) operating activities
Cash flows from investing activities:
Purchases of property and equipment (net of financed amount)
Proceeds from sale of property and equipment
Cash used in investing activities of continuing operations
Cash flows from financing activities:
Borrowing on revolving credit
Repayments of revolving credit borrowings
Proceeds from long term debt (Term Loan 2/Capital Line) (Note 9)
Principal repayment of finance lease liabilities
Principal repayments of long term debt
Payment of debt issuance costs
Offering costs paid from sale of Common Stock in 2021
Proceeds from issuance of Common Stock upon exercise of options/warrant
Cash provided by (used in) financing activities of continuing operations
Effect of exchange rate changes on cash
Increase (decrease) in cash and finite risk sinking fund (restricted cash) (Note 2)
Cash and finite risk sinking fund (restricted cash) at beginning of period (Note 2)
Cash and finite risk sinking fund (restricted cash) at end of period (Note 2)
Supplemental disclosure:
Interest paid
Income taxes paid
Non-cash investing and financing activities:
Equipment purchase subject to financing
2023
2022
$
485
(433)
$
(3,816)
(605)
918
(3,211)
2,568
93
(66)
45
77
477
548
(403)
(2,370)
4,193
665
6,745
(597)
6,148
(1,714)
──
(1,714)
90,256
(90,256)
2,500
(189)
(709)
(175)
──
269
1,696
2,109
60
(390)
(20)
18
481
408
2,028
2,933
2,018
(6,270)
164
(717)
(553)
(1,023)
26
(997)
73,322
(73,322)
524
(860)
(502)
(35)
(61)
13
(921)
8
(4)
6,138
13,436
19,574
$
(2,475)
15,911
13,436
$
$
308
──
$
173
6
784
114
The accompanying notes are an integral part of these consolidated financial statements.
41
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
Notes to Consolidated Financial Statements
December 31, 2023, and 2022
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 two 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 four uniquely licensed and permitted treatment and storage facilities; and
- R&D activities to identify, develop and implement innovative waste processing techniques for
problematic waste streams.
SERVICES SEGMENT, which includes:
- Technical services, which include:
o professional radiological measurement and site survey of large government and commercial
o
installations using advanced methods, technology and engineering;
integrated Occupational Safety and Health services including 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 OSHA
citation assistance;
o global technical services providing consulting, engineering, project management, waste
management, environmental, and D&D field, technical, and management personnel and
services to commercial and government customers; and
o on-site waste management services to commercial and governmental customers.
- Nuclear services, which include:
o
o
technology-based services including engineering, D&D, specialty services and construction,
logistics, transportation, processing and disposal;
remediation 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 NEOSH instrumentation.
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 Canada, Inc. (“PF Canada”) and Oak Ridge Environmental
Waste Operations Center (“EWOC”).
The Company’s continuing operations also consisted of Perma-Fix ERRG, a variable interest entity (“VIE”)
for 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
The Company’s discontinued operations (see “Note 8 – Discontinued Operations”) consist of operations of
all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in 2011 and
42
earlier, as well as three previously closed locations.
On December 18, 2023, a JV where the Company and Campoverde Srl (“JV partner”) each owns 50% of
the partnership, was awarded a multi-year contract valued up to approximately EUR 50 million by the
European Commission (the “Contracting Authority”) for the treatment of radioactive waste from the Joint
Research Center in Ispra, Italy. Work under this JV has not started as of December 31, 2023. The scope of
work to be performed in the initial phases of this contract will be performed predominately by our JV
partner. Revenue generated by the Company under the initial phases will be limited to project management
support through 2025. The Company expects to generate an increase in revenue under this contract starting
in 2026 when the waste treatment phases begin. The Contracting Authority may terminate the contract
under certain conditions as set forth in the contract. Once activities commence under this JV, the Company
will consolidate the operations of this JV into its financial statements.
Financial Positions and Liquidity
The Company experienced significant improvement in its 2023 financial results as the lingering effects of
COVID-19 began to subside starting in the early part of 2022. The Company’s Treatment Segment
continued to see steady improvements in waste receipts from certain customers who had previously delayed
waste shipments due, in part, from the impact of COVID-19. Within the Company’s Services Segment,
certain projects which were delayed/curtailed in first part of 2022 due, in part, from the lingering effects of
the COVID-19, achieved full operational status and improved productivity in 2023 which positively
impacted revenue. Revenues from both of the Company’s Segments were also positively impacted from
contracts won in 2023 as procurement and planning on behalf of our government clients continued to
progress as the lingering effects of COVID-19 pandemic subsided.
Heading into 2024, the Company expects to see overall continue steady improvements in waste receipts and
increases in project work from certain existing contracts, contracts won in 2023, and bids submitted in both
segments that are awaiting awards. However, due to our operations which is subject to seasonal factor, the
Company generally experiences lower revenue in the first quarter due to overall reduced activities by our
customers from the usual slowdown in operations due, in part, from returning from the holiday periods and
poorer weather conditions. Additionally, due to Congress’s inability to timely approve FY 2024 budget and
the extension of the continuing resolution, certain of our government related customers have informed us
that waste shipments will likely be delayed. Although the Company expects to see overall improvements in
revenue in 2024 as disclosed above, if Congress is unable to enact the full FY 2024 appropriation bills or
further extend the continuing resolutions to fund government spending by the late March deadline, the U.S.
government will enter into a partial shutdown. The full impact of any additional continued resolution
beyond March or a partial government shutdown is uncertain. If a partial government shutdown were to
occur and were to continue an extended period, our financial results of operations could be negatively
impacted by delays in procurement actions, waste shipments and project delays on newly awarded projects.
The Company’s cash flow requirements during the twelve-months ended December 31, 2023, were
primarily financed by its operations, credit facility availability and cash on hand (which included the ERC,
along with interest, that the Company received in March 2023 (See “Note 10 – Employee Retention Credit
(“ERC”) and proceeds from a new term loan dated July 31, 2023, in the amount of $2,500,000 provided to
us under an amendment to the Company’s existing credit facility (See “Note 9 – Long Term Debt”)). The
Company’s 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. The Company plans to fund these requirements from its operations, cash on hand,
credit facility availability, and collections of unpaid receivables (See “Note 14 – Commitments and
Contingencies - Perma-Fix Canada, Inc. (“PF Canada”)” and “Note 19 – Subsequent Events – Perma-Fix
Canada, Inc. (“PF Canada”)” for a discussion of a settlement agreement relating to unpaid receivables due
to the Company from Canadian Nuclear Laboratories (“CNL”)). The Company’s ability to utilize its credit
facility from its lender is subject to meeting its quarterly financial covenant requirements, among other
things. The Company continues to explore all sources of increasing its capital and/or liquidity and to
improve its revenue and working capital, including, but not limited to entering into equity transactions.
There are no assurances that the Company will be successful in increasing our liquidity through our efforts.
The Company is continually reviewing operating costs and reviewing the possibility of further reducing
43
operating costs and non-essential expenditures to bring them in line with revenue levels, when necessary. At
this time, the Company believes that its cash flows from operations, our available liquidity from our credit
facility, and our cash on hand should be sufficient to fund our operations for the next twelve months.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Company’s consolidated financial statements include our accounts and those of our wholly-owned
subsidiaries. The Company’s consolidated financial statements for 2022 also included the accounts of
Perma-Fix ERRG, a VIE for which we were the primary beneficiary as discussed above, after elimination of
all significant intercompany accounts and transactions.
Use of Estimates
The Company prepares financial statements in conformity with accounting standards generally accepted in
the United States (“U.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. Due to the inherent uncertainty involved in making estimates, actual results could differ
from those estimates.
Cash and Finite Risk Sinking Fund (Restricted Cash)
As of December 31, 2023, and 2022, the Company had cash on hand of approximately $7,500,000 and
$1,866,000, respectively. Starting in late 2023, the Company maintained an interest bearing money account
with its lender. At December 31, 2023, and 2022, the Company had finite risk sinking funds of
approximately $12,074,000 and $11,570,000, respectively, which represented cash held as collateral under
the Company’s financial assurance policy (see “Note 14 – Commitment and Contingencies – Insurance” for
a discussion of this finite risk sinking fund).
Accounts Receivable
Accounts receivable are customer obligations due under normal trade terms generally requiring payment
within 30 or 60 days from the invoice date based on the customer type (government, broker, or
commercial). The carrying amount of accounts receivables is reduced by a credit loss determined in
accordance with Accounting Standards Update (“ASU”) 2016-13 “Credit Losses (Topic 326) Measurement
of Credit Losses on Financial Instruments.” which requires the Company to consider forward-looking
information in estimating the expected loss and is developed using historical collection experience, current
and future economic and market conditions that may affect customers’ ability to pay, and a review of the
current status of customers’ accounts receivables. The Company does not apply a credit loss allowance to
government related receivables due to our past successful experience in their collectability. The Company’s
monitoring activities include routine follow-up on past due accounts and consideration of 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 credit losses for the years ended December
31, 2023, and 2022 (in thousands):
Allowance for credit losses - beginning of year
Provision charges (Recovery of)
Write-off
Allowance for credit losses - end of year
Year Ended December 31,
2023
2022
$
$
57
44
(71)
30
$
$
85
(21)
(7)
57
44
Unbilled Receivables
Unbilled receivables are generated by differences between invoicing timing and our over 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: delays in the final
processing of all wastes associated with certain work orders and 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.
Unbilled receivables within our Services Segment can result from work performed under contracts but
invoice milestones have not yet been met and/or contract claims and pending change orders, including
requests for equitable adjustments (“REA”) for which work has been performed and collection of revenue is
reasonably assured.
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 net 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 leases. Amortization of financed leased
assets is computed using the straight-line method over the estimated useful lives of the assets. As of
December 31, 2023, assets recorded under finance leases were $1,608,000 less accumulated depreciation of
$545,000, resulting in net fixed assets under finance leases of $1,063,000. As of December 31, 2022, assets
recorded under finance leases were $1,201,000 less accumulated depreciation of $549,000, resulting in net
fixed assets under finance leases of $652,000. 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.
45
Our depreciation expense totaled approximately $2,370,000 and $1,872,000 in 2023 and 2022, respectively.
Leases
The Company accounts for leases in accordance with FASB’s ASU 2016-02, “Leases (Topic 842).” At the
inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on
facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are
then determined at the lease commencement date.
The Company’s operating lease right-of-use (“ROU”) assets and operating lease liabilities include primarily
leases for office and warehouse spaces used to conduct our business. The Company’s operating leases also
include the lease of a building with land utilized for our waste treatment operations which includes a
purchase option. These leases have remaining terms of approximately one to six years. 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; however, at December 31, 2023, none of our operating leases has
remaining renewal options. 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 transport equipment used by our facilities’ operations.
The Company’s finance leases have remaining terms of approximately one to six 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.
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. Judgments 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, 2023 and 2022 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.
Definite-lived intangible assets are also tested for impairment whenever events or changes in circumstances
suggest impairment might exist.
Research and Development (“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
46
charged to expense when incurred in accordance with ASC Topic 730, “Research and Development.”
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. 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. 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.
47
Concentration Risk
The Company performed services relating to waste generated by government clients (domestic), either
indirectly for others as a subcontractor to government entities or directly as a prime contractor, representing
approximately $70,642,000, or 78.8%, of our total revenue during 2023, as compared to $59,658,000, or
84.5%, of our total revenue during 2022.
Our 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.
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. The Company has not experienced any losses due to such cash concentration. 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 government entities.
The Company had two government related customers whose total unbilled and net outstanding receivable
balances each represented 13.2% of the Company’s total consolidated unbilled and net accounts receivable
at December 31, 2023. The Company had two government related customers whose total unbilled and net
outstanding receivable balances represented 12.5% and 23.0% of the Company’s total consolidated unbilled
and net accounts receivable at December 31, 2022.
Revenue Recognition and Related Policies
The Company recognizes revenue in accordance with FASB’s ASC 606, “Revenue from Contracts with
Customers.” ASC 606 provides a single, comprehensive revenue recognition model for all contracts with
customers. Under 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. Under ASC 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 (ranging from
9.0% to 33%), treatment/processing (ranging from 40% to 87%) and shipment/final disposal (ranging from
2.0% to 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 or fixed price arrangements:
The 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.
48
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 input method. For
the input method, revenue is recognized based on costs incurred on the project relative to the total estimated
costs of the project.
As discussed above for the Treatment and Services Segments, the Company’ revenue is generally
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.
Contracts with our customers within our Treatment Segment are generally short term with an original
expected length of one year or less. For the Services 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 a substantial penalty.
Variable Consideration
The Company’s contracts generally 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 are also accounted for under ASC 718. ASC 718 requires stock-based payments to
49
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 Income (Loss)
The components of comprehensive income (loss) are net income (loss) and the effects of foreign currency
translation adjustments.
Income (Loss) Per Share
Basic income (loss) per share is calculated based on the weighted-average number of outstanding common
shares during the applicable period. Diluted income (loss) per share is based on the weighted-average
number of outstanding common shares plus the weighted-average number of potential outstanding common
shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive
earnings per share. Income (loss) 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 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations 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 3—Valuations 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. As of December 31, 2023, and December 31, 2022, the fair value of the
Company’s financial instruments approximated their carrying values. The fair value of the Company’s
revolving credit, term loans and capital loan approximate its carrying value due to the variable interest rate.
Recently Issued Accounting Standards – Not Yet Adopted
In August 2023, the FASB issued ASU 2023-05, “Business Combinations—Joint Venture Formations
(Subtopic 805-60): Recognition and Initial Measurement.” ASU 2023-05 applies to the formation of a “joint
venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions
received upon its formation at fair value. The guidance does not impact accounting by the venturers. The
new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025 on a
prospective basis. The Company is currently evaluating the impact of this ASU on its consolidated financial
statements.
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures,” which expands reportable segment disclosure requirements by requiring
disclosures of significant reportable segment expenses that are regularly provided to the CODM and
included within each reported measure of a segment's profit or loss. The ASU also requires disclosure of the
title and position of the individual identified as the CODM and an explanation of how the CODM uses the
reported measures of a segment's profit or loss in assessing segment performance and deciding how to
allocate resources. Additionally, ASU 2023-07 requires all segment profit or loss and assets disclosures to
50
be provided on an annual and interim basis. The amendments in this ASU are required to be adopted for
fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024 with early adoption permitted, and should be applied on a retrospective basis. ASU
2023-07 will be effective for the Company’s financial statements for the year ended December 31, 2024.
This ASU will not have impact on the Company’s consolidated financial condition or results of operations.
The Company is evaluating the impact to the related segment reporting disclosures.
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic
740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax
disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or
loss from continuing operations before income tax expense or benefit (separated between domestic and
foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and
foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal,
state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning
after December 15, 2024. ASU 2023-09 should be applied on a prospective basis, but retrospective
application is permitted. This ASU will not have impact on the Company’s consolidated financial condition
or results of operations. The Company is evaluating the impact to its income taxes reporting disclosures.
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
(In thousands)
Fixed price
Time and materials
Total
Revenue by generator
(In thousands)
Domestic government
Domestic commercial
Foreign government
Foreign commercial
Total
$
$
Twelve M onths Ended
December 31, 2023
Twelve M onths Ended
December 31, 2022
Treatment
43,477
―
43,477
$
$
Services
41,540
4,718
46,258
$
$
Total
85,017
4,718
89,735
$
$
Treatment
33,358
―
33,358
$
$
Services
26,960
10,281
37,241
$
$
Total
60,318
10,281
70,599
$
$
Twelve M onths Ended
December 31, 2023
Treatment
Services
31,448
10,670
1,001
358
43,477
$
$
39,194
6,357
619
88
46,258
$
$
Total
70,642
17,027
1,620
446
89,735
$
$
Twelve M onths Ended
December 31, 2022
Services
$
$
35,906
1,408
(202)
129
37,241
$
$
Treatment
23,752
8,307
574
725
33,358
Total
59,658
9,715
372
854
70,599
Contract Balances
The timing of revenue recognition and billings results in unbilled receivables (contract assets). The
Company’s contract liabilities consist of deferred revenues which represent advance payment from
customers in advance of the completion of our performance obligation. The following table represents
changes in our contract asset and contract liabilities balances: Our deferred revenue as of December 31,
2023, included a remaining prepayment of approximately $2,031,000 by a certain customer for a waste
treatment project which is expected to be completed in 2024.
51
(In thousands)
Contract assets
Unbilled receivables - current
Contract liabilities
Deferred revenue
December 31, 2023
December 31, 2022
Year-to-date
Change ($)
Year-to-date
Change (%)
$
$
8,432
6,815
$
$
6,062
$
2,370
39.1 %
4,813
$
2,002
41.6 %
During the twelve-months ended December 31, 2023, and 2022, the Company recognized revenue of
$6,759,000 and $6,576,000, 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 relates to performance obligations
satisfied within the respective period.
NOTE 4
LEASES
The components of lease cost for the Company’s leases were as follows (in thousands):
Operating Leases:
Lease cost
Finance Leases:
Amortization of ROU assets
Interest on lease liability
Short-term lease rent expense
Total lease cost
$
Twelve Months Ended December 31,
2023
2022
$
612
$
627
163
33
196
2
810
176
37
213
7
847
$
The weighted average remaining lease term and the weighted average discount rate for operating and
finance leases at December 31, 2023, were:
Weighted average remaining lease terms (years)
Weighted average discount rate
Operating Leases
Finance Leases
5.6
7.5%
4.5
8.7%
The weighted average remaining lease term and the weighted average discount rate for operating and
finance leases at December 31, 2022, were:
Weighted average remaining lease terms (years)
Weighted average discount rate
Operating Leases
Finance Leases
6.2
7.8%
3.0
5.3%
The following table reconciles the undiscounted cash flows for the operating and finance leases as of
December 31, 2023, to the operating and finance lease liabilities recorded on the balance sheet (in
thousands):
52
2024
2025
2026
2027
2028
2029 and thereafter
Total undiscounted lease payments
Less: Imputed interest
Present value of lease payments
Operating Leases
520
433
416
406
383
366
2,524
(474)
2,050
$
$
Current portion of operating lease obligations
Long-term operating lease obligations, less current portion
Current portion of finance lease obligations
Long-term finance lease obligations, less current portion
$
$
$
$
380
1,670
―
―
Finance Leases
372
345
192
157
134
102
1,302
(235)
1,067
―
―
291
776
$
$
$
$
$
$
Supplemental cash flow and other information related to our leases were as follows (in thousands):
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases
Operating cash flow from finance leases
Financing cash flow from finance leases
ROU assets obtained in exchange for lease obligations for:
Finance liabilities
Operating liabilities
NOTE 5
PERMIT AND OTHER INTANGIBLE ASSETS
Twelve Months Ended Twelve Months En
2023
2022
$
$
$
$
$
582
32
189
786
466
$
$
$
$
$
573
37
860
147
―
The following table summarizes changes in the carrying value of permits, which exist only in our Treatment
Segment.
Permit (amount in thousands)
Balance as of December 31, 2021
Permit in progress
Balance as of December 31, 2022
Permit in progress
Balance as of December 31, 2023
Treatment
$
$
$
9,476
134
9,610
295
9,905
The following table summarizes information relating to the Company’s definite-lived intangible assets:
December 31, 2023
December 31, 2022
Weighted Average
Amortization Period
(Years)
Gross
Carrying Accumulated
Amount Amortization
Net
Carrying
Amount
Gross
Carrying Accumulated
Amount Amortization
Net
Carrying
Amount
Other Intangibles (amount in thousands)
Patent
Software
Customer relationships
Total
8.3
3
10
$
$
710
667
3,370
4,747
$
$
(387)
(529)
(3,370)
(4,286)
$
$
323
138
―
461
$
$
711
640
3,370
4,721
$
$
(374)
(468)
(3,250)
(4,092)
$
$
337
172
120
629
The intangible assets noted above were amortized on a straight-line basis over their useful lives with the
53
exception of customer relationships which were amortized using an accelerated method.
The following table summarizes the expected amortization over the next five years for our definite-lived
intangible assets:
Year
2024
2025
2026
2027
2028
Amount
(In thousands)
72
35
35
32
25
Amortization expense recorded for definite-lived intangible assets was approximately $198,000 and
$237,000, for the years ended December 31, 2023, and 2022, respectively.
NOTE 6
CAPITAL STOCK, STOCK PLANS, WARRANTS AND STOCK BASED COMPENSATION
Stock Option Plans
The Company’s 2003 Outside Directors Stock Plan, as amended (the “2003 Plan”) provides for the grant of
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”). The 2003 Plan also
provides for the grant of an NQSO to purchase up to 10,000 shares of the Company’s Common Stock for
each Eligible Director upon each re-election to the Board, and the grant of an NQSO to purchase up to
20,000 shares of the Company’s Common Stock upon initial election. NQSOs granted prior to July 20, 2021
have a vesting period of six months from the date of grant and a term of 10 years, with an exercise price
equal to the closing trade price on the date prior to grant date. NQSOs granted on and after July 20, 2021
vest 25% per year, beginning on the first anniversary date of the grant and also have a term of 10 years, with
an exercise price equal to the closing trade price on the date prior to grant date. Additionally, the 2003 Plan
provides for the issuance to each Eligible 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 Director
for services rendered as a member of the Board. The number of shares issued is determined at 75% of the
market value as defined in the plan (the Company recognizes 100% of the market value of the shares
issued). At December 31, 2023, the 2003 Plan had available for issuance 318,680 shares.
The Company’s 2017 Stock Option Plan, as amended (the “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 Plan authorizes an aggregate grant of 1,740,000 NQSOs
and Incentive Stock Options (“ISOs”), which included an increase of 600,000 additional authorized shares
approved by the Company’s Stockholders at the Company’s 2023 Annual Meeting of Stockholders held on
July 20, 2023. 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, 2023, the 2017 Plan had available for issuance
720,500 shares.
Stock Options to Employees and Outside Director
On January 19, 2023, the Company granted ISOs to certain employees under the 2017 Plan, for the purchase
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
54
Agreement, as follows: 70,000 shares for the Chief Executive Officer (“CEO”); 40,000 shares for the Chief
Financial Officer (“CFO”); 30,000 shares for the Executive Vice President (“EVP”) of Strategic Initiatives;
30,000 shares for the EVP of Waste Treatment Operations; and 30,000 shares for the EVP of Nuclear and
Technical Services. Each of the ISOs granted has a contractual term of six years with one-fifth yearly
vesting over a five-year period. The exercise price of each ISO is $3.95 per share, which was equal to the
fair market value of the Company’s Common Stock on the date of grant.
On July 20, 2023, the Company issued a NQSO to each of the Company’s seven reelected outside (non-
management) directors under the 2003 Plan, for the purchase of up to 10,000 shares of the Company’s
Common Stock. The CEO and EVP of Strategic Initiatives, each an executive officer of the Company as
well as a director, were not eligible to receive an option under the 2003 Plan. Each NQSO granted is for a
contractual term of ten years with one-fourth vesting annually over a four-year period. The exercise price of
each NQSO is $9.81 per share, which was equal to the fair market value of the Company’s Common Stock
on the day preceding the grant date, in accordance with the 2003 Plan.
On October 19, 2023, the Company granted an ISO to an employee under the 2017 Plan, for the purchase of
up to 5,000 shares of the Company’s Common Stock. The 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 is $9.62 per share,
which was equal to the fair market value of the Company’s Common Stock on the date of grant.
On July 21, 2022, the Company issued a NQSO to each of the Company’s seven reelected outside directors
under the 2003 Plan, for the purchase of up to 10,000 shares of the Company’s Common Stock. The
Company’s EVP of Strategic Initiatives 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 is 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 under the 2017 Plan, for the purchase 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 is
$5.34 per share, which was equal to the fair market value of the Company’s Common Stock on the date of
grant.
During 2023, the Company issued an aggregate 185,549 shares of its Common Stock from cashless
exercises of options for the purchases of 280,000 shares of the Company’s Common Stock, at exercise
prices ranging from $3.60 per share to $7.005 per share. Additionally, the Company issued 40,400 shares of
its Common Stock from the cash exercise of options for the purchase of 40,400 shares of the Company’s
Common Stock, at exercise prices ranging from at $2.785 per share to $7.005 per share resulting in
proceeds of approximately $164,000. Income tax benefit associated with stock options exercised with cash
during 2023 was approximately $25,000.
During 2022, the Company issued 16,526 shares of its Common Stock from 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 an option for the purchase of 2,400
shares of the Company’s Common Stock at $5.50 per share resulting in proceeds of approximately $13,000.
Income tax benefit associated with the stock option exercised with cash during 2022 was approximately
$3,000.
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 2023 and 2022 and the related assumptions used in the Black-Scholes option model used to
value the options granted were as follows:
55
Weighted-average fair value per share
Risk -free interest rate (1)
Expected volatility of stock (2)
Dividend yield (3)
Expected option life (years) (4)
Employee Stock Options Granted
2023
2.07
$
3.48%-4.98%
55.19%-58.78%
None
5.0 - 5.6
2022
2.71
3.00%
55.72%
None
5.0
$
Weighted-average fair value per share
Risk -free interest rate (1)
Expected volatility of stock (2)
Dividend yield (3)
Expected option life (years) (4)
Outside Director Stock Options Granted
2023
6.46
3.85%
54.31%
None
10.0
$
2022
3.61
2.91%
55.04%
None
10.0
(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 Company has never paid any dividends on its Common Stock. Our Loan Agreement prohibits the Company from paying any
cash dividends without prior approval from our lender.
(4) The expected option life is based on historical exercises and post-vesting data.
The following table summarizes stock-based compensation recognized (within SG&A expenses) for fiscal
years 2023 and 2022.
Employee Stock Options
Director Stock Options
Total
Year Ended
2023
367,000
181,000
548,000
2022
313,000
95,000
408,000
$
$
$
$
Income tax benefits associated with stock-based compensation expense were approximately $45,000 and
$23,000, respectively, for the years ended December 31, 2023, and 2022.
At December 31, 2023, the Company had approximately $1,809,000 of total unrecognized compensation
costs related to unvested options for employee and directors. The weighted average period over which the
unrecognized compensation costs are expected to be recognized is approximately 3.2 years.
Stock Options to Consultant
On July 27, 2017, the Company granted a NQSO from the 2017 Plan to Robert Ferguson, for the purchase
of up to 100,000 shares of the Company’s Common Stock (“Ferguson Stock Option”), at an exercise price
of $3.65 per share, which was the fair market value of the Company’s Common Stock on the date of grant.
The Ferguson Stock Option was granted in connection with Mr. Ferguson’s work as a consultant to the
Company’s Test Bed Initiative (“TBI”) at our PFNWR facility. The term of the Ferguson Stock Option was
seven years from the grant date, with vesting subject to the achievement of three separate milestones by
certain dates, the achievement of which would entitle Mr. Ferguson to purchase, respectively, 10,000,
30,000, and 60,000 shares of the Company’s Common Stock issuable under the Ferguson Stock Option.
Mr. Ferguson previously achieved the first milestone during the first vesting period. Upon the death of Mr.
Ferguson, the balance of the shares issuable under the Ferguson Stock Option was forfeited in accordance
with the terms of the option.
56
Summary of Stock Option Plans
The summary of the Company’s total plans as of December 31, 2023, and 2022, and changes during the
period then ended are presented as follows:
Weighted
Average
Exercise
Price
5.02
3.15
3.72
3.77
5.57
5.46
Weighted
Average
Exercise
Price
4.91
5.20
4.04
4.08
5.02
4.27
$
$
$
$
$
$
$
$
$
$
$
$
Shares
1,018,400
370,000
(320,400)
(73,500)
994,500
319,300
Shares
1,019,400
94,000
(52,400)
(42,600)
1,018,400
530,900
Weighted
Average
Remaining
Contractual
Term
(years)
5.0
4.1
Weighted
Average
Remaining
Contractual
Term
(years)
3.8
2.4
$
$
$
$
$
$
Aggregate
Intrinsic
Value (4)
2,335,042
2,417,081
766,037
Aggregate
Intrinsic
Value (4)
97,856
44,262
30,962
Options outstanding January 1, 2023
Granted
Exercised
Forfeited/expired
Options outstanding end of period (1)
Options exercisable at December 31, 2023(2)
Options outstanding January 1, 2022
Granted
Exercised
Forfeited/expired
Options outstanding end of period (3)
Options exercisable at December 31, 2022(3)
(1) Options with exercise prices ranging from $3.15 to $9.81
(2) Options with exercise prices ranging from $3.15 to $7.50
(3) Options with exercise prices ranging from $2.79 to $7.50
(4) The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds
the exercise price
The summary of the Company’s nonvested options as of December 31, 2023, and changes during the period
then ended are presented as follows:
Non-vested options January 1, 2023
Granted
Vested
Forfeited
Non-vested options at December 31, 2023
Shares
487,500
370,000
(119,300)
(63,000)
675,200
Weighted Average
Grant-Date
Fair Value
$
3.32
2.90
3.27
3.22
3.12
$
Warrant
In connection with a $2,500,000 loan that the Company received from Mr. Robert Ferguson (the “Ferguson
Loan”) on April 1, 2019, the Company issued a warrant to Mr. Ferguson (the “Ferguson Warrant”) for the
purchase of up to 60,000 shares of our Common Stock at an exercise price of $3.51 per share. The Ferguson
Loan was paid in full in December 2020. Upon Mr. Ferguson’s death, the Ferguson Warrant was transferred
equally to Mr. Ferguson’s two heirs with each holding a Warrant for the purchase of up to 30,000 shares of
the Company’s Common Stock, as permitted under the Ferguson Warrant. On December 12, 2023, one of
the Warrants was exercised by Mr. Ferguson’s heir for the purchase of 30,000 shares of the Company’s
Common Stock, resulting in proceeds received by the Company of approximately $105,000. As of
December 31, 2023, the remaining Warrant remains outstanding and will expire on April 1, 2024.
57
Common Stock Issued for Services
The Company issued a total of 65,854 and 90,920 shares of our Common Stock in 2023 and 2022,
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
$477,000 in each of the years 2023 and 2022 in compensation expense (included in SG&A expenses) for the
for the portion of director fees earned in the Company’s Common Stock.
Shares Reserved
As of December 31, 2023, the Company has reserved approximately 994,500 shares of our Common Stock
for future issuance under all of the option arrangements.
NOTE 7
INCOME (LOSS) PER SHARE
The following table reconciles the income (loss) and average share amounts used to compute both basic and
diluted income (loss) per share:
(Amounts in Thousands, Except for Per Share Amounts)
Income (loss) per common share from continuing operations
Income (Loss) from continuing operations, net of taxes
Basic income (loss) per share
Diluted income (loss) per share
Loss per common share from discontinued operations,
Loss from discontinued operations, net of taxes
Basic loss per share
Diluted loss per share
Net income (loss) per common share
Net income (loss)
Basic income (loss) per share
Diluted income (loss) per share
Weighted average shares outstanding:
Basic weighted average shares outstanding
Add: dilutive effect of stock options
Add: dilutive effect of warrants
Diluted weighted average shares outstanding
$
$
$
$
$
$
$
$
$
Years Ended
December 31,
2023
2022
918
.07
.07
$
$
$
(3,211)
(.24)
(.24)
$
(433)
(.03) $
(.03) $
(605)
(.05)
(.05)
485
.04
.04
$
$
$
(3,816)
(.29)
(.29)
13,506
215
18
13,739
13,280
―
―
13,280
Potential shares excluded from above weighted average share
calculations due to their anti-dilutive effect include:
Stock options
75
499
NOTE 8
DISCONTINUED OPERATIONS
The Company’s discontinued operations consist of all our subsidiaries included in our Industrial Segment
which encompasses subsidiaries divested in 2011 and earlier, as well as three previously closed locations.
The Company incurred losses from discontinued operations of $433,000 (net of tax benefit of $117,000) and
$605,000 (net of tax benefit of $199,000) for the years ended December 31, 2023, and 2022, respectively. In
2022, the Company incurred additional costs in connection with management of administrative and
regulatory matters for the Company’s remediation projects as discussed below.
58
The following table presents the major class of assets of discontinued operations as of December 31, 2023,
and December 31, 2022. No assets and liabilities were held for sale at each of the periods noted.
(Amounts in Thousands)
Current assets
Other assets
Total current assets
Long-term assets
Property, plant and equipment, net (1)
Total long-term assets
Total assets
Current liabilities
Accounts payable
Accrued expenses and other liabilities
Environmental liabilities
Total current liabilities
Long-term liabilities
Closure liabilities
Environmental liabilities
Total long-term liabilities
Total liabilities
December 31,
2023
December 31,
2022
13
13
81
81
94
80
128
61
269
169
784
953
1,222
$
$
$
$
15
15
81
81
96
104
146
112
362
159
749
908
1,270
$
$
$
$
(1) net of accumulated depreciation of $10,000 for each period presented.
Environmental Liabilities
The Company has three remediation projects, which are currently in progress relating to our PFD, PFM and
PFSG 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.
As of December 31, 2023, the Company had total accrued environmental remediation liabilities of
$845,000, a decrease of $16,000 from the December 31, 2022 balance of $861,000. The decrease represents
payments for remediation projects. As of December 31, 2023, $61,000 of the total accrued environmental
liabilities was recorded as current.
The current and long-term accrued environmental liabilities as of December 31, 2023, are summarized as
follows (in thousands).
PFD
PFM
PFSG
Total liability
Current
Accrual
─
─
61
$ 61
Long-term
Accrual
$ 60
15
709
$ 784
Total
$ 60
15
770
$ 845
NOTE 9
LONG - TERM DEBT
Long-term debt consists of the following as of December 31, 2023, and December 31, 2022:
59
(Amounts in Thousands)
Revolving Credit facility dated May 8, 2020, borrowings based upon eligible
accounts receivable, subject to monthly borrowing base calculation, balance due
on May 15, 2027. Effective interest rate for 2023 and 2022 was 9.7% and 8.9%,
respectively. (1)
Term Loan 1 dated May 8, 2020, payable in equal monthly installments of principal,
balance due on May 15, 2027. Effective interest rate for 2023 and 2022 was 9.2%
and 5.6%, respectively (1)
Term Loan 2 dated July 31, 2023, payable in equal monthly installments of principal,
December 31,
2023
December 31,
2022
$
$
213
640
balance due on May 15, 2027. Effective interest rate for 2023 was 9.9% (1)
2,333
Capital Line dated May 4, 2021, payable in equal monthly installments of principal,
balance due on May 15, 2027. Effective interest rate for 2023 and 2022 was
was 8.6% and 6.2%, respectively (1)
Debt Issuance Costs
Notes Payable to 2023 and 2025, annual interest rate of 5.6% and 9.1%.
Total debt
Less current portion of long-term debt
Long-term debt
358
(170)
14
2,748
(2)
463
(88)
24
1,039
(2)
$
773
1,975
$
476
563
(1) Our revolving credit facility is collateralized by our accounts receivable, and our term loans and capital line are
collateralized by our property, plant, and equipment.
(2) Aggregate unamortized debt issuance costs in connection with the Company’s credit facility, which consists of the
revolving credit, Term loan 1, Term loan 2 and Capital Line, as applicable.
Revolving Credit and Term Loan Agreement
The Company entered into a Second Amended and Restated Revolving Credit, Term Loan and Security
Agreement, dated May 8, 2020 (“Loan Agreement”), with PNC National Association (“PNC” and “lender”),
acting as agent and lender. The Loan Agreement, as amended from time to time and including the March 21,
2023, and the July 31, 2023, amendments as discussed below, provides the Company with the following
credit facility with a maturity date of May 15, 2027: (a) up to $12,500,000 revolving credit (“revolving
credit”), with the maximum that the Company can borrow under the revolving credit based on a percentage
of eligible receivables (as defined) at any one time reduced by outstanding standby letters of credit and
borrowing reductions that the Company’s lender may impose from time to time; (b) a term loan (“Term
Loan 1”) of approximately $1,742,000, requiring monthly installments of $35,547; (c) a term loan (“Term
Loan 2”) of $2,500,000, requiring monthly installments of $41,667; and (d) a capital expenditure line
(“Capital Line”) of up to $1,000,000 with advances on the line, subject to certain limitations, permitted for
up to twelve months starting May 4, 2021 (the “Borrowing Period”), with interest only payable on advances
during the Borrowing Period. Amounts advanced under the Capital Line at the end of the Borrowing Period
totaled approximately $524,000, requiring monthly installments of principal of approximately $8,700 plus
interest, commencing June 1, 2022.
On March 21, 2023, the Company entered into an amendment to its Loan Agreement, as amended, with its
lender which provided, among other things, the following:
removed the quarterly FCCR testing requirement for the fourth quarter of 2022 and removed the
FCCR testing requirement for the first quarter of 2023;
reduced the maximum revolving credit line under the credit facility from $18,000,000 to
$12,500,000;
reinstated the quarterly FCCR testing requirement starting in the second quarter of 2023 using a
trailing twelve-months period (with no change to the minimum 1.15:1 ratio requirement for each
quarter); and
required maintenance of a minimum of $3,000,000 in borrowing availability under the revolving
credit until the minimum FCCR requirement for the quarter ended June 30, 2023 has been met and
60
certified to the lender (the Company met its FCCR in the second quarter of 2023 which was
certified to its lender and therefore, this requirement is no longer applicable under the Loan
Agreement, as amended).
In connection with the March 21, 2023, amendment, the Company paid its lender a fee of $25,000 which is
being amortized over the remaining term of the Loan Agreement, as amended, as interest expense-financing
fees.
On July 31, 2023, the Company entered into a further amendment to its Loan Agreement, as amended,
which provided, among other things, the following:
extended the maturity date of the Loan Agreement, as amended, to May 15, 2027, from May 15,
2024;
an additional term loan (“Term Loan 2”) to the Company in the amount of $2,500,000, requiring
monthly installments of approximately $41,667. The annual rate of interest due on Term Loan 2 is
at prime (8.50% at December 31, 2023) plus 3.00% or SOFR (as defined in the Loan Agreement, as
amended) plus 4.00% plus an SOFR Adjustment applicable for an interest period selected by the
Company. A SOFR Adjustment rate of 0.10% and 0.15% is applicable for a one-month interest
period and three-month period, respectively, that may be selected by the Company;
removed the minimum Tangible Adjusted Net Worth (as defined in the Loan Agreement) covenant
requirement;
placed an indefinite reduction in borrowing availability of $750,000; and
allows for up to $2,500,000 in capital expenditure made in fiscal year 2023 and thereafter to be
treated as financed capital expenditure in the Company’s quarterly FCCR covenant calculation
requirement.
At maturity of the Loan Agreement, as amended, any unpaid principal balance plus interest, if any, will
become due.
Pursuant to the amendment dated July 31, 2023, as discussed above, the Company agreed to pay PNC 1.0%
of the total financing under the Loan Agreement, as amended, in the event the Company pays off its
obligations on or before July 31, 2024, and 0.5% of the total financing if the Company pays off its
obligations after July 31, 2024, to and including July 31, 2025. No early termination fee shall apply if the
Company pays off its obligations under Loan Agreement, as amended, after July 31, 2025.
In connection with the amendment dated July 31, 2023, the Company paid its lender a fee of $100,000
which is being amortized over the remaining term of the Loan Agreement, as amended, as interest expense-
financing fees.
Pursuant to the Loan Agreement, as amended, the annual rate of interest due on the revolving credit is at
prime plus 2% or SOFR plus 3.00% plus an SOFR Adjustment applicable for an interest period selected by
the Company. The annual rate of interest due on Term Loan 1 and the Capital Line is at prime plus 2.50% or
SOFR plus 3.50% plus an SOFR Adjustment applicable for an interest period selected by the Company.
SOFR Adjustment rates of 0.10% and 0.15% are applicable for a one-month interest period and three-month
period, respectively, that may be selected by the Company. See payment of annual rate of interest due on
Term Loan 2 as provided under the amendment dated July 31, 2023.
The Company’s credit facility under its Loan Agreement, as amended, with PNC contains certain financial
covenants, along with customary representations and warranties. A breach of any of these financial
covenants, unless waived by PNC, could result in a default under our credit facility allowing our lender to
immediately require the repayment of all outstanding debt under our credit facility and terminate all
commitments to extend further credit. The Company’s Loan Agreement, as amended, prohibits us from
paying cash dividends on our Common Stock without prior approval from our lender. The Company was
not required to perform testing of the FCCR requirement in the first quarter of 2023 pursuant to the March
61
21, 2023, amendment as discussed above. It otherwise met all of its other financial covenant requirements.
The Company met all of its covenant requirements in each of the second to fourth quarters of 2023.
At December 31, 2023, the borrowing availability under the Company’s credit facility was approximately
$10,622,000 which included our cash (deposited with the Company’s lender) and was based on our eligible
receivables and is net of approximately $3,950,000 in outstanding standby letters of credit and net of the
$750,000 indefinite reduction in borrowing availability imposed by the Company’s lender pursuant to the
amendment dated July 31, 2023, as discussed above.
The following table details the amount of the maturities of long-term debt maturing in future years as of
December 31, 2023 (excludes unamortized debt issuance costs of $170,000).
Year ending December 31:
(In thousands)
2024
2025
2026
2027
Total
$
$
824
612
605
877
2,918
NOTE 10
EMPLOYEE RETENTION CREDIT (“ERC”)
The Coronavirus Aid, Relief and Economic Securities Act (“CARES Act”), which was enacted on March
27, 2020, provided 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, was 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 were 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 was 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, the Company accounted 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 had 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. On March 30, 2023, the Company received the
ERC refund of $1,975,000 and approximately $60,000 in interest (recorded within “Interest Income” on the
Company’s Consolidated Statements of Operations for the quarter ended March 31, 2023), totaling
approximately $2,035,000.
NOTE 11
ACCRUED EXPENSES
Accrued expenses include the following (in thousands) at December 31:
62
Salaries and employee benefits
Accrued sales, property and other tax
Interest payable
Insurance payable
Other
Total accrued expenses
$
$
2023
4,120
477
23
1,390
550
6,560
2022
2,629
240
8
1,253
463
4,593
$
$
Accrued expenses for 2023 included a total of approximately $750,000 in compensation expenses accrued
under the 2023 Management Incentive Plans (“MIPs”) for our executives (See “Note 18 – Employment
Agreements and MIPs” for further discussion of the 2023 MIPs) in addition to a remaining $25,000 in
discretionary bonus approved by the Company’s Compensation Committee payable to the Company’s EVP
of Nuclear and Technical Services.
NOTE 12
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, 2023, and 2022, were as follows:
Amounts in thousands
Balance as of December 31, 2021
Accretion expense
Addition to closure liability
Spending
Balance as of December 31, 2022
Accretion expense
Spending
Balance as of December 31, 2023
$
$
$
7,191
411
1,339
(975)
7,966
462
(298)
8,130
In 2022, the Company recorded a total of approximately $1,339,000 in additional estimated closure
liabilities of which approximately $465,000 (within long-term) was recorded in connection with the
footprint expansion at one of our facilities and an update to a processing enclosure area at another facility.
The remaining additional closure liabilities was recorded for our EWOC facility for decommissioning
activities due to changes in estimated closure costs.
As of December 31, 2023, and December 31, 2022, the current portion of the closure liabilities totaled
approximately $79,000 and $682,000, respectively, which reflect closure liabilities for our EWOC facility.
The spending made in each of the years 2023 and 2022 was primarily for our EWOC facility.
The reported closure asset or ARO, is reported as a component of “Net Property and equipment” in the
Consolidated Balance Sheets as of December 31, 2023, and 2022 with the following activity for the years
ended December 31, 2023, and 2022:
63
Amounts in thousands
Balance as of December 31, 2021
Addition to closure and post-closure asset
Amortization of closure and post-closure asset
Balance as of December 31, 2022
Amortization of closure and post-closure asset
Balance as of December 31, 2023
$
$
$
3,576
1,128
(603)
4,101
(878)
3,223
The addition to ARO in 2022 reflects closure obligations as discussed above.
NOTE 13
INCOME TAXES
The components of income (loss) before income tax expense (benefit) by jurisdiction for continuing
operations for the years ended December 31, consisted of the following (in thousands):
United States
Canada
United Kingdom
Total income (loss) before tax benefit
$
2023
622
521
(208)
935
$
2022
(2,782)
(630)
(177)
(3,589)
The components of current and deferred federal and state income tax expense (benefit) for continuing
operations for the years ended December 31, consisted of the following (in thousands):
Federal income tax expense - current
Federal income tax benefit - deferred
State income tax expense - current
State income tax benefit - deferred
Total income tax expense (benefit)
2023
2022
76
(28)
7
(38)
17
$
(331)
12
(59)
(378)
$
An overall reconciliation between the expected tax expense (benefit) using the federal statutory rate of 21%
for each of the years ended 2023 and 2022 and the expense (benefit) for income taxes from continuing
operations as reported in the accompanying Consolidated Statement of Operations is provided below (in
thousands).
64
Federal tax expense (benefit) at statutory rate
State tax expense, net of federal benefit
Difference in foreign rate
Permanent items
Change in deferred tax rates
Reserve for uncertain tax positions
Tax credits
Stock-based compensation
Provision-to-return adjustments
Other
(Decrease) increase in valuation allowance
Income tax expense (benefit)
2023
2022
$
$
196
50
20
116
51
81
(318)
100
155
(434)
17
$
$
(754)
5
(42)
133
20
93
52
5
110
(378)
The global intangible low-taxed income (“GILTI”) provisions under the Tax Cuts and Jobs Act of 2017 (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, 2023 and 2022. As the
Canada and United Kingdom foreign subsidiaries are in loss positions for 2023, no GILTI inclusion is
expected for these entities for the current year.
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 as of December 31, 2023, and 2022 as
follows (in thousands):
Deferred tax assets:
Net operating losses
Environmental and closure reserves
Lease liability
Capital loss carryforward
Accrued expenses
R&D cost capitalization
Tax credits
Deferred tax liabilities:
Depreciation and amortization
Indefinite lived intangible assets
Right-of-use lease asset
481(a) adjustment
Prepaid expenses
Valuation allowance
Net deferred income tax asset
$
2023
9,876
2,332
525
780
1,186
905
200
(4,260)
(557)
(510)
(46)
10,431
(6,131)
4,300
$
2022
11,646
2,269
482
756
776
25
135
(4,351)
(503)
(476)
(53)
(30)
10,676
(6,560)
4,116
As of December 31, 2023, 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.
65
The Company has estimated net operating loss carryforwards (“NOLs”) for federal and state income tax
purposes of approximately $19,450,000 and $72,859,000, respectively, as of December 31, 2023. These
NOLs can be carried forward and applied against future taxable income, if any, and expire in various
amounts starting in 2023. All of our federal NOLs were generated after December 31, 2017 and thus do not
expire.
The Company accounts for uncertainties in income tax pursuant to ASC 740. A reconciliation of the
beginning and ending amount of our recognized tax expense is summarized as follows (in thousands):
Balances at beginning of year
Addition related to R&D tax credit
Balances at end of the year
2023
2022
$
$
― $
81
81
$
―
―
―
The tax years 2020 through 2022 remain open to examination by taxing authorities in the jurisdictions in
which the Company operates.
The Company had $76,000 and $0 federal income tax payable for the years ended December 31, 2023 and
2022, respectively.
Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (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 each tax year 2023 and 2022, the Company has capitalized
$2,059,000 of research and development expenses. While Management believes the estimate for 2023 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, 2023.
NOTE 14
COMMITMENTS AND CONTINGENCIES
Hazardous Waste
In connection with our waste management services, the Company processes hazardous, non-hazardous, low-
level radioactive and mixed (containing both hazardous and low-level radioactive) waste, which 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, the Company could be a potentially
responsible party for the costs of the cleanup notwithstanding any absence of fault on our part.
Legal Matters
In the normal course of conducting our business, the Company may be involved in various litigation. The
Company is not a party to any litigation or governmental proceeding which our management believes could
result in any judgments or fines against us that would have a material adverse effect on our financial
position, liquidity or results of future operations.
Tetra Tech EC, Inc. (“Tetra Tech”)
During July 2020, Tetra Tech EC, Inc. ("Tetra Tech") filed a complaint in the U.S. 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.
66
CH2M was hired by the Navy in 2016 to review Tetra Tech's work. CH2M subcontracted with
environmental consulting and cleanup firms Battelle Memorial Institute, Cabrera Services, Inc.,
SC&A, Inc. and the Company to assist with the review, according to the complaint.
The Company’s insurance carrier is providing a defense on our behalf in connection with this lawsuit,
subject to a $100,000 self-insured retention and the terms and limitations contained in the insurance policy.
The majority of Tetra Tech’s claims have been dismissed by the Court. Remaining claims include: (1)
intentional interference with contractual relations; and (2) inducing a breach of contract. The Company
continues to believe it has no liability exposure to Tetra Tech.
Insurance
The Company has 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, provides for a maximum allowable coverage
of $28,177,000 which includes available capacity to allow for annual inflation and other performance and
surety bond requirements. Total coverage under the 2003 Closure Policy, as amended, was $22,461,000 at
December 31, 2023. As of December 31, 2023, and December 31, 2022, finite risk sinking funds
contributed by the Company related to the 2003 Closure Policy which is included in other long term assets
on the accompanying Consolidated Balance Sheets totaled $12,074,000 and $11,570,000, respectively,
which included interest earned of $2,603,000 and $2,099,000 on the finite risk sinking funds as of
December 31, 2023 and December 31, 2022, respectively. Interest income for the year ended 2023 and 2022
was approximately $504,000 and $99,000, respectively. If the Company so elects, AIG is obligated to pay
the Company an amount equal to 100% of the finite risk sinking fund account balance in return for complete
release of liability from both the Company and any applicable regulatory agency using this policy as an
instrument to comply with financial assurance requirements.
Perma-Fix Canada Inc. (“PF Canada”)
During the fourth quarter of 2021, PF Canada received a Notice of Termination (“NOT”) from 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, 2023, PF Canada has approximately $2,389,000 in unpaid receivables due
from CNL as a result of work performed under the TOA. CNL and PF Canada have reached a settlement
agreement on payment of the aforementioned receivables to PF Canada by CNL, subject to certain
conditions/terms precedents being met, including release of certain liens. (see “Note 19 - Subsequent Event
– PF Canada” for a discussion of a partial payment made by CNL in January 2024 on the receivables and
the remaining receivables to be paid by CNL).
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,
2023, the total amount of standby letters of credit outstanding was approximately $3,950,000 and the total
amount of bonds outstanding was approximately $36,674,000.
NOTE 15
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% of their compensation, up to a maximum amount as limited by law. The Company, at
its discretion, may make matching contributions of 25% based on the employee’s elective contributions.
67
Company contributions vest over a period of five years. In 2023 and 2022, the Company contributed
approximately $576,000 and $575,000 in 401(k) matching funds, respectively.
NOTE 16
RELATED PARTY TRANSACTIONS
David Centofanti serves as our Vice President of Information Systems. For such position, he received
annual compensation of $191,000 and $187,000 for 2023 and 2022, respectively. David Centofanti is the
son of our EVP of Strategic Initiatives and a Board member.
NOTE 17
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 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 have two reporting segments, consisting of the Treatment and Services Segments, which are based on a
service offering approach. Our reporting segments exclude our corporate headquarter, business center and
our discontinued operations (see “Note 8 – 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, 2023, and 2022 (in thousands).
Segment Reporting as of and for the year ended December 31, 2023
Revenue from external customers
Intercompany revenues
Gross profit
Research and development
Interest income
Interest expense
Interest expense-financing fees
Depreciation and amortization
Treatment
Services
$ 43,477
290
6,876
418
(91)
$ 46,258
139
9,493
38
(27)
Segments
Total
$ 89,735
429
16,369
456
(118)
2,112
397
2,509
(3)(4)
Corporate (2)
$ —
105
606
(205)
(93)
59
Consolidated
Total
$ 89,735
16,369
561
606
(323)
(93)
2,568
Segment income (loss) before income taxes
2,107
5,854
7,961
(7,026)
935
Income tax (benefit) expense
(121)
138
17
Segment income (loss)
Segment assets (1)
Expenditures for segment assets (net)
2,228
5,716
7,944
40,470
10,239
50,709
1,696
10
1,706
(7,026)
28,040 (5)
8
Total debt
372
372
2,376
17
918
78,749 (9)
1,714 (7)
2,748 (6)
68
Segment Reporting as of and for the year ended December 31, 2022
Revenue from external customers
Intercompany revenues
Gross profit
Research and development
Interest income
Interest expense
Interest expense-financing fees
Depreciation and amortization
Treatment
Services
$ 33,358
56
5,243
246
(74)
1,710
$ 37,241
213
4,366
23
(3)
(1)
334
(3)(4)
Segments
Total
$ 70,599
269
9,609
269
(77)
(1)
2,044
Segment income (loss) before income taxes
1,531
1,565
3,096
Income tax benefit
(236)
(133)
(369)
Corporate (2)
$ —
67
99
(98)
(60)
65
(6,685)
(9)
Segment income (loss)
Segment assets (1)
Expenditures for segment assets (net)
Total debt
1,767
1,698
3,465
37,918
8,473
46,391
(6,676)
24,507 (5)
866
157
1,023
482
5
487
552
(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.
Consolidated
Total
$ 70,599
9,609
336
99
(175)
(61)
2,109
(3,589) (8)
(378)
(3,211)
70,898 (9)
1,023 (7)
1,039 (6)
(3) The Company performed services relating to waste generated by government clients (domestic), either directly as a prime
contractor or indirectly for others as a subcontractor to government entities, representing approximately $70,642,000 or 78.7%
of total revenue for 2023 and $59,658,000 or 84.5% of total revenue for 2022. The following reflects such revenue generated by
our two segments:
Domestic government
$
Treatment
31,448
2023
Services
$
39,194
$
Total
70,642
Treatment
23,752
$
2022
Services
$
35,906
$
Total
59,658
(4) The following table reflects revenue based on customer location:
United States
Canada
Germany
Italy
Slovenia
United Kingdom
Total
2023
2022
87,669
1,685
206
87
88
89,735
$
$
69,373
406
678
14
128
70,599
$
$
(5) Amount includes assets from our discontinued operations of $94,000 and $96,000 as of December 31, 2023, and 2022,
respectively.
(6) Net of debt issuance costs of ($170,000) and ($88,000) for 2023 and 2022, respectively (see “Note 9 – Long-Term Debt” for
additional information).
(7) Net of financed amount of $784,000 and $114,000 for the year ended December 31, 2023, and 2022, respectively.
(8) Includes approximately $1,975,000 recorded as other income under the ERC program under the CARES Act, as amended (see
“Note 10 –Employee Retention Credit (“ERC”)” for a discussion of this refund amount).
(9) Includes long-lived assets for continued operations as follows:
United States
Foreign Subsidiaries
Total
$
$
2023
2022
19,009
19,009
$
$
18,957
18,957
69
NOTE 18
EMPLOYEMENT AGREEMENTS AND MIPS
Employment Agreements
On April 20, 2023, the Company entered into employment agreements with each of its executive officers:
Mark Duff, President and CEO; Ben Naccarato, EVP and CFO; Dr. Louis Centofanti, EVP of Strategic
Initiatives; Andrew Lombardo, EVP of Nuclear and Technical Services; and Richard Grondin, EVP of
Waste Treatment Operations (collectively the “New Employment Agreements” and each, individually, the
“New Employment Agreement”). The Company had previously entered into employment agreements with
each of the aforementioned executive officers on July 22, 2020, all five of which agreements were due to
expire on July 22, 2023, but which were terminated effective April 20, 2023, upon the execution of the New
Employment Agreements.
Each of the New Employment Agreements are substantially identical except for compensation. Under the
New Employment Agreements, each of these executive officers is provided an annual salary, which annual
salary may be increased from time to time, but not reduced, as determined by the Compensation Committee.
In addition, each of these executive officers is entitled to participate in the Company’s broad-based benefits
plans and to certain performance compensation payable under separate Management Incentive Plan (“MIP”)
as approved by the Company’s Compensation Committee and the Company’s Board.
Each of the New Employment Agreements is effective for three years from April 20, 2023 (the “Initial
Term”) unless earlier terminated by the Company or by the executive officer. At the end of the Initial Term
of each New Employment Agreement, each New 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 officer provides written notice not to extend the terms of the New Employment Agreement.
Mr. Andrew Lombardo retired from the position of EVP of Nuclear and Technical Services effective
January 1, 2024. Upon Mr. Lombardo’s retirement from the position of EVP of Nuclear and Technical
Services, he no longer was an executive officer of the Company and his employment agreement dated April
20, 2023, was terminated effective January 1, 2024. Mr. Lombardo remains employed by the Company at a
reduced capacity, and assists with the transition of his former responsibilities as well as contributing to
certain business development matters.
Pursuant to the New Employment Agreements, if the executive officer’s employment is terminated due to
death, disability or for cause (as defined in the agreements), 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. In the event that an executive
officer’s employment is terminated due to death, the Company will also pay a lump-sum payment (the
“Cash Medical Continuation Benefit”) equal to eighteen times the monthly premium that would be required
to be paid, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), to continue group health coverage for the executive officer’s eligible covered dependents in
effect on the date of the executive officer’s termination of employment, based on the premium for the first
month of COBRA coverage. Such cash payment will be taxable and will be made regardless of whether the
executive officer’s eligible covered dependents elect COBRA continuation coverage.
If the executive officer 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 agreements), the Company will pay the
executive officer Accrued Amounts, (a) two years of full base salary, plus (b) (i) two times the performance
compensation (under the executive officer’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, or (ii) if performance
compensation earned with respect to the fiscal year immediately preceding the date of termination has
70
already been paid 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, and (c) the Cash Medical Continuation Benefit. If the executive officer terminates his
employment for a reason other than for good reason, the Company will pay to the executive officer an
amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP
applicable to such executive officer.
Additionally, in the event of a Change in Control (as defined in the agreements), 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 an executive officer terminates his employment for “good reason” (as defined in the agreements)
or is terminated by the Company without cause, all outstanding stock options to purchase common stock
held by the 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 officer’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 19, 2023, the Board and the Compensation Committee approved individual MIP for the calendar
year 2023 for each of the Company’s executive officers. Each MIP was effective January 1, 2023, and
applicable for year 2023. Each MIP provided guidelines for the calculation of annual cash incentive-based
compensation, subject to Compensation Committee oversight and modification. The performance
compensation under each of the MIPs was based upon meeting certain of the Company’s separate target
objectives during 2023. The total potential target performance compensation payable ranged from 25% to
150% of the 2023 base salary for the CEO ($93,717 to $562,304), 25% to 100% of the 2023 base salary for
the CFO ($76,193 to $304,772), 25% to 100% of the 2023 base salary for the EVP of Strategic Initiatives
($63,495 to $253,980), 25% to 100% of the 2023 base salary for the EVP of Nuclear and Technical Services
($76,193 to $304,772), and 25% to 100% ($65,308 to $261,233) of the 2023 base salary for the EVP of
Waste Treatment Operations. Total compensation earned under the five 2023 MIPs were approximately
$750,000, which is to be paid on or about 90 after year-end, or sooner, based on the Company’s filing of its
2023 Form 10-K. As disclosed above, Mr. Lombardo retired from the position of EVP of Nuclear and
Technical Services effective January 1, 2024. He is entitled to compensation earned under his 2023 MIP as
EVP of Nuclear and Technical Services.
NOTE 19
SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date
through March 13, 2024, the date that these consolidated financial statements were available to be issued.
Based upon this review, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the consolidated financial statements other than the below.
MIPs
On January 18, 2024, the Board (with Mr. Mark Duff and Dr. Louis Centofanti abstaining) and the
Compensation Committee approved individual MIP for the calendar year 2024 for each of our executive
officers. Each MIP is effective January 1, 2024 and applicable for year 2024. Each MIP provides guidelines
for the calculation of annual cash incentive-based compensation, subject to Compensation Committee
oversight and modification. The performance compensation under each of the MIPs is based upon meeting
certain of the Company’s separate target objectives during 2024. The total potential target performance
compensation payable ranges from 25% to 150% of the 2024 base salary for the CEO ($104,287 to
$625,733), 29% to 100% of the 2024 base salary for the CFO ($95,681 to $332,811), 25% to 100% of the
71
2024 base salary for the EVP of Strategic Initiatives ($69,337 to $277,346), and 25% to 100% ($71,317 to
$285,267) of the 2024 base salary for the EVP of Waste Treatment Operations.
PF Canada
As discussed in “Note 14 – Commitment and Contingencies - Perma-Fix Canada Inc. (“PF Canada”),” the
Company’s subsidiary, PF Canada. has unpaid receivables due from CNL for a previous TOA that PF
Canada entered into with CNL in May 2019 for remediation work within Ontario, Canada in which a
settlement agreement on the payment of the receivables by CNL was reached, subject to certain
conditions/terms precedents being met, including release of certain liens. On January 22, 2024, the
Company received approximately $741,000 of the $2,389,000 in unpaid receivables, with the remaining
receivables to be paid by CNL upon completion of the settlement conditions/terms, which the Company
believes should occur during 2024.
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.
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, 2023.
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
72
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.
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, 2023 based on the
framework in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment,
management and our CEO and CFO, concluded that the Company’s internal control over
financial reporting was effective as of December 31, 2023.
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
There was no change in our internal control over financial (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) during the fiscal quarter ended December 31, 2023 that
have materially affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.
ITEM 9B.
OTHER INFORMATION
(a) None.
(b) During the quarter ended December 31, 2023, no director or "officer" (as defined
in Rule 16a-1(f)) of the Company adopted or terminated a "Rule 10b5-1 trading
arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in
Item 408(a) of Regulation S-K.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not Applicable.
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
(the “Board”):
NAME
Lieutenant General (LTG) (ret.) Thomas P. Bostick
Dr. Louis F. Centofanti
Mr. Mark J. Duff (1)
Ms. Kerry C. Duggan
Mr. Joseph T. Grumski
The Honorable Joe R. Reeder
AGE POSITION
67 Director
80 Director; EVP of Strategic Initiatives
61 Director; President and CEO
45 Director
62 Director
76 Director
73
Mr. Larry M. Shelton
The Honorable Zach P. Wamp
Mr. Mark A. Zwecker
70 Chairman of the Board
66 Director
73 Director
(1) Mr. Duff was unanimously elected by the Board effective April 20, 2023, to fill a newly created directorship.
Each director is elected to serve until the next annual meeting of stockholders or until their respective
successors are duly elected and qualified.
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 are 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.
LTG (ret.) Thomas P. Bostick
LTG (ret.) Bostick, a director since August 2020, is currently the 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, LTG (ret.) 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. LTG (ret.) Bostick previously served (from November 2017 to February 2020)
as the 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, LTG (ret.) 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, LTG (ret.) 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. LTG (ret.) Bostick continues to serve as a board member for several
other privately-held and nonprofit organizations. LTG (ret.) 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.
LTG (ret.) 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, LTG (ret.) 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). LTG (ret.) 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,
LTG (ret.) Bostick was a special assistant to the Secretary of Veterans Affairs.
LTG (ret.) Bostick 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,
an Executive MBA from Oxford 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.
74
LTG (ret.) 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. From March 1996 to September 8, 2017 and
from February 1991 to September 1995, Dr. Centofanti held the position of President and 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”). 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 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, and led the Board to conclude that he
should serve as a director.
Mark J. Duff
Effective April 20, 2023, Mr. Duff was unanimously elected by the Company’s Board of Directors to serve
as a member of Board to fill a newly created directorship. Mr. Duff is currently the Company’s President
and CEO, a position he has held since September 2017. Since joining the Company in 2016, Mr. Duff has
developed and implemented strategies to meet 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 waste contamination. Mr. Duff
has over 39 years of management and technical experience in the DOE and DOD environmental and
construction markets as a corporate officer, senior project manager, co-founder of a consulting firm, and
federal employee. Mr. Duff has an MBA from the University of Phoenix and received his B.S. from the
University of Alabama.
Mr. Duff’s extensive experience in the government sector has proven invaluable in the continuing growth of
the Company’s Treatment and Services Segments. Mr. Duff’s comprehensive understanding of the
Company’s operations, his proven leadership skills, and his drive for new innovation in this evolving
industry and market, led the Board to conclude that he should serve as a director.
75
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 was appointed
to the faculty and named as the Founding Director of the University of Michigan’s School for
Environmental and Sustainability (SEAS) Clinic in Detroit.
In 2021, Ms. Duggan was appointed to the Department of Energy’s prestigious Secretary of Energy
Advisory Board (SEAB), serving under Energy 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. More recently, Duggan also served on
the Governor’s bipartisan Growing Michigan Together Council (Infrastructure &Places Workgroup). 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 federal public-service leadership roles, including
inside the Obama-Biden White House as Deputy Director for Policy in the Office of 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 briefly 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 and their inaugural “Notable Leaders in Sustainability” lists. 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 attended the University of Vermont, where she completed her Bachelor of Science degree in
environmental studies. Ms. Duggan also has a Master of Science degree 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.
76
Mr. Joseph T. Grumski
Mr. Grumski, a director of the Company since February 2020, has served since April 2020 as the 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 locations throughout
the United States. Mr. Grumski also served as the President of TAS Energy, Inc. from April 2020 to
December 2023. Prior to the acquisition of TAS by Comfort Systems USA, Inc., Mr. Grumski served as
President and CEO and a board member of TAS 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 $1.1 billion of services for federal,
commercial, utility and state customers. Mr. Grumski’s many accomplishments with SAIC included
growing SAIC’s $300 million federal environmental business to a top ranked, $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. Mr. 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 a director.
The Honorable Joe R. Reeder
Mr. Reeder, a director since 2003, is a principal shareholder of the law firm of Greenberg Traurig LLP, one
of the nation's largest law firms, with 47 offices and 2,700 attorneys worldwide. Mr. Reeder served as
Shareholder-in-Charge of the law firm’s Mid-Atlantic Region offices for ten years. His clientele includes
celebrities, heads of state, sovereign nations, international corporations, and law firms. As the U.S. Army’s
14th Undersecretary (1993-97), he also served three years as Chairman of the Panama Canal Commission's
Board, overseeing a multibillion-dollar infrastructure program. For the past 22 years, he has served on the
Canal’s International Advisory Board. He has written extensively in leading journals on corporate
cybersecurity, and has served on the boards of the USO; 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 director of WashingtonFirst Bank, the bank subsidiary of WashingtonFirst
Bankshares, Inc. (Nasdaq: WSBI), from 2004 to 2017; Sandy Spring Bancorp, Inc. (Nasdaq: SASR), from
2018 to 2020; and Trustar Bank, a Virginia state-chartered bank (2022 - present).
After two 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 10 years on the
USO Board of Governors. Appointed by former Governor Terry McAuliffe to the Virginia Military
Institute’s Board of Visitors (2014), he was reappointed in 2018 by former Virginia Governor Ralph
Northam, with his term ending in 2022. Mr. Reeder, who has been a television commentator on legal and
national security issues, is consistently named a Super Lawyer for Washington, D.C. In May 2018 he was
appointed to the United States Court of Federal Claims Advisory Council Bid Protest Committee.
A West Point graduate who served in the 82nd Airborne Division after Ranger School, Mr. Reeder earned
77
his J.D. from the University of Texas, his L.L.M. from Georgetown University, and has devoted his career
to resolving complex domestic and international issues. He continues to greatly enhance the Board’s ability
to address major challenges in the nuclear market and day-to-day corporate, and Washington D.C.- related
challenges.
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 2014. Mr. Shelton served as the CFO of S K Hart Management, LLC, a private investment
management company (“S K Hart Management”), from 1999 until August 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 until August 2017, and has served on its board since
December 2005. Mr. Shelton served as Director and CFO of S K Hart Ranches (PTY) Ltd, a private South
African Company involved in agriculture, from March 2012 to March 2020. Mr. Shelton has over 20 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 factors led 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. 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, for which he was named Chattanooga’s Small Business Person of the Year.
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, and led the Board to conclude that he should serve as a
director.
Mr. Mark A. Zwecker
Mr. 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 to 2019. JCI US Inc. is a telecommunications company and
wholly-owned subsidiary of Japan Communications, Inc. (Tokyo Stock Exchange (Securities Code: 9424)),
78
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.
Mr. Zwecker has held various other senior management positions, including President of ACI Technology,
LLC, a privately-held IT services provider, and Vice President of Finance and Administration for American
Combustion, Inc., a privately-held combustion technology solutions provider. In 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 factors
led the Board to conclude that he should serve as a director.
Board Skills Matrix
The Company is focused on nominating a Board of Directors with a balance of functional expertise,
leadership experience, high moral character, critical thinking, and a diversity of backgrounds and tenure
necessary to effectively oversee the Company’s business. The Company’s Corporate Governance and
Nominating Committee is responsible for developing the criteria 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.
KEY SKILLS/EXPERIENCE
Corporate Governance:
Supports management and board accountability, transparency and protection of
shareholder interests
Financial Literacy:
Knowledge of financial reporting, internal controls and procedures and complex
financial transactions, as is involved with the Company business
Government/DOE/DOD Policies:
Significant work experience with government decision makers
Business/Investment Structures:
Work experience with infrastructure for financial interests and proven success
Risk Management and Compliance:
Understanding and experience with identification, assessment and oversight of risk
management and programs, including cyber-security risks
Nuclear Waste Management:
Understanding the compliance and environmentally responsible nuclear services and
radioactive waste management solutions
Environmental Studies:
Analytical tools and skills understanding the environment, while emphasizing the role
of beliefs, values and ethics of the corporate body
Human Capital Management:
Experience and understanding talent management and development, executive
compensation issues and succession planning efforts
Regulatory/Legal Processes:
Knowledge of the various regulatory processes governing Perma-Fix business sectors,
such as financial, environmental, nuclear, and safety
International Work:
79
NUBMER OF
DIRECTORS
9
7
9
8
9
7
9
9
9
Experience in overseeing global operations and assessing opportunities and challenges
9
Board Diversity Matrix
The 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 nine current directors are also military veterans.
Total Number of Directors
9
Female
M ale
Non-Binary
Did Not
Disclose
Gender
1
Gender Identity:
Directors
Number of Directors Who Identify in Any of The Categories Below:
African American or Black
Alaskan Native or Native American
Asian
Hisp anic or Latinx
Native Hawaiian or Pacific Islander
White
Two or M ore Races or Ethnicities
LGBTQ
Did not Disclose Demographic Background
-
-
-
-
-
1
-
-
-
8
-
-
-
-
-
7
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
We have a separately-designated standing Corporate Governance and Nominating Committee (the
“Governance and Nominating Committee”). Members of the Governance and Nominating Committee
during 2023 were Joe R. Reeder (Chairperson), Thomas P. Bostick, Kerry C. Duggan and Zach P. Wamp.
All members of the Nominating Committee are and were “independent” as that term is defined by current
Nasdaq listing standards.
The Governance and Nominating Committee has specific responsibilities which include:
considering and making recommendations to the Board regarding the composition and
chairmanship of the committees of our Board;
developing and making recommendations to our Board regarding corporate governance guidelines
which include policies and procedures that promote honest and ethical conduct and prohibit conflict
of interest in business conduct;
overseeing evaluations of the Board’s performance, including committees of the Board; and
overseeing Company practices and initiatives with respect to environmental, social and governance
matters.
The Governance and Nominating Committee recommends to the Board of Directors candidates to fill
vacancies on the Board and the nominees for election as directors at each annual meeting of stockholders. In
making such recommendations, the Governance and Nominating Committee takes into account information
provided to them from the candidates, as well as the Committee’s own knowledge and information obtained
through inquiries to third parties to the extent the Committee deems appropriate. The Company’s Bylaws
sets forth certain minimum director qualifications to qualify as a 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 of
Directors;
not serve on the boards of more than three other publicly-held companies;
satisfy the director qualification requirements of all environmental and nuclear commissions, boards
or similar regulatory or law enforcement authorities to which the Company is subject so as not to
80
cause the Company to fail to satisfy any of the licensing requirements imposed by any such
authority;
not be affiliated with, employed by or be 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 of Directors, such candidate must deliver to the
Governance and Nominating Committee a completed questionnaire with respect to the background,
qualifications, stock ownership and independence of such proposed nominee. The Governance and
Nominating Committee reviews each candidate’s qualifications to include considerations of:
standards of integrity, personal ethics and 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, business operations, and
industry knowledge.
The Governance and Nominating Committee does not assign specific weight to any particular criteria and
no particular criterion is necessarily applicable to all prospective nominees. The Governance and
Nominating Committee does not have a formal policy for the consideration of diversity in identifying
nominees for 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 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 Governance and Nominating
Committee believes are important to be represented on the Board. The Company also 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 believes that the inclusion of diversity
as one of many factors considered in selecting director nominees is consistent with the Company's goal of
creating a board of directors that best serves our needs and those of our shareholders.
Stockholder Nominees
The Governance and 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 Governance and Nominating Committee, delivered to the Company’s principal
executive office address (i) in the case of an Annual Meeting of Stockholders, no later than the 90th day nor
earlier than the 120th 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 day following the day on which public disclosure of the date of the Special
Meeting of Stockholders is made.
81
The Governance and 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 Governance and 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.
BOARD LEADERSHIP STRUCTURE
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 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.
Mark A. Zwecker, a current member of our Board, continues to serve as the Independent Lead Director, a
position he has held since February 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 an information source for directors and management; and
carrying out responsibilities as the Board may delegate from time to time.
AUDIT COMMITTEE
We have a separately designated standing 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 and Mark Duff, is “independent”
within the meaning of applicable Nasdaq rules. Each of Dr. Centofanti and Mark Duff 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 2023. Members of the
Compensation Committee during 2023 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
82
Commission regulations.
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
(Chairperson), Kerry C. Duggan, Joe R. Reeder, and Zach P. Wamp, who replaced Mark A. Zwecker,
effective October 19, 2023.
The Board has adopted a written charter for each of the Audit Committee, the Compensation Committee, the
Governance and Nominating Committee, and the Strategic Advisory Committee, 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
Mr. Mark Duff
Mr. Ben Naccarato
Dr. Louis Centofanti
Mr. Richard Grondin
Mr. Andrew Lombardo (1)
AGE
61
61
80
65
64
POSITION
President and CEO
CFO, EVP, and Secretary
EVP of Strategic Initiatives
EVP of Waste Treatment Operations
EVP of Nuclear and Technical Services
(1) Mr. Andrew Lombardo retired from the position of EVP of Nuclear and Technical Services effective January 1,
2024, a position he had held since January 2020. Upon Mr. Lombardo’s retirement from the position of EVP of
Nuclear and Technical Services, he no longer is considered an executive officer of the Company. Mr. Lombardo
remains employed by the Company at a reduced capacity, and assists with the transition of his former
responsibilities as well as contributing to certain business development matters.
Mr. Mark Duff
See “Director – Mark J. Duff” in this section for information on Mr. Duff.
Mr. Ben Naccarato
Mr. Naccarato has served as the Company’s CFO since February 2009. Mr. Naccarato joined the Company
in September 2004, holding the positions of Vice President of Finance for the Company’s Industrial
Segment until May 2006, when he was named Vice President, Corporate Controller/Treasurer. Mr.
Naccarato has over 35 years of experience in senior financial positions in the waste management and used
oil industries. Mr. Naccarato was the CFO of a privately-held company in the fuel distribution and used
waste oil 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 the Audit
Committee, the Compensation Committee, and the Strategic Initiatives 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.
Dr. Louis Centofanti
See “Director – Dr. Louis F. Centofanti” in this section for information on Dr. Centofanti.
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,
83
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 2023 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).
Schelhammer Capital Bank AG, a banking institution regulated by the banking regulations of Austria, has
represented to the Company that as of February 1, 2024, it holds of record as a nominee for, and as an agent
of, certain accredited investors, 1,837,572 shares of our Common Stock. Schelhammer Capital Bank AG
has also represented to the Company that none of the investors, individually or as a group, as the term
“group” is defined under Rule 13d-5(b) of the Exchange Act, beneficially owns more than 4.9% of our
Common Stock. Additionally, the investors for whom Schelhammer 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. 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 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 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 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 Matters – Security Ownership of Certain Beneficial Owners” for
a discussion of Schelhammer Capital Bank AG’s current record ownership of our securities).
84
Code of Ethics
Our Code of Business Conduct and Ethics (“Code of Ethics”), which applies to our Board and all our
employees, including our CEO and our senior financial officers, complies with applicable SEC rules and
Nasdaq listing standards. and is available on our website at 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 our CEO 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.
ITEM 11.
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the total compensation of the Company’s named executive officers
(“NEOs”) for the fiscal years ended December 31, 2023, 2022 and 2021.
Name and Principal Position
Year
Salary
Non-Equity
Incentive Plan
Compensation
($) (4)
All other
Compensation
($) (5)
Total
Compensation
($)
Mark Duff
President and CEO
Ben Naccarato
EVP and CFO
Dr. Louis Centofanti
EVP of Strategic Initiatives
Andy Lombardo
(1)
EVP of Nuclear & Technical Services
Richard Grondin
EVP of Waste Treatment Operations
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
Bonus
($)
($)
382,367
374,870
350,341
310,867
304,772
284,830
259,060
253,980
237,361
Option
Awards
($) (3)
140,840
175,518
80,480
87,759
70,207
87,759
60,360
126,990
310,867
50,000
(2)
60,360
304,772
284,830
266,458
261,233
244,140
85
60,360
130,617
87,759
187,435
152,386
152,386
37,453
41,270
37,121
51,744
51,484
45,440
39,015
38,776
35,836
16,212
15,088
15,500
40,890
38,240
33,943
748,095
416,140
562,980
595,477
356,256
418,029
485,425
292,756
343,404
589,825
319,860
388,089
498,325
299,473
365,842
(1) Mr. Andrew Lombardo retired from the position of EVP of Nuclear and Technical Services effective January 1, 2024. Upon
Mr. Lombardo’s retirement from the position of EVP of Nuclear and Technical Services, he no longer was an executive
officer of the Company. Mr. Lombardo remains employed by the Company at a reduced capacity, and assists with the
transition of his former responsibilities as well as contributing to certain business development matters. Amounts reflected in
the table reflects compensation earned by Mr. Lombardo as EVP of Nuclear and Technical Services.
(2)
(3)
(4)
(5)
Reflects a discretionary bonus earned by Mr. Lombardo which was approved by the Company’s Compensation Committee.
Remaining $25,000 of the $50,000 was paid in January 2024.
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 “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.”
Represents performance compensation earned under the Company’s 2023 Management Incentive Plans (“MIPs”). The MIP
for each individual in the table is described under the heading ”2023 MIPs.” Compensation earned under the 2023 MIPs is to
be paid on or about 90 days after year-end, or sooner based on final Form 10-K filing.
The amount shown for 2023 includes a monthly automobile allowance, insurance premiums (health, disability and life) paid
by the Company on behalf of the NEO, and 401(k) matching contributions.
Name
Mark Duff
Ben Naccarato
Dr. Louis Centofanti
Andy Lombardo
Richard Grondin
$
$
$
$
$
Insurance
Premium
Auto Allowance
22,107
35,244
24,390
24,390
$
$
$
$
$
9,000
9,000
9,000
9,000
9,000
$
$
$
$
$
401(k) match
6,346
7,500
5,625
7,212
7,500
$
$
$
$
$
Total
37,453
51,744
39,015
16,212
40,890
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.
Summary
Average Summary
Compensation T able (SCT ) Compensation Compensat ion T able
T otal for Principal
Actually Paid
Year
(a)
Executive Officer (PEO)
(b)
(1)
to PEO
(2)
(c)
T otal for Non-
(3)
PEO NEOs
(d)
Average
Compensat ion
Actually Paid
Value of Initial
Fixed $100
Investment Based On
T otal Shareholder
to Non-PEO NEOs
(4)
(e)
(5)
Return
(f)
Net income
(6)
(loss)
(g)
2023
$
748,095
$
999,730
$
542,263
$
661,212
$
132
$
485,000
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” under Item
402(v) of Regulation S-K:
86
Reported
Summary Compensation T able
T otal for P EO
($)
$
748,095
Reported
Value of Equity
Awards (a)
($)
(140,840)
$
Equit y
Award
Adjustments (b)
($)
Compensation Act ually
P aid to PEO
($)
$
392,475
$
999,730
$
416,140
$
-
$
(139,155)
$
276,985
$
562,980
$
(175,518)
$
138,780
$
526,242
Year
2023
2022
2021
(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 End Fair
Value of
Out st anding and
Unvest ed Equit y
Awards Grant ed
in t he Year
($)
$
245,070
Year over Year
Change in Fair
Value of
Out st anding and
Unvest ed Equit y
Award Grant ed in
Prior Years
($)
$
101,015
Fair Value as of
Vest ing Dat e of
Equit y Awards
Grant ed and
Vest ed in t he
Year
($)
$
-
Year over Year
Change in Fair
Value of Equit y
Award Grant ed in
Prior Years
t hat Vest ed in t he
Year
($)
$
46,390
Year
2023
Fair Value at the
End of t he Prior
Year of Equit y
Awards t hat
Failed t o Meet
Vest ing
Condit ions in t he
Year
($)
$
-
Value of Dividends or
ot her Earnings Paid
on St ock or Opt ion
Awards not Ot herwise
Reflected in Fair
Value or T ot al
Compensat ion
($)
$
-
T ot al
Equit y
Award
Adjust ment s
($)
$
392,475
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.
(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
Summary Compensation T able
T otal for Non-PEO NEOs
($)
$
542,263
Average Reported
Value of Equity
Awards
($)
$
(65,390)
Average Equity
Award
Adjustments (a)
($)
Average
Compensation Actually
Paid to Non-PEO NEOs
($)
$
184,339
$
661,212
$
317,086
$
-
$
(66,341)
$
250,745
$
378,841
$
(83,371)
$
69,033
$
364,503
Year
2023
2022
2021
(a) The amount deduced or added in calculating the total average equity adjustments are as follows:
87
Average
Year End Fair
Value of
Out st anding and
Unvest ed Equit y
Awards Grant ed
in t he Year
($)
Average
Year over Year
Change in Fair
Value of
Out st anding and
Unvest ed Equit y
Award Grant ed in
Prior Years
($)
$
113,783
$
48,478
Average
Fair Value as of
Vest ing Date of
Equit y Awards
Grant ed and
Vest ed in the
Year
($)
$
-
Average
Year over Year
Change in Fair
Value of Equit y
Award Grant ed in
Prior Years
t hat Vest ed in t he
Year
($)
$
22,078
Average
End of t he Prior
Year of Equit y
Awards that
Failed t o Meet
Vest ing
Condit ions in t he
Year
($)
$
-
Average
Value of Dividends or
ot her Earnings Paid
on St ock or Opt ion
Awards not Ot herwise
Reflect ed in Fair
Value or T otal
Compensat ion
($)
$
-
Average
T ot al
Equit y
Award
Adjust ment s
($)
$
184,339
Year
2023
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 income (loss) 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.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth unexercised options held by the NEOs as of the fiscal year-end.
Outstanding Equity Awards at December 31, 2023
Option Awards
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
20,000
20,000
12,000
10,000
12,000
8,000
6,000
10,000
10,000
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
5,000
30,000
70,000
3,000
15,000
40,000
3,000
12,000
30,000
2,000
15,000
30,000
2,000
15,000
30,000
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
3.150
7.005
3.950
3.150
7.005
3.950
3.150
7.005
3.950
3.150
7.005
3.950
3.150
7.005
3.950
1/17/2025
10/14/2027
1/19/2029
1/17/2025
10/14/2027
1/19/2029
1/17/2025
10/14/2027
1/19/2029
1/17/2025
10/14/2027
1/19/2029
1/17/2025
10/14/2027
1/19/2029
Name
Mark Duff
Ben Naccarato
Dr. Louis Centofanti
Andy Lombardo
Richard Grondin
(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 April 20, 2023, 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
88
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) 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.
(3) 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.
(4) Incentive stock option granted on January 19, 2023 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 2023:
Name
Mark Duff
Numbe r of Share s
Acqui re d on Exe rci se (#)
66,968
Ben Naccarat o
33,484
(1)
(2)
Louis Cent ofant i
Andy Lombardo
Richard Grondin
33,484
(3)
8,398
(4)
12,882
5,509
(5)
(6)
Val ue Re al iz e d
on Exe rci se ($)
740,000
370,000
(1)
(2)
370,000
(3)
100,740
(4)
130,300
55,720
(5)
(6)
$
$
$
$
$
$
(1) On May 22, 2023, Mr. Duff exercised 100% of his ISO granted to him on July 27, 2017 under the Company’s 2017 Stock Option
Plan for the purchase of up to 100,000 shares (Option Shares) of the Company’s Common Stock at $3.65 per share. As permitted
by the 2017 Stock Option Plan, Mr. Duff elected to pay the exercise price of the Option Shares by having the Company withhold
from the Option Shares a number of shares having a fair market value equal to the aggregate exercise price of $365,000. Since the
fair market value of the Company’s Common Stock on May 22, 2023, (as determined in accordance with the 2017 Stock Option
Plan) was $11.05 per share, the Company withheld 33,032 shares of Common Stock ($365,000 divided by $11.05) to pay the
aggregate exercise price for the Option Shares and issued 66,968 shares to Mr. Duff. Realized value on this exercise was
determined based on the difference between the (a) exercise price ($3.65) per share of the Option Shares multiplied by the
100,000 Option Shares exercised, and (b) the market value ($11.05) on the date of exercise of the Option Shares times the
100,000 Option Shares exercised.
(2) On May 22, 2023, Mr. Naccarato exercised 100% of his ISO granted to him on July 27, 2017 under the Company’s 2017 Stock
Plan for the purchase of up to 50,000 shares (Option Shares) of the Company’s Common Stock at $3.65 per share. As permitted
by the 2017 Stock Option Plan, Mr. Naccarato elected to pay the exercise price of the Option Shares by having the Company
withhold from the Option Shares a number of shares having a fair market value equal to the aggregate exercise price of $182,500.
Since the fair market value of the Company’s Common Stock on May 22, 2023, (as determined in accordance with the 2017
Stock Option Plan) was $11.05 per share, the Company withheld 16,516 shares of Common Stock ($182,500 divided by $11.05)
to pay the aggregate exercise price for the Option Shares and issued 33,484 shares to Mr. Naccarato. Realized value on this
exercise was determined based on the difference between the (a) exercise price ($3.65) per share of the Option Shares multiplied
by the 50,000 Option Shares exercised, and (b) the market value ($11.05) on the date of exercise of the Option Shares times the
50,000 Option Shares exercised.
(3) On May 22, 2023, Dr. Louis Centofanti exercised 100% of his ISO granted to him on July 27, 2017 under the Company’s 2017
Stock Plan for the purchase of up to 50,000 shares (Option Shares) of the Company’s Common Stock at $3.65 per share. As
permitted by the 2017 Stock Option Plan, Dr. Centofanti elected to pay the exercise price of the Option Shares by having the
Company withhold from the Option Shares a number of shares having a fair market value equal to the aggregate exercise price of
$182,500. Since the fair market value of the Company’s Common Stock on May 22, 2023, (as determined in accordance with the
2017 Stock Option Plan) was $11.05 per share, the Company withheld 16,516 shares of Common Stock ($182,500 divided by
$11.05) to pay the aggregate exercise price for the Option Shares and issued 33,484 shares to Dr. Centofanti. Realized value on
this exercise was determined based on the difference between the (a) exercise price ($3.65) per share of the Option Shares
multiplied by the 50,000 Option Shares exercised, and (b) the market value ($11.05) on the date of exercise of the Option Shares
times the 50,000 Option Shares exercised.
(4) On March 28, 2023, Mr. Lombardo exercised 100% of his remaining ISO granted to him on October 19, 2017 under the
Company’s 2017 Stock plan for the purchase of up to 12,000 shares (Option shares) of the Company’s Common Stock at $3.60
per share. As permitted by the 2017 Stock Option Plan, Mr. Lombardo elected to pay the exercise price of the Option Shares by
having the Company withhold from the Option Shares a number of shares having a fair market value equal to the aggregate
89
exercise price of $43,200. Since the fair market value of the Company’s Common Stock on March 28, 2023, (as determined in
accordance with the 2017 Stock Option Plan) was $11.995 per share, the Company withheld 3,602 shares of Common Stock
($43,200 divided by $11.995) to pay the aggregate exercise price for the Option Shares and issued 8,398 shares to Mr. Lombardo.
Realized value on this exercise was determined based on the difference between the (a) exercise price ($3.60) per share of the
Option Shares multiplied by the 12,000 Option Shares exercised, and (b) the market value ($11.995) on the date of exercise of
the Option Shares times the 12,000 Option Shares exercised.
(5) On October 2, 2023, Mr. Grondin exercised 100% of an ISO granted to him on October 19, 2017 under the Company’s 2017
Stock Option Plan for the purchase of up to 20,000 shares (Option Shares) of the Company’s Common Stock at $3.60 per share.
As permitted by the 2017 Stock Option Plan, Mr. Grondin elected to pay the exercise price of the Option Shares by having the
Company withhold from the Option Shares a number of shares having a fair market value equal to the aggregate exercise price of
$72,000. Since the fair market value of the Company’s Common Stock on October 2, 2023, (as determined in accordance with the
2017 Stock Option Plan) was $10.115 per share, the Company withheld 7,118 shares of Common Stock ($72,000 divided by
$10.115) to pay the aggregate exercise price of the option and issued 12,882 shares to Mr. Grondin. Realized value on this
exercise was determined based on the difference between the (a) exercise price ($3.60) per share of the Option Shares multiplied
by the 20,000 Option Shares exercised, and (b) the market value ($10.115) on the date of exercise of the Option Shares times the
20,000 Option Shares exercised.
(6) On October 2, 2023, Mr. Grondin exercised the vested portion of an ISO granted to him on January 17, 2019 under the
Company’s 2017 Stock Option Plan for the purchase of 8,000 shares (Option Shares) of the Company’s Common Stock at $3.15
per share. As permitted by the 2017 Stock Option Plan, Mr. Grondin elected to pay the exercise price of the Option Shares by
having the Company withhold from the Option Shares a number of shares having a fair market value equal to the aggregate
exercise price of $25,200. Since the fair market value of the Company’s Common Stock on October 2, 2023, (as determined in
accordance with the 2017 Stock Option Plan) was $10.115 per share, the Company withheld 2,491 shares of Common Stock
($25,200 divided by $10.115) to pay the aggregate exercise price of the option and issued 5,509 shares to Mr. Grondin. Realized
value on this exercise was determined based on the difference between the (a) exercise price ($3.15) per share of the Option
Shares multiplied by the 8,000 Option Shares exercised, and (b) the market value ($10.115) on the date of exercise of the Option
Shares times the 8,000 Option Shares exercised.
Employment Agreements
On April 20, 2023, upon recommendation by the Compensation Committee and approval by the Board, the
Company entered into employment agreements with each of Mark Duff, President and CEO, Ben
Naccarato, EVP and CFO, Dr. Louis Centofanti, EVP of Strategic Initiatives, Andrew Lombardo, EVP of
Nuclear and Technical Services, and Richard Grondin, EVP of Waste Treatment Operations (collectively
the “New Employment Agreements” and each, individually, a “New Employment Agreement”).” The
Company had previously entered into employment agreements with each of Mark Duff, Ben Naccarato, Dr.
Louis Centofanti, Andrew Lombardo and Richard Grondin on July 22, 2020, all five of which agreements
were due to expire on July 22, 2023, but which were terminated effective April 20, 2023 upon the execution
of the New Employment Agreements.
Each of the New Employment Agreements, which are substantially identical except for compensation, are
effective April 20, 2023. Under the New Employment Agreements, each of these executive officers is
provided an annual salary, which annual salary may be increased from time to time, but not reduced, as
determined by the Compensation Committee. In addition, each of these executive officers is entitled to
participate in the Company’s broad-based benefits plans and to certain performance compensation payable
under separate MIPs as approved by the Company’s Compensation Committee and the Company’s Board.
The Company’s Compensation Committee and the Board approved individual 2023 MIPs on January 19,
2023 (which were effective January 1, 2023 and applicable for the 2023 fiscal year) for each of the
executive officers (see discussion of each of the 2023 MIPs below under “2023 MIPs”).
Each of the New Employment Agreements is effective for three years from April 20, 2023 (the “Initial
Term”) unless earlier terminated by the Company or by the executive officer. At the end of the Initial Term
of each New Employment Agreement, each New 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 officer provides written notice not to extend the terms of the New Employment Agreement.
Mr. Andrew Lombardo retired from the position of EVP of Nuclear and Technical Services effective
January 1, 2024. Upon Mr. Lombardo’s retirement from the position of EVP of Nuclear and Technical
Services, he no longer was an executive officer of the Company. Upon his retirement as EVP of Nuclear
and Technical Services, his employment agreement dated April 20, 2023, was terminated effective January
1, 2024. Mr. Lombardo remains employed by the Company at a reduced capacity, and assists with the
transition of his former responsibilities as well as contributing to certain business development matters.
90
Pursuant to the New Employment Agreements, if the executive officer’s employment is terminated due to
death, disability or for cause (as defined in the agreements), 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 executive
officer’s MIP with respect to the fiscal year immediately preceding the date of termination. In the event that
an executive officer’s employment is terminated due to death, the Company will also pay a lump-sum
payment (the “Cash Medical Continuation Benefit”) equal to eighteen times the monthly premium that
would be required to be paid, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”), to continue group health coverage for the executive officer’s eligible covered
dependents in effect on the date of the executive officer’s termination of employment, based on the
premium for the first month of COBRA coverage. Such cash payment will be taxable and will be made
regardless of whether the executive officer’s eligible covered dependents elect COBRA continuation
coverage.
If the executive officer 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 agreements), the Company will pay the
executive officer Accrued Amounts, (a) two years of full base salary, plus (b) (i) two times the performance
compensation (under the executive officer’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, or (ii) if performance
compensation earned with respect to the fiscal year immediately preceding the date of termination has
already been paid 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, and (c) the Cash Medical Continuation Benefit. If the executive officer terminates his
employment for a reason other than for good reason, the Company will pay to the executive officer an
amount equal to the Accrued Amounts plus any performance compensation payable pursuant to the MIP
applicable to such executive officer.
Additionally, in the event of a Change in Control (as defined in the agreements), all outstanding stock
options to purchase the 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 an executive officer terminates his employment for “good reason” (as defined in
the agreements) or is terminated by the Company without cause, all outstanding stock options to purchase
common stock held by the 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 officer’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)).
Potential Payments Upon Termination or Change in Control
The following table sets forth the potential (estimated) payments and benefits to which each executive
officer would be entitled upon termination of employment by the executive officer 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 Agreements with the Company, assuming each circumstance described below
occurred on December 31, 2023, the last day of our most recent fiscal year. Such potential payments include
any Accrued Amounts (accrued base salary earned for 2023 but paid in 2024, as well as accrued unused
vacation/sick time and other vested benefits under the Company plans in which the executive officer
participates). The executive officer is not entitled to payment of any benefits upon termination for cause or
resignation without good reason other than for Accrued Amounts.
91
Name and Principal Position
Potential Payment/Benefit
Mark Duff
President and CEO
Base salary and Accrued Amounts
Performance compensation
Stock Options
Cash Medical Benefit Cotinuation
Ben Naccarato
EVP and CFO
Base salary and Accrued Amounts
Performance compensation
Stock Options
Cash Medical Benefit Cotinuation
Dr. Louis Centofanti
EVP of Strategic Initiatives
Base salary and Accrued Amounts
Performance compensation
Stock Options
Cash Medical Benefit Cotinuation
Andy Lombardo
EVP of Nuclear and Technical Services
Base salary and Accrued Amounts
Performance compensation
Stock Options
Cash Medical Benefit Cotinuation
Richard Grondin
EVP of Waste Treatment Operations
Base salary and Accrued Amounts
Performance compensation
Stock Options
Cash Medical Benefit Cotinuation
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Good Reason or by
Company Without
Cause
Change in Control
of the Company
791,176
374,870
435,650
32,814
682,857
304,772
249,225
54,144
674,187
253,980
205,700
37,415
652,427
304,772
176,985
626,791
261,234
148,665
37,415
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
791,176
374,870
435,650
32,814
682,857
304,772
249,225
54,144
674,187
253,980
205,700
37,415
652,427
304,772
176,985
626,791
261,234
148,665
37,415
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
Represents two times the base salary of the executive officer at December 31, 2023, plus “Accrued Amounts.”
Represents two times the performance compensation earned for fiscal year 2023 (see “2023 MIPs” below).
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, 2023 times the number of options outstanding at
December 31, 2023. Benefit excludes options which were out-of-the-money at December 31, 2023.
Represents a lump-sum payment equal to eighteen times the monthly premium that would be required to be paid to continue
group health coverage for the executive officer’s eligible covered dependents in effect on the date of the executive officer’s
termination of employment as defined in the employment agreement,
2023 Executive Compensation Components
For the fiscal year ended December 31, 2023, the principal components of compensation for executive
officers were:
base salary;
performance-based incentive compensation;
perquisites.
long term incentive compensation;
retirement and other benefits; and
Based on the amounts set forth in the Summary Compensation table, during 2023, salary accounted for
approximately 52.4% of the total compensation of our NEOs, while equity option awards, MIP
compensation, bonus and other compensation accounted for approximately 47.6% of the total compensation
92
of the NEOs.
Base Salary
The NEOs, other officers, and other employees of the Company receive a base 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 business segments in
which the Company operates.
During its review of base salaries for executives, the Compensation Committee primarily considers:
market data and 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
October 19, 2023, the Compensation Committee and the Board approved a base salary increase adjustment,
effective January 1, 2024, of seven percent for the CEO and five percent for each of the CFO, EVP of
Strategic Initiatives, and the EVP of Waste Treatment Operations. The following reflects the base salary for
each of the NEOs on January 1, 2024, after the base salary increase: $417,155 for the CEO; $332,811 for
the CFO; $277,346 for the EVP of Strategic Initiatives; and $285,267 for the EVP of Waste Treatment
Operations.
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 option 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.
2023 MIPs
On January 19, 2023, the Compensation Committee and the Board approved individual MIPs for the
calendar year 2023 for each of the NEOs. Each of the MIPs was effective January 1, 2023.
The performance compensation payable under each MIP was 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 was to be paid for attaining any of the Company’s separate target objectives
unless a minimum of 75% of the EBITDA target objective was achieved. The Compensation Committee
believes 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-U.S. GAAP
(accounting principles generally accepted in the United States of America) financial measurement, as the
Company believes that this target provides a better indicator of operating performance as 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 Company’s financial performance under U.S. GAAP.
93
In formulating certain targets set forth in the MIPs, the Compensation Committee and the Board considered
the Board-approved budget for 2023, economic conditions (continued potential impact of COVID-19),
forecasts for 2023 government spending, as well as the Compensation Committee’s expectation for
performance that in its estimation would warrant payment of incentive cash compensation.
Performance compensation amounts earned under the 2023 MIPs are to be paid on or about 90 days after
year-end, or sooner, based on finalization of our audited financial statements for 2023. For 2023, a total of
approximately $750,000 was earned by the NEOs under the MIPs. See “Compensation Earned Under 2023
MIPs” below for amount earned by each NEO under his respective MIP.
The Compensation Committee retained 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 to be paid to the NEOs under the 2023 MIPs may not exceed 50% of the Company’s pre-tax net
income prior to the calculation of performance compensation.
The following schedules reflect performance compensation that was payable under each of the 2023 MIPs,
along with a description of the target objectives.
CEO MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$374,870
$187,435
$562,305
Perma-Fix Environmental Services, Inc.
2023 M anagement Incentive Plan
CEO M IP M ATRIX
Target Objectives
75%-89%
Performance Target Achieved
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
93,717
$
28,115
187,435
$
28,115
281,152
$
28,115
374,870
$
28,115
562,305
$
CFO MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$304,772
$152,386
$457,158
Perma-Fix Environmental Services, Inc.
2023 M anagement Incentive Plan
CFO M IP M ATRIX
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
76,193
$
11,429
152,386
$
11,429
198,102
$
11,429
259,056
$
11,429
304,772
$
94
EVP of Strategic Initiatives MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$253,980
$126,990
$380,970
Perma-Fix Environmental Services, Inc.
2023 M anagement Incentive Plan
EVP OF STRATEGIC INITIATIVES M IP M ATRIX
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
63,495
$
9,524
126,990
$
9,524
165,087
$
9,524
215,883
$
9,524
253,980
$
EVP of Waste Treatment Operations MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$261,233
$130,617
$391,850
Perma-Fix Environmental Services, Inc.
2023 M anagement Incentive Plan
EVP OF WASTE TREATM ENT OPERATIONS M IP M ATRIX
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
65,308
$
19,592
130,617
$
19,592
169,802
$
19,592
222,048
$
19,592
261,233
$
EVP of Nuclear and Technical Services MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$304,772
$152,386
$457,158
95
Perma-Fix Environmental Services, Inc.
2023 M anagement Incentive Plan
EVP OF NUCLEAR & TECHNICAL SERVICES M IP M ATRIX
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
76,193
$
22,858
152,386
$
22,858
198,102
$
22,858
259,056
$
22,858
$
304,772
(1) Revenue was defined as the total consolidated third-party top line revenue as publicly reported in the
Company’s 2023 financial statements. The percentage achieved was determined by comparing the
actual consolidated revenue for 2023 to the Board-approved revenue target for 2023.
(2) EBITDA was defined as earnings before interest, taxes, depreciation, and amortization from continuing
and discontinued operations. The percentage achieved was determined by comparing the actual
EBITDA to the Board-approved EBITDA target for 2023.
(3) The Health and Safety Incentive target was based upon the actual number of Worker’s Compensation
Lost Time Accidents (“WCLTA”), as provided by the Company’s Worker’s Compensation carrier. For
the EVP of Nuclear and Technical Services and the EVP of Waste Treatment Operations, the incentive
target was based on actual number of WCLTA in the Services and Treatment Segments only,
respectively. 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 2023.
Work Comp.
Claim Number
Performance
Target Achieved
3
2
1
1
1
75%-89%
90%-110%
111%-129%
130%-150%
>150%
(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 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 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
Performance
License Violations
Target Achieved
96
3
2
1
1
1
75%-89%
90%-110%
111%-129%
130%-150%
>150%
(5) CPI incentive was earned/determined by maintaining project performance metrics for all Firm Fixed
Price task orders and projects to include monitoring 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 thresholds were established for annual incentive compensation
plan calculation for 2023.
CPI
Performance
(if CCPI is)
Target Achieved
0.75-0.89
0.90-1.10
1.11-1.29
1.30-1.50
>1.50
75%-89%
90%-110%
111%-129%
130%-150%
>150%
(6) No performance incentive compensation was payable for the target objective unless a minimum of 75%
of the EBITDA target objective was achieved.
Compensation Earned Under 2023 MIPs
The following tables set forth the MIP compensation earned by the CEO, CFO, EVP of Strategic Initiatives,
EVP of Nuclear and Technical Services and the EVP of Waste Treatment Operations for fiscal year 2023:
CEO
Target Objectives:
Revenue
EBITDA
Health & Safety
Permit & License Violations
Total Performance Compensation
CFO
Target Objectives:
Revenue
EBITDA
Health & Safety
Permit & License Violations
Total Performance Compensation
Performance Target
Threshold Achieved
90%-110%
90%-110%
90%-110%
>150%
Performance Target
Threshold Achieved
90%-110%
90%-110%
90%-110%
>150%
M IP Compensation
Earned
18,744
112,461
28,115
28,115
187,435
M IP Compensation
Earned
15,239
114,289
11, 429
11,429
152,386
$
$
$
$
97
EVP of S trategic Initiatives
Target Objectives:
Revenue
EBITDA
Health & Safety
Permit & License Violations
Total Performance Compensation
EVP of Nuclear and Technical S ervices
Target Objectives:
Revenue
EBITDA
Health & Safety
CPI
Total Performance Compensation
EVP of Waste Treatment Operations
Target Objectives:
Revenue
EBITDA
Health & Safety
Permit & License Violations
Total Performance Compensation
Performance Target
Threshold Achieved
90%-110%
90%-110%
90%-110%
>150%
Performance Target
Threshold Achieved
90%-110%
90%-110%
>150%
>150%
Performance Target
Threshold Achieved
90%-110%
90%-110%
90%-110%
>150%
M IP Compensation
Earned
12,699
95,243
9,524
9,524
126,990
M IP Compensation
Earned
15,239
91,431
22, 858
22,858
152,386
M IP Compensation
Earned
13,062
78,371
19, 592
19,592
130,617
$
$
$
$
$
$
2024 MIPs
On January 18, 2024, the Compensation Committee and the Board (with Mr. Mark Duff and Dr. Louis
Centofanti abstaining) approved individual MIPs for the calendar year 2024 for each of the NEOs. Each of
the MIPs is effective January 1, 2024.
The performance compensation payable under each MIP is based upon meeting certain of the Company’s
separate target objectives during 2024 as described in each of the MIPs below, provided, however, no
performance compensation will be paid for attaining any of the Company’s separate target objectives unless
a minimum of 75% of the EBITDA target objective is achieved. In formulating such targets, the
Compensation Committee and the Board considered 2023 results, the Board-approved budget for 2024,
economic conditions, forecasts for 2024 government spending, as well as the Compensation Committee’s
expectation for performance that in its estimation would warrant payment of incentive cash compensation
Performance compensation amounts under the 2024 MIPs are to be paid on or about 90 days after year-end,
or sooner, based on finalization of our audited financial statements for 2024.
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 to be paid to the NEOs under the MIPs shall not exceed 50% of the Company’s pre-tax net income
prior to the calculation of performance compensation.
The following schedules reflect performance compensation payable under each of the MIPs, along with a
description of the target objectives.
CEO MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$417,155
$208,578
$625,733
98
Perma-Fix Environmental Services, Inc.
2024 Management Incentive Plan
CEO MIP MAT RIX
T arget Object ives
Performance T arget Achieved
75%-89%
90%-110% 111%-129%
130%-150%
>150%
Revenue (1) (6)
$
10,429
$
20,858
$
35,756
$
50,655
$
80,451
EBIT DA (2)
62,572
125,146
214,537
303,927
482,708
Health & Safety (4) (6)
15,643
31,287
31,287
31,287
31,287
P ermit & License Violations (5) (6)
15,643
104,287
$
31,287
208,578
$
31,287
312,867
$
31,287
417,156
$
31,287
625,733
$
CFO MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$332,811
$166,406
$499,217
Perma-Fix Environmental Services, Inc.
2024 M anagement Incentive Plan
CFO M IP M ATRIX
Target Objectives
Performance Target Achieved
75%-89%
90%-110%
111%-129%
130%-150%
>150%
Revenue (1) (6)
$
8,320
$
16,641
$
27,338
$
36,847
$
43,979
EBITDA (2)
62,401
124,805
164,029
221,082
263,872
70,721
141,446
191,367
257,929
307,851
100%
100%
100%
100%
100%
Performance Target Achieved
Regulatory Filing (3) (6)
24,960
24,960
24,960
24,960
24,960
$
95,681
$
166,406
$
216,327
$
282,889
$
332,811
EVP of Strategic Initiatives MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$277,346
$138,673
$416,019
Perma-Fix Environmental Services, Inc.
2024 Management Incentive Plan
EVP OF ST RAT EGIC INIT IAT IVES MIP MAT RIX
T arget Objectives
Performance T arget Achieved
75%-89%
90%-110% 111%-129%
130%-150%
>150%
Revenue (1) (6)
$
6,935
$
13,867
$
22,782
$
30,706
$
36,649
EBIT DA (2)
52,002
104,006
136,692
184,237
219,897
Health & Safety (4) (6)
5,200
10,400
10,400
10,400
10,400
Permit & License Violations (5) (6)
5,200
69,337
$
10,400
138,673
$
10,400
180,274
$
10,400
235,743
$
10,400
277,346
$
99
EVP of Waste Treatment Operations MIP:
Annualized Base Pay:
Performance Incentive Compensation Target (at 100% of Plan):
Total Annual Target Compensation (at 100% of Plan):
$285,267
$142,634
$427,901
Perma-Fix Environmental Services, Inc.
2024 Management Incentive Plan
EVP OF WAST E T REAT MENT OPERAT IONS MIP MAT RIX
T arget Objectives
Performance T arget Achieved
75%-89%
90%-110%
111%-129% 130%-150%
>150%
Revenue (1) (6)
$
7,132
$
14,263
$
20,376
$
28,527
$
34,640
EBIT DA (2)
42,789
85,581
122,257
171,160
207,837
Health & Safety (4) (6)
10,698
21,395
21,395
21,395
21,395
Permit & License Violations (5) (6)
10,698
71,317
$
21,395
142,634
$
21,395
185,423
$
21,395
242,477
$
21,395
285,267
$
(1) Revenue is defined as the total consolidated third-party top line revenue as publicly reported in the
Company’s 2024 financial statements. The percentage achieved is determined by comparing the actual
consolidated revenue for 2024 to the Board-approved revenue target for 2024.
(2) EBITDA is defined as earnings before interest, taxes, depreciation, and amortization from continuing
and discontinued operations. The percentage achieved is determined by comparing the actual EBITDA
to the Board-approved EBITDA target for 2024.
(3) Regulatory Filing Incentive Target is based on meeting all deadlines (including allowable extension
granted by the SEC) for the Form 10-K, Form 10-Q and 8-Ks required by SEC (Securities and
Exchange Commission).
(4) The Health and Safety Incentive target was based upon the actual number of Worker’s Compensation
Lost Time Accidents (“WCLTA”), as provided by the Company’s Worker’s Compensation carrier. For
the EVP of Waste Treatment Operations, the incentive target is based on actual number of WCLTA in
the Treatment Segments only. 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 2024.
Work Comp.
Claim Number
Performance
Target Achieved
3
2
1
1
1
75%-89%
90%-110%
111%-129%
130%-150%
>150%
(5) 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 2024 from a local,
100
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
Performance
License Violations
Target Achieved
3
2
1
1
1
75%-89%
90%-110%
111%-129%
130%-150%
>150%
(6) No performance incentive compensation will be payable for the target objective unless a minimum of
75% of the EBITDA target objective is achieved.
Long-Term Incentive Compensation
Employee Stock Option Plans
The 2017 Stock Option Plan (“2017 Plan”) encourages 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 Plan authorizes the grant of Non-Qualified Stock Options (“NQSOs”) and Incentive
Stock Options (“ISOs”) for the purchase of our Common Stock.
The 2017 Plan was adopted 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 have outstanding options from the Company’s 2017 Plan (See “Item 11 – Executive
Compensation – Outstanding Equity Awards at Fiscal Year-End - Outstanding Equity Awards at December
31, 2023,” for outstanding options under the 2017 Plan for each of our NEOs).
In cases of termination of an executive officer’s employment due to death, by the executive for “good
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
101
further discussion of the exercisability term of these options in each of these circumstances in
“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 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.
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. At our discretion, we may make matching contributions based on the
employee’s elective contributions. Company contributions vest over a period of five years. In 2023, the
Company contributed approximately $576,000 in 401(k) matching funds, of which approximately $34,000
was for our NEOs (see the “Summary Compensation” table in this section for 401(k) matching fund
contributions made for the NEOs for 2023).
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.
Compensation of Directors
Directors who are employees receive no additional compensation for serving on the Board or its
committee(s). In 2023, the Company provided the following annual compensation to each non-employee
director for service on the Board and the committee(s) for which he/she serves:
a quarterly fee of $11,500;
an additional quarterly fee of $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 was
not eligible to receive a quarterly fee for serving as the Chairman of any the aforementioned
committees;
102
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 attended and a $500 fee for meeting attendance via
conference call;
Under the 2003 Outside Directors Stock Plan (“2003 Outside Directors Plan”), each director may elect to
have either 65% or 100% of such fees payable in Common Stock, with the balance, if any, payable in cash.
Each non-employee director was also granted a NQSO to purchase up to 10,000 shares of Common Stock
upon reelection at the 2023 Annual Meeting of Stockholders, with vesting at 25% per year, beginning on the
first anniversary date of the grant, with each option having a 10-year term.
Dr. Louis Centofanti, a current member of the Board, is not eligible to receive compensation for his service
as a director of the Company as he is an employee of the Company. As the Company’s President and CEO,
Mr. Duff, who was elected by the Company’s Board as a Board member effective April 20, 2023, also is not
eligible to receive compensation for his service as a director of the Company (see “Summary
Compensation” table in this section for each of Dr. Centofanti’s and Mark Duff’s annual salary and other
compensation as an employee of the Company).
The table below summarizes the director compensation expenses recognized by the Company for director
options and stock awards (resulting from fees earned) for the year ended December 31, 2023. The terms of
the 2003 Outside Directors Plan are further described below under “2003 Outside Directors Plan.”
Director Compensation
Fees
Earned or
Paid
In Cash
($) (1)
Stock
Awards
($) (2)
Option
Awards
($) (4)
—
18,550
—
—
31,850
18,550
26,425
67,994
45,930
90,003
82,673
78,861
45,923
65,420
64,600
64,600
64,600
64,600
64,600
64,600
64,600
(3)
(3)
(3)
(3)
(3)
(3)
(3)
Non-Equity
Incentive Plan
Compensation
Nonqualified
Deferred
Compensation
Earnings
All Other
Compensation
Total
($)
—
—
—
—
—
—
—
($)
—
—
—
—
—
—
—
($)
—
—
—
—
—
—
—
($)
132,594
129,080
154,603
147,273
175,311
129,073
156,445
Name
Thomas P. Bostick
Kerry C. Duggan
Joseph T. Grumski
Joe R. Reeder
Larry M. Shelton
Zach P. Wamp
Mark A. Zwecker
(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 director’s fee elected to be paid in Common Stock under the 2003 Outside Directors Plan, which values are included under
“Stock Awards.”
(2)
(3)
(4)
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.
Reflects options granted under the Company’s 2003 Outside Directors Plan resulting from re-election to the Board on July 20,
2023. Options are for a 10-year period with an exercise price of $9.81 per share and 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 $6.46) on grant date times the number of options granted, which was 10,000 for each
director, pursuant to ASC 718, “Compensation – Stock Compensation.”.
The following table reflects the aggregate number of outstanding NQSOs held by the Company’s directors at December 31,
2023. As an employee of the Company or its subsidiaries, neither Dr. Centofanti nor Mark Duff is eligible to participate in the
103
2003 Outside Directors Plan. Options reflected below for each of Dr. Centofanti and Mark Duff were granted from the 2017
Plan as discussed previously:
Name
Dr. Louis Centofanti
Thomas P. Bostick
Mark J. Duff
Kerry C. Duggan
Joseph T. Grumski
Joe R. Reeder
Larry M. Shelton
Zach P. Wamp
Mark A. Zwecker
Total
Options Outstanding at
December 31, 2023
65,000
36,000
145,000
36,000
38,400
30,000
46,800
43,200
46,800
487,200
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
Plan, each outside director is granted a 10-year NQSO to purchase up to 20,000 shares of Common Stock on
the date such director is initially elected to the Board, and receives on each re-election date a NQSO to
purchase up to another 10,000 shares of our Common Stock, with the exercise price being the fair market
value of the Common Stock preceding the option grant date. Common Stock shares subject to option
granted vest at 25% per year, beginning on the first anniversary date of the grant and no option shall be
exercisable after the expiration of ten years from the date the option is granted. As of December 31, 2023,
options to purchase 300,000 shares of Common Stock were outstanding under the 2003 Outside Directors
Plan, of which 142,500 were vested.
As a member of the Board, each director may elect to receive either 65% or 100% of his or her 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 2023, fees
earned by our outside directors totaled approximately $572,000.
In the event of a “change of control” (as defined in the 2003 Outside Directors Plan) or by reason of the
director’s death or Disability (as defined), 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
Schelhammer Capital Bank AG, a banking institution regulated by the banking regulations of Austria, has
represented to the Company that as of February 1, 2024, it holds of record as a nominee for, and as an agent
of, certain accredited investors, 1,837,572 shares of our Common Stock. None of the Common Stock held
by Schelhammer Capital Bank AG for the account of any single investor represents more than 4.9% of our
Common Stock and, to the best knowledge of Schelhammer Capital Bank AG, as far as stocks held by such
investors in accounts with Schelhammer Capital Bank AG, none of such 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 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 AG’s name because (a) Schelhammer
Capital Bank AG holds the Common Stock as a nominee only, (b) Schelhammer Capital Bank AG has
104
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 AG.
Notwithstanding the previous paragraph, if Schelhammer Capital Bank AG's representations to us described
above are incorrect or if the investors for whom Schelhammer Capital Bank AG acts as nominee are acting
as a group, then Schelhammer Capital Bank AG or a group of such 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 1, 2024:
Name of
Record Owner
Schelhammer Capital Bank AG
Title
Of Class
Common
Amount and
Nature of
Ownership
1,837,572(+)
Percent
Of
Class (*)
13.44%
(*) This calculation is based upon 13,671,022 shares of Common Stock outstanding on February 12, 2024,
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.
(+) 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 accredited investors. As of February 1, 2024, the
date of 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 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. Schelhammer Capital Bank 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 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. Accordingly, we do not believe that
is
Schelhammer Capital Bank AG
Goldschmiedgasse 3, A-1010 Wien, Austria.
is our affiliate. Schelhammer Capital Bank AG's address
Security Ownership of Management
The following table sets forth information as to the shares of voting securities beneficially owned as of
February 12, 2024, 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.
105
Name of Beneficial Owner (2)
Thomas P. Bostick (3)
Kerry C. Duggan (4)
Dr. Louis F. Centofanti (5)
Joseph T. Grumski (6)
Joe R. Reeder (7)
Larry M. Shelton (8)
Zack P. Wamp (9)
Mark A. Zwecker (10)
Mark Duff (11)
Richard Grondin (12)
Ben Naccarato (13)
Directors and Executive Officers as a Group (11 persons)
Amount and Nature
of Beneficial Owner (1)
48,323
32,687
298,009
64,878
234,318
193,943
62,996
249,415
169,952
37,427
70,877
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
1,462,825 (14)
Percent of Class (1)
*
*
2.18%
*
1.71%
1.42%
*
1.82%
1.24%
*
*
10.51%
*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) LTG (ret.) Bostick has sole and voting and investment power over all shares shown, which include: (i)
34,823 shares of Common Stock held of record by LTG (ret.) Bostick, and (ii) options to purchase 13,500
shares which are immediately exercisable.
(4) Ms. Duggan has sole and voting and investment power over all shares shown, which include: (i) 19,187
shares of Common Stock held of record by Ms. Duggan, and (ii) options to purchase 13,500 shares which
are immediately exercisable.
(5) These shares include (i) 206,209 shares held of record by Dr. Centofanti, (ii) immediately exercisable
options to purchase 29,000 shares, and (iii) 62,800 shares held by Dr. Centofanti's wife. Dr. Centofanti has
sole voting and investment power over all such shares, except for the shares held by Dr. Centofanti's wife,
over which Dr. Centofanti shares voting and investment power.
(6) Mr. Grumski has sole and voting and investment power over all shares shown, which include: (i) 48,978
shares of Common Stock held of record by Mr. Grumski, and (ii) options to purchase 15,900 shares which
are immediately exercisable.
(7) Mr. Reeder has sole voting and investment power over all shares shown, which include: (i) 234,318
shares of Common Stock held of record.
(8) Mr. Shelton has sole voting and investment power over all shares shown, which include: (i) 169,643
shares of Common Stock held of record by Mr. Shelton, and (ii) options to purchase 24,300 shares which
are immediately exercisable.
(9) Mr. Wamp has sole voting and investment power over all shares shown, which include: (i) 42,296
shares of Common Stock held of record by Mr. Wamp, and (ii) options to purchase 20,700 shares which are
immediately exercisable.
(10) Mr. Zwecker has sole voting and investment power over all shares shown, which include: (i) 225,115
shares of Common Stock held of record by Mr. Zwecker, and (ii) options to purchase 24,300 shares which
are immediately exercisable.
106
(11) Mr. Duff has sole voting and investment power over all shares shown, which include: (i) 110,952 shares
of Common Stock held of record by Mr. Duff, and (ii) immediately exercisable options to purchase 59,000
shares.
(12) Mr. Grondin has sole voting and investment power over all shares shown, which include: (i) 19,427
shares of Common Stock held of record by Mr. Grondin, and (ii) immediately exercisable options to
purchase 18,000 shares.
(13) Mr. Naccarato has sole voting and investment power over all shares shown, which include: (i) 37,877
shares of Common Stock held of record by Mr. Naccarato, and (ii) immediately exercisable options to
purchase 33,000 shares.
(14) Amount includes options to purchase 251,200 shares which are immediately exercisable.
Equity Compensation Plans
The following table sets forth information as of December 31, 2023, with respect to our equity
compensation plans.
Equity Compensation Plan
Number of securities to
be issued upon exercise
of outstanding options
warrants and rights
(a)
Weighted average
exercise price of
outstanding
options, warrants
and rights
(b)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)
(c)
994,500
—
994,500
$5.57
—
$5.57
1,039,180
—
1,039,180
Plan Category
Equity compensation plans
approved by stockholders
Equity compensation plans not
approved by stockholders
Total
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.
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;
107
(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, provides 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.
Related Party Transactions
David Centofanti
David Centofanti serves as our Vice President of Information Systems. For such position, he received
annual compensation of $191,000 and $187,000 for 2023 and 2022, respectively. David Centofanti is the
son of Dr. Louis F. Centofanti, our EVP of Strategic Initiatives and a Board member.
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”).
108
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 reviews 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/her background, employment and affiliations, including family relationships, our Board of
Directors has determined that Ms. Kerry C. Duggan and each of Messrs. Thomas P. Bostick, Joseph T.
Grumski, Joe R. Reeder, Larry M. Shelton, Zach P. Wamp and Mark A. Zwecker is an "independent
director" as defined under the Nasdaq Marketplace Rules. Our Board of Directors has also determined that
each member of our Audit Committee, consisting of Mark A. Zwecker (Chairperson), Joseph T. Grumski,
and Larry M. Shelton, and each member of our Compensation and Stock Option Committee, consisting of
Joseph T. Grumski (Chairperson), Zach P. Wamp, and Mark A. Zwecker, satisfy 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 neither Dr. Louis Centofanti nor Mark J. Duff is deemed to be
an “independent director” because of their employment as a senior executive of the Company.
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 2023 and 2022:
Fee Type
2022
2023
Audit Fees
(1)
Tax Fees
(2)
Total
$
$
699,000
$
743,000
100,000
799,000
$
113,000
856,000
(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
(2) Fees for income tax planning, filing, and consulting.
Engagement of the Independent Auditor
To ensure that our independent registered public accounting firm is engaged only to provide audit and non-
109
audit services that are compatible with maintaining its independence, the Audit Committee has a policy that
requires the Committee to review and approve in advance all services to be provided by the Company’s
independent accounting firm before the firm is engaged to provide those services. The Audit Committee
considers non-audit services 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
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-
typically
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
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 Duff
Mark Duff
Chief Executive Officer, President and
Principal Executive Officer
Date March 13, 2024
110
By /s/ Ben Naccarato
Ben Naccarato
Chief Financial Officer and
Principal Financial Officer
Date March 13, 2024
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. Bostick
Thomas P. Bostick, Director
By /s/Dr. Louis F. Centofanti
Dr. Louis F. Centofanti, Director
By /s/Mark J. Duff
Mark J. Duff, Director
By /s/ Kerry C. Duggan
Kerry C. Duggan, Director
By /s/Joseph T. Grumski
Joseph T. Grumski, Director
By /s/ Joe R. Reeder
Joe R. Reeder, Director
Date March 13, 2024
Date March 13, 2024
Date March 13, 2024
Date March 13, 2024
Date March 13, 2024
Date March 13, 2024
By /s/ Larry M. Shelton
Date March 13, 2024
Larry M. Shelton, Chairman of the Board
By /s/ Zach P. Wamp
Zach P. Wamp, Director
By /s/ Mark A. Zwecker
Mark A. Zwecker, Director
Date March 13, 2024
Date March 13, 2024
111
Exhibit
No.
3(i)
3(ii)
4.1
4.2
4.3
4.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
EXHIBIT INDEX
Description
Restated Certificate of Incorporation, as amended, of Perma-Fix Environmental Services,
Inc., as incorporated by reference from Exhibit 3(i) to the Company’s Form 10-Q for
Quarter ended March 31, 2021 filed on May 6, 2021.
Second Amended and Restated Bylaws, as amended effective April 20, 2023, of Perma-Fix
Environmental Services, Inc., as incorporated by reference from Exhibit 3(ii) to the
Company’s 8-K filed on April 26, 2023.
Fifth Amendment to Second Amended and Restated Revolving Credit, Term Loan and
Security Agreement dated August 29, 2022, as incorporated by reference from Exhibit 4.1
to the Company’s Form 8-K filed on August 29, 2022.
Revised Second Amended and Restated Revolving Credit, Term Loan and Security
Agreement referenced as Annex A in the Fifth Amendment, as incorporated by reference
from Exhibit 4.2 to the Company’s Form 8-K filed on August 29, 2022.
Sixth Amendment to Second Amended and Restated Revolving Credit, Term Loan and
Security Agreement dated March 21, 2023, between Perma-Fix Environmental Services,
Inc. and PNC Bank, National Association, as incorporated by reference from Exhibit 4.3 to
the Company’s 2022 Form 10-K filed on March 23, 2023.
Seventh Amendment to Second Amended and Restated Revolving Credit, Term Loan and
Security Agreement dated July 31, 2023, between Perma-Fix Environmental Services, Inc.
and PNC Bank, National Association, as incorporated by reference from Exhibit 4.1 to the
Company’s Form 10-Q for the Quarter ended June 30, 2023 filed on August 3, 2023.
Term Note dated July 31, 2023, between Perma-Fix between Perma-Fix Environmental
Services, Inc. and PNC Bank, National Association, as incorporated by reference from
Exhibit 4.2 to the Company’s Form 10-Q for the Quarter ended June 30, 2023 filed on
August 3, 2023.
2003 Outside Directors' Stock Plan of the Company, as incorporated by reference from
Exhibit 10.1 to the Company’s 2019 Form 10-K filed on March 20, 2020.
First Amendment to 2003 Outside Directors Stock Plan, as incorporated by reference from
Exhibit 10.2 to the Company’s 2019 Form 10-K filed on March 20, 2020.
Second Amendment to 2003 Outside Directors Stock Plan.
Third Amendment to 2003 Outside Directors Stock Plan.
Fourth Amendment to 2003 Outside Directors Stock Plan.
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.
2017 Stock Option Plan,
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.
Second Amendment to 2017 Stock Option Plan, as incorporated by reference from
Appendix “A” to the Company’s Proxy Statement for it 2023 Annual Meeting of Stock
holders filed on June 8, 2023.
Employment Agreement dated April 20, 2023, between Mark Duff, Chief Executive
Officer, and Perma-Fix Environmental Services, Inc., as incorporated by reference from
Exhibit 99.1 to the Company’s Form 8-K filed on April 26, 2023.
Employment Agreement dated April 20, 2023, between Ben Naccarato, Chief Financial
Officer, and Perma-Fix Environmental Services, Inc., as incorporated by reference from
Exhibit 99.2 to the Company’s Form 8-K filed on April 26, 2023.
Employment Agreement dated April 20, 2023, between Dr. Louis Centofanti, EVP of
Strategic Initiatives, and Perma-Fix Environmental Services, Inc., as incorporated by
reference from Exhibit 99.3 to the Company’s Form 8-K filed on April 26, 2023.
112
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Employment Agreement dated April 20, 2023, 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 April 26, 2023.
Employment Agreement dated April 20, 2023, 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 April 26, 2023.
2024 Incentive Compensation Plan for Chief Executive Officer, effective January 1, 2024,
as incorporated by reference from Exhibit 99.1 to the Company’s Form 8-K filed on January
23, 2024. 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.
2024 Incentive Compensation Plan for Chief Financial Officer, effective January 1, 2024, as
incorporated by reference from Exhibit 99.2 to the Company’s Form 8-K filed on January
23, 2024. 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.
2024 Incentive Compensation Plan for EVP of Strategic Initiatives, effective January 1,
2024, as incorporated by reference from Exhibit 99.3 to the Company’s Form 8-K filed on
January 23, 2024. 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.
2024 Incentive Compensation Plan for EVP of Waste Treatment Operations, effective
January 1, 2024, as incorporated by reference from Exhibit 99.4 to the Company’s Form 8-
K filed on January 23, 2024. 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.
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.
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.
Incentive Stock Option Agreement dated January 17, 2019 between Perma-Fix
Environmental Services, Inc., and EVP of Strategic Initiatives, as incorporated by reference
from Exhibit 99.6 to the Company’s Form 8-K filed on January 23, 2019.
Incentive 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.
Solicitation, Offer and Award dated September 17, 2021
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.
Joint 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.
Incentive 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.
Incentive 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.
issued
113
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
Incentive 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.
Incentive 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.
Incentive 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.
Incentive 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.
Incentive 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.
Incentive 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.
Incentive 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.
Incentive 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.
31.2
21.1
23.1
31.1
10.35 Mixed Direct & Framework Contract for Services (Number -945711-IPR-2023), issued by
European Commission to Perma-Fix Environmental Services, Inc. and Campoverde Srl,
dated December 18, 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.
List of Subsidiaries
Consent of Grant Thornton, LLP
Certification by Mark Duff, Chief Executive Officer and Principal Executive Officer of the
Company pursuant to Rule 13a-14(a) and 15d-14(a).
Certification by Ben Naccarato, Chief Financial Officer and Principal Financial Officer of
the Company pursuant to Rule 13a-14(a) and 15d-14(a).
Certification by Mark Duff, Chief Executive Officer and Principal Executive Officer of the
Company furnished pursuant to 18 U.S.C. Section 1350.
Certification by Ben Naccarato, Chief Financial Officer and Principal Financial Officer of
the Company furnished pursuant to 18 U.S.C. Section 1350.
Perma-Fix Clawback Policy
XBRL Instance Document*
XBRL Taxonomy Extension Schema Document*
XBRL Taxonomy Extension Calculation Linkbase Document*
XBRL Taxonomy Extension Definition Linkbase Document*
XBRL Taxonomy Extension Labels Linkbase Document*
XBRL Taxonomy Extension Presentation Linkbase Document*
97
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
32.1
32.2
*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.
114
EXHIBIT 31.1
CERTIFICATIONS
I, Mark Duff, certify that:
1.
I have reviewed this annual report on Form 10-K of Perma-Fix Environmental Services, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of the
internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: March 13, 2024
/s/ Mark Duff
Mark Duff
Chief Executive Officer, President
and Principal Executive Officer
EXHIBIT 31.2
CERTIFICATIONS
I, Ben Naccarato, certify that:
1.
I have reviewed this annual report on Form 10-K of Perma-Fix Environmental Services, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation
of the internal control over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: March 13, 2024
/s/ Ben Naccarato
Ben Naccarato
Chief Financial Officer and
Principal Financial Officer
Corporate Information
Board of Directors
P. Bostick
Lieutenant General (U.S. Army Ret.)
Thomas
CEO of Bostick Global Strategies, LLC
(Director since 2020)(2)
Dr. Louis F. Centofanti
Executive Vice President of Strategic
Initiatives
(Director since 1991)(4)
Mark J. Duff
President and Chief Executive Officer
(Director since April 2023)
Joseph T. Grumski
Chief Executive Officer of TAS
Energy, Inc.
(Director since 2020)(1)(3)
The Honorable Joe R. Reeder
Shareholder of Greenburg
Traurig, LLP
Former Army Undersecretary
(Director since 2003)(2)(4)
Larry M. Shelton
Chairman of the Board
(Director since 2006)(1)
The Honorable Zach P. Wamp
President of Zach Wamp Consulting
Member of U.S. House of
Representatives from Tennessee's
3rd District (1995-2011)
(Director since 2018)(2)(3)(4)
Mark A. Zwecker
(Director since 1991)(1)(3)
Kerry C. Duggan
Founder and Principal of S ustainabiliD
(Director since 2021)(2)(4)
(1) Member of Audit Committee
(2) Member of Corporate Governance and
Nominating Committee
(3) Member of Compensation and Stock
(4) Member of Strategic Advisory
Option Committee
Committee
Management Team
Mark Duff
President and Chief Executive
Officer
Ben Naccarato
Executive Vice President and Chief
Financial Officer
Dr. Louis F. Centofanti
Executive Vice President of
Strategic Initiatives
Richard Grondin
Executive Vice President of Waste
Treatment Operations
Corporate Information
Executive Offices
8302 Dunwoody Place, Suite 250
Atlanta, Georgia 30350
Telephone: 770-587-9898
Transfer Agent and Registrar
Continental Stock Transfer
& Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Independent Registered
Public Accounting Firm
Grant Thornton LLP
1100 Peachtree Street NE #1200
Atlanta, Georgia 30309
Stock Listing
The common stock of Perma-Fix
Environmental Services, Inc. is listed
on Nasdaq where it is traded under
the ticker symbol PESI.
Stockholder Inquiries
Inquiries concerning stockholder records should be addressed to the Transfer Agent listed above. Comments or questions concerning the operations of the
Company should be addressed to the Secretary, Perma-Fix Environmental Services, Inc., 8302 Dunwoody Place, Suite 250, Atlanta, Georgia 30350.
Included within this Annual Report is a list briefly describing all exhibits listed in the Company’s Form 10-K. We will furnish any exhibit to a shareholder upon
receipt of a written request and payment of a specified reasonable fee, which fee shall be limited to the registrant’s reasonable expenses in furnishing such exhibit.
Each request must set forth a good-faith representation that, as of the record date for the solicitation of proxies, the person making the request was a beneficial
owner of securities of the Company entitled to vote.
The Company defines EBITDA as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before research and
development costs related to the Medical Isotope project, gain on extinguishment of debt, income from Employee Retention Credit (ERC) refund claim (net of costs
incurred), and loss on deconsolidation of subsidiary (where applicable). Both EBITDA and adjusted EBITDA are not measures of performance calculated in
accordance with accounting standards generally accepted in the United States of America (U.S. GAAP), and should not be considered in isolation of, or as a
substitute for, earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. The Company believes the
presentation of EBITDA and adjusted EBITDA is relevant and useful by enhancing the readers’ ability to understand the Company’s operating performance. The
Company’s management utilizes EBITDA and adjusted EBITDA as a means to measure performance. The Company’s meas urements of EBITDA and adjusted EBITDA
may not be comparable to similar titled measures reported by other companies. The table below reconciles EBITDA and adjusted EBITDA, both non-GAAP
measures, to GAAP numbers for income (loss) from continuing operations for the periods noted.
(In thousands)
Income (loss) from continuing operations
Adjustments:
Depreciation and amortization
Interest income
Interest expense
Interest expense—financing fees
Income tax expense (benefit)
EBITDA
Research and development costs related to medical isotope project
Gain on extinguishment of debt
Income from ERC refund claim, net (1)
Loss on deconsolidation of subsidiary
Adjusted EBITDA
(1) Net of costs incurred in connection with the ERC program in the amount of approximately $67.
Fiscal Year
2023
$ 918
2,568
(606)
323
93
17
3,313
—
—
----
—
$ 3,313
Fiscal Year
2022
$ (3,211)
2,109
(99)
175
61
(378)
(1,343)
---
---
(1,908)
---
$ (3,251)
Fiscal Year
2021
$ 1092
1,687
(26)
247
41
(3,890)
(849)
414
(5,381)
—
1,062
$(4,754)
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in the Shareholders’ letter, which have been added to this Annual Report on Form 10-K, may be deemed additional forward-looking
statements. All estimates, projections, and other statements generally identifiable by the use of the words “believe,” “expect,” “intend,” “anticipate,” “plans to” and
similar expressions (except statements of historical facts) contained therein are forward-looking statements, including but not limited to, key initiatives that will be
impactful to our business; diversify our revenue stream; our scope of work under the Joint Research Council project to ramp up in late 2025; long-term backlog; well
positioned to provide extensive waste treatment services in support of DOE’s Hanford closure strategy; accepting commercial waste to treat PFAS by the end of the
year; expanding commercial and international market opportunities; and advancing our mission. See “Special Note Regarding Forward-Looking Statements”
contained in this Form 10-K that is part of the Annual Report and our Form 10-Q for the quarter ended March 31, 2024, for discussion of factors which could cause
future outcomes to differ materially from those described herein.
The Shareholders’ letter should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in
the Form 10-K contained within this 2023 Annual Report and our Form 10-Q for the quarter ended March 31, 2024
Perma-Fix Environmental Services, Inc.
8302 Dunwoody Place, Suite 250
Atlanta, GA 30350
www.perma-fix.com