Lou Centofanti - Chairman & CEO Ben Naccarato – CFO.

Al Kaschalk - Wedbush Securities Doug Dyer - Heartland Advisors Anthony Marchese - Insiders Trend Fund Bill Nasgovitz - Heartland Funds Charles Dickenson - Private Investor.

Greetings, and welcome to the Perma-Fix Environmental Third Quarter 2014 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It’s now pleasure to introduce your host [Claire Fieldherst].

You may begin. .

Thank you. Good morning, everyone, and welcome to Perma-Fix Environmental Services third quarter conference call. On the call with us this morning are Dr. Lou Centofanti, Chairman and CEO; and Ben Naccarato, Chief Financial Officer.

The company issued a press release this morning containing third quarter financial results, which is also posted on the company's website. If you have any questions after the call or would like additional information about the company, please contact Crescendo Communications at (212) 671-1020.

I'd also like to remind everyone that certain statements contained within this conference call may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

All statements on this conference call, other than the statements 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.

These risks and uncertainties are detailed in the company's filings with the U.S. Securities and Exchange Commission. The company makes no commitment to disclose any revisions to forward-looking statements or any facts, events or circumstances after the date hereof that bear upon forward-looking statements. I'd now like to turn the call over to Dr.

Lou Centofanti. Please go ahead, Lou..

Thank you, Claire and welcome everyone. I am extremely pleased to report to you our third quarter results and the improved outlook for the rest of the year and even extending into ’15.

As we anticipated and discussed in our last quarter conference call, we saw a significant improvement in our treatment revenue which increased 42% compared to the same period last year. At the same time, our gross margin more than doubled to 33% compared to 16% for the period last year.

We are beginning to see the benefits of our efforts to streamline the organization. For the third quarter we generated $3.5 million of EBITDA and achieved $1.5 million of net income. While we're pleased with this improvement, we continue to look at additional ways to improve our operating efficiency and profitability.

On the balance sheet, we're now reporting positive cash and no revolver debt. After operating in an extremely difficult market over the past couple of years, we believe we’re now in a strong position to resume growth and maintain profitability.

One of the more exciting areas, is turning to our service segment, we’ve now seen an increase in our base revenue and the streamlining of the projects supported infrastructure has resulted in an improved profitability. As a result, we believe we will continue to see improvement within this segment going forward.

We've also been successful in expanding our commercial and international business which has been a major focus in order to diversify our revenue streams beyond the government. These initiatives are beginning to payoff. In particular we are working in Canada and maintain an office in the UK and are actively bidding in Europe.

Of course, the DOE is always an important source of revenue for us and their waste shipments have increased this year. Lastly, we are making rapid progress on advancing our new process for production of Tc-99m for use in medical imaging.

We’ve completed the spin-off of this technology into a publicly traded company, Perma-Fix Medical SA which is traded on the Warsaw Stock Exchange. Our first capital raise has closed but it’s currently in his escrow awaiting final regulatory requirements in Poland.

As we mentioned that I am very excited about this new process which we believe has the potential to reshape the entire supply chain for these isotopes in Europe, North America and around the world. We believe our process can meet global needs for Tc-99m without the use of uranium.

Our process will also help reduce environmental concerns with the current production methodologies including issues related to reprocessing, production of high level waste and other issues.

Additionally the process is less expensive and can be performed in most standard research reactors which should help solve concerns regarding global supply shortages of Tc-99m and as we said in the past, we fully validated the technology both through tests in the US -- with the University in Missouri reactor in the U.S and at POLATOM in Warsaw.

In addition, we were recently awarded Notice of Allowance by the US Patent Office which allows all our claims for the technology to produce Tc-99 as well as a composition of matter patent on our [resin]. And this is a very major milestone for the company.

We continue to advance the isotope technology and have witnessed growing interest from within the industry both in the US and Europe. And we continue to pursue strategic partners and look forward to announcing these in the near future when they unfold.

As I mentioned earlier we’re encouraged by the outlook for the fourth quarter and for early 2015, given our sales pipeline within the service segment and our backlog within the treatment segment. The backlog improved to $10.7 million, an increase of over 75% from the end of the second quarter.

We expect our fourth quarter results to be as profitable as the third quarter. Finally, a word on the election. Though it is still early lots of macro issues we review the outcome to be positive for the industry and for Perma-Fix.

So to wrap with, we are encouraged by the outlook for the fourth quarter and 2015 given our sales pipeline within the service segment and our backlog within treatment. We’ve cut significant operating expenses out of the business and continue to look for ways to further streamline the organization.

At the same time we remain focused on paying down debt and further strengthening the balance sheet. I greatly appreciate the strong support from investors that have stuck with us during this turbulent period.

At this point, I'd like to turn over the call to Ben who will give more details on the number and then I'll be back to answer questions at the conclusion of the formal remarks.

Ben?.

PNC bank debt of $9.5 million; shareholder loan debt of 2.7 and miscellaneous other debt of 104,000. Finally, I will summarize our cash flow activities. For the nine months ended September 30, our cash used in continuing operations was $1.4 million. Our cash used in discontinued operations was $2 million. Our cash provided from investing was 957,000.

Cash provided from investing in discontinued operations was $5.7 million. And cash used for financing was $2 million. With that operator, we’ll now take questions..

(Operator Instructions) Our first question today is coming from Al Kaschalk with Wedbush Securities..

Good to see the delivery on the treatment side. Could you comment, Lou, about your visibility? I know you said that it would extend until the early part of ’15. But with the backlog number in the new fiscal year, how far it does extend into early ‘15 really mean? Is it first quarter, second quarter, what – talk through --.

Well, two parts to that. One, of course the service side is much more predictable and right now it continues to win projects and we’re optimistic it will continue to be – it will continue to run at a profitable level into the - throughout ’15. On the treatment side, the visibility is very good for two quarters maybe a little bit into three quarters.

So there we have very good visibility into the first quarter at this point and everything is looking good..

But in terms of I guess the message though here is that the profitability - the dollar revenue here is much more profitable given the cuts to the bone that you folks have done particularly on the service side. But obviously this was a very high margin, I don’t know what the peak in the past, I don’t have it in front of me.

But this is a very high margin even for the treatment side; is that fair?.

It was good margin, Al, mostly – but more because of volume, the waste mix really wasn't special when you compare it to prior year.

But we just saw the volumes bounce back and I think to expand on what Lou said is the treatment side because of the nature of its profitability, it's usually -- even in a little bit lower volume times like first quarter it's usually profitable but the key is the cost reductions that you touched on compared to a year ago and also the gross margin or profitability of the service projects that we now have as opposed to last year, services was hopefully at its low point last year.

And the actual projects we had were not as profitable as they should be. The cost cuts we’ve made as well as the fact that we have a better baseline of business there and hopefully improving, continuing to improve is why we’re more optimistic about ‘15 in the early part..

Nice transition to the service side.

When you talk about the base line of the business, do you mean that the contracts are not only more profitable but the terms of these contracts are longer than 3, 6, 9 months, years, talk a little bit about the duration of those contracts? And then secondly the prospects on bid activity for the contracts being let out?.

Yeah I'll let Lou discuss the bid activity after this. But I think on what we have in hand is it's a combination of both -- we have projects that have a little bit longer tail on them but also these are more -- they were bid more recently with profitability in mind.

We had a lot of tail projects in the past two years that we had inherited in the acquisition that we’re completing and in some cases probably had some catch-up costs and stuff. So I think it's a combination of better margin projects and longer -- little bit longer-term.

And then Lou, you want to discuss bidding?.

Well, bidding has been very robust. We’ve seen a variety of smaller projects and we also have bidding going on, on some much larger projects that – the success up to now has been in the smaller projects. And it’s not that we lost the bigger ones, there’s not been any or many awards.

So as we look ahead we’re very very focused on continuing to use the service group and especially in the area of health physics as our lead to grow that business. It has a tremendous expertise in the health physics, area of nuclear and a tremendous reputation and that success is driving -- that expertise is driving the success. .

Have we seen an inflection though on contract awards on the service side?.

A dramatic change. Last year there were no awards because nobody was doing anything even in the commercial work. So – or awarding contracts and we’ve seen a fairly significant turnaround in bidding and awards. So yes –.

So the run rate in the quarter 4.2 million of revenue that directionally should be improving. .

We hope that will continue to improve, yes. We hit a low point in the first quarter and we think we’re on an uphill right, right now. .

Al, I'll just finish that comment and I think that sort of what has changed is we were still from a cost standpoint a little too larger, waiting for the bigger contracts. Our initiatives now have put us to the point where with this kind of a baseline we should be -- we should continue to be profitable and this business is scalable.

So if you win larger contracts you add to it. If you don’t and you don't award - you reduce your costs. And we feel now strategically where we want to be that way..

My final question, Lou, I think you always – or you should provide us an update maybe on the timeline on Tc-99, how you get patent and all that, but talk us through the next 12 months here and what we should be seeing from either commercial results or updates on your progress to convert this into commercial revenue?.

One, of course, the financing is there, and it’s taken a little longer than we all anticipated in terms of going through the various processes.

But on the technology side, the key change has been -- we have been as we look more and more in the market and several strategic players became more involved, it became obvious that we have a successful technology but that our initial design on our technology was a little too small to really go after the commercial market in a big way.

So over the last two months we’ve been – we’ve redesigned our system to really produce a larger generator and over the next 2 to 3 months we will be going through some high activity testing of three or four possible designs that we will final prototype and at that point we will choose one of those designs and then be able to move ahead with the regulatory approval.

So we’re optimistic we can get to a higher design. It’s just a question of the best structure of the technology for the higher design and scaling it up. So the next kind of discussions we’d see is more involvement with strategics, more involvement with a larger design generator for the market..

Thank you. Our next question today is coming from Doug Dyer from Heartland Advisors..

Couple of questions about the treatment backlog.

What types of products are in that backlog and can you [clarify the process] and I believe you said your visibility going into Q2 but I’d like to know more about types of waste that’s being treated and the margins that are in that backlog?.

As Ben had mentioned earlier, we've seen pretty much a typical structure of the waste.

You have some very high activity materials at Hanford and coming out of Los Alamos and then you have more normal waste and probably the biggest change that has occurred is over this year has been – we’ve been very successful more on the sources of the waste in terms of commercial and international and other areas that we've focused on.

But we’ve also seen a, as I mentioned a big pickup in the government market also. So it’s been a combination of things. As we look ahead, so the backlog at this point is rather typical, it’s a combination of high activity, it’s a combination of fairly low activity materials. And also a nice backlog from commercial clients.

We’re very focused -- still very focused on the commercial market and have several initiatives going on to grow the commercial market, those from -- the commercial includes both the enrichment side and also the commercial utilities side, and also the remedial side.

We’re doing a lot of work for some of the mining operations and others in the commercial nuclear business. So it’s a pretty broad good mix and we will continue to focus on growing that part of our business. Doug, think I answered your whole question, if not –.

Doug, I will add to that, from a number standpoint, the margins on the waste were no different than they were last year but the volume is. The volume is key to us because of our fixed cost base and when the volumes increase like they did, again year-over-year there was no major change but we saw the difference in the gross profit. .

Our next question is coming from Anthony Marchese from Insiders Trend Fund..

Two questions. First of all, as I look at your stock price, it seems as though the market cap is around 53 million.

What – now you also have I guess a subsidiary that trades in another stock exchange in Europe, if I am not mistaken, correct?.

Yes, it trades on the Warsaw Exchange. It’s trading -- I didn’t check it today but the medical company now has the market cap of about 40 million give or take..

And what is your portion – so what – of that equity, of that 40 million in equity, is that your portion of the equity or –.

We own as of today 64% of the medical company..

So about $25 million in equity?.

Yeah, no, there is about 25 million in value there. So when you look at Perma-Fix, I mean you look at a company that has a restricted cash and our bonding fund of 21 million, we’ve got 3 million of cash on the balance sheet, it’s got – an asset that’s worth 20 plus million, 25 million.

So in one sense we are trading way below, almost the cash what we have in cash today. .

That being the case, do you have any -- given the earnings visibility, given the value in the company, do you guys have any plans to expand or expand your outreach to investors in the near future?.

To late, going out to market, I could really talk about the numbers. One, we’re going to make a bigger effort on the investor side in talking about who we are and what we are and where we’re going now. Two, the other is we -- the board has been very concerned about -- in terms of our true value here.

When you look at the some of the basic numbers, it just doesn't make any sense.

And it’s very focused today on how can the company provide a better return and also value to the shareholders?.

I see. Okay. Well that’s great because I do think there is a lot of value there.

And final question, are there companies out there or technologies out there that you would consider acquiring if the share price were higher or just how can you expand – are there ways to expand beyond just internal growth?.

In the short-term there's some great fits for Perma-Fix with a variety of other companies out there. In the short-term we are extremely focused though on that we have some very valuable assets that are being underutilized both on the service side and on the treatment side. So there is a major focus in the short run on internal growth.

I think right now the best thing we could do is to grow internally. There are variety of -- this industry is going through a lot of change now and we’re in a very very strong position from an industry point of view in terms of playing a long-term role in that industry one way or another.

So it's been -- over the last two years it's been very very tough.

We have seen the industry go through a dramatic valley and I guess the key thing we’ve looked at long-term was that it was critical that we come out of this in a very strong position and it's been pretty dramatic from – if you look at where we were six months ago to where we are today with – from a financial point.

So we think we're in a very very good spot right and the board is personally taking a very strong look at this in terms of setting up strategic committee in terms of involving some of the board members and where do we go or how do we do it and how do we grow this and create more value for the people that have stuck it out for so long. .

Well, are you concerned – I mean given the activity in your sector in the past, I guess there has been a number of private equity transactions.

Are you guys concerned that you are vulnerable to some type of M&A activity?.

Well, you look at the value of our assets. I mean like I say we’ve got 21 million of cash sitting behind our bonds of cash that we could access if under the right conditions, you’ve got now cash on the balance sheet, got assets, hard assets at the facilities that are irreplaceable and could never be duplicated.

And the technologies we develop at those facilities and the technologies in medical, I think long-term – and now, we’re very excited and I think -- we're very excited about being able to create a little more value here..

Our next question today is coming from [John Gruber from Gruber McMain]..

I think with your low value, I mean the reason you have a low value is you’re losing money forever, now you’re making $0.20 this quarter per share.

My question is given the good visibility in treatment and so obviously that's the real important group there, and given the backlog, so what - the 12.7 you just reported, how is that going to ratchet up here the next few quarters in revenue in 4Q, 1Q?.

Well, I think as I said earlier I think probably as you go further and further out, I have less and less visibility but for fourth quarter it looks very very good right now. .

So it'll be up from the 12.7?.

Very close. Yeah, it could be the same or a little higher. The first quarter is of course always a scary quarter for us but as we look today going into – with the good backlog and looking at our sales forecasts, we’re as I guess use the old political saying we’re guardedly optimistic..

Now what was the previous high in treatment revenue per quarter?.

The previous high for treatment – let me refresh my memory. I think back in ‘11 we had a one quarter about 20 million was the best revenue –.

Yes you were up to 20 but that was an anomaly or you can get up there again?.

It's possible to get back there. But I would not predict that in the near – in the next couple quarters. But with the right mix and the right type of material and some of the opportunities we look at, you look at some of the waste at Hanford that we could treat, if they ever start moving it you could see numbers like that again..

My next question is the discontinued – what is the discontinued, that’s taken 20% of your earnings out here, it’s $0.20 minus $0.04 when does that disappear?.

John, it will. That was our facility that we had in Georgia that is for sale and we had had the accident on it. And so we took some one-time costs in the third quarter as we’re preparing it either for sale or for closure..

Do you have any interest in – will you think you will sell it?.

We have interest in some buyers. So we’re aggressively attempting to sell it. But we have interest and its permit still has the value there. That’s a key out of our industry is in the industrial side. So we shouldn't see those kind of it from disco again..

So last question I think the 4.2 million in services, you said you’re winning a lot of contracts.

So where is that going to go in a year, with that 4.2, where that should be what number, what kind of quarterly numbers should services be?.

At this point I’ve got a lot more faith in some of these smaller contracts that we seldom talk about, because they are too small to announce. But we should see that continue to grow quarter to quarter here and we’re also bidding on some fairly large contracts. .

Lou, that didn’t answer the question.

So where could it be in a year – I mean is that going to be 4.4 or is it going to be 10 per quarter?.

It is going to continue to grow at a reasonable rate of - with a smaller work – what do you think -- yeah 20%, 15%, 20% then and then the hope is that we can win a fairly large contract that will jump -- in that business you'll see continued growth but then every once in a while there will be a discontinuity if we can win a larger contract where you see a fairly large jump.

So it's hard to predict and hard to give you an answer because it's -- those larger contracts will produce a very large increase in revenue. .

John, I think I can just add to that. We’re set up right now from an infrastructure standpoint to support continual growth which is reasonable 15-nish, that 20, good years on that number. But then just like the Hanford contract that went away, that was bringing in 24 million at its low and 40 million at its high.

So there are the white elephants, big contracts that if you’re getting, it’s hard to answer your question. But just without one of those –.

But you don’t make any money on those anyway, do you?.

They also provide ways -- our service group is very focused on two areas - is waste treatment and health physics both of which lead in the end to projects that usually generate waste, though it helps feed the facilities and that we can go in and give a client a -- we can bid on projects that are cleaning out a tank and also taking the waste to our facility.

So it does add value from a synergistic point of view. And it also puts our people on the client sites so that we have visibility on what they have, what they are doing and what they could do..

Our next question today is coming from [Stan Robertsky] from SCR Asset Management..

Hi Lou, is this a dream or what’s going on here?.

A dream..

All right.

Let's talk about the backlog, the 10.7, I don't – did you say what the breakdown between treatment and service is?.

That's all treatment, Bob. .

It’s all treatment, okay.

So can we assume this 10.7 million gets done in the fourth quarter and you add more treatment in the fourth quarter so that we're doing better than the 12.7 in the current quarter?.

It's not first-in first-out like that Bob, because of the different waste streams and timing because as you know we have a year usually to move waste by our permits. But you can use the assumption that with reasonable receipts and a good backlog that would suggest another strong quarter, yes..

No, I understand.

I am just -- so you're saying the 10.7 is evenly divided over the next year?.

Not evenly but it’s not necessarily one quarter’s worth of revenue. Other revenue coming in in the fourth quarter could be processed in the same quarter..

And the bidding -- what kind of numbers do we have that we’re bidding on for treatment? What could we look at there? I didn't hear a number. .

Well the problem with treatment is that we don't necessarily bid on much work for treatment.

But we have contracts in place and so what we usually receive our purchase orders and in terms of they want to send this so much waste, that's way I have got visibility for two to three quarters because we have purchase orders coming in from various clients saying we have this much waste and it will be coming about this time.

And that we then have to prove them sending us waste. So it's not a question – in most cases of bidding, it’s a question of just receiving an order. .

So did you say that the 12.7 for the next two or three quarters is the visibility, is that you will have that kind of number or higher, I didn’t understand that?.

Well, I didn't get it down to revenue.

What I said was that -- because depending on the revenue mix and how it flows through the facilities, I really focus more on the profitability and cash flow and over the next several quarters as far as I can see in treatment we have either orders coming in or we have backlog sitting in our warehouse that should provide enough material for a very profitable treatment group.

.

So the profitability for the next two or three quarters will be in the neighborhood of $4 million for the treatment – for the segment, that segment?.

Well I would suggest the next quarter will look a lot like this quarter, Bob. Then we get to first quarter, we have a seasonality – that history that showed you that things do kind of drop off a little bit.

But again with the backlog and with the expected treatment receipt we’re going to get, I think you could put a high probability on the fourth quarter and you could certainly assume better than last year in the first. .

So the visibility is two quarters, not the three quarters. .

Right..

On the services, with the 4.2 million, is that what you need to breakeven and do we see that we will get at least that number so that we could say will breakeven in the next two quarters?.

Yes, we’re at a number now that as you can see is covering our costs and so anything upside to that would certainly add to the bottom line and where -- as I mentioned earlier we’re pretty scalable right now, if any of that were to drop off, we can move cost downward to minimize the impact on the bottom line.

So that's a pretty fair -- pretty fair assumption..

So is it fair to say that the number could be in the 6 million range where that you could show profit or we see is the 4 million with the breakeven basically?.

It could go up, Bob, as we’re bidding a lot of contracts. Right I don’t see it today but that doesn’t mean it won’t happen by January. .

We think it should continue to grow from here, but it's just hard to give you what that number will be. I think you'll see a better number in the fourth quarter and hopefully you will see a better number in the first quarter..

And the dollar amount of contracts that we’re bidding on, do we have a number there?.

Very significant, I don't have at this moment, no but we’re seeing a lot of bidding activity. Our sales group is extremely busy right now with a significant contract, also. The difference at the moment is that we’re now bidding a fair -- number of fairly large contracts. .

And when we look at the fourth quarter last year there was sales about 12.8 million and you took a big write-down because it showed a loss of 34 million etc.

So is any of that loss that we took last year helping us currently? Are we getting anything that we wrote off, did we write-things off that was in excess that may be that we should have kept a little more or tell me about the write-down etc. and –.

Bob, the write-down really isn’t happening -- doing much except that reduced our balance sheet because of goodwill, which we don't depreciate.

So it just cleans up the goodwill side of the balance sheet and we're seeing a little bit -- we've got assets that are aging out, so we’re seeing a little bit of improvement on the depreciation side but not materially, we talk in terms of EBITDA usually anyway..

One further thing, the technology which has the market valuation of say 40 million currently.

What range did that technology trade in, did it trade in the total of 25 million, 60 million? What was the range and the people that bought the 36%, are they ahead of the game or basically -- what – could you sort of give some color there?.

The placement was a little below that. So the people who put equity and are up in their valuation, it has always traded in a fairly narrow range and it’s fairly illiquid so that it hasn't moved a lot either way. And most of the stock that it’s really come from either Perma-Fix stock or the new investors and all of that stock is locked up..

So do you expect to grow this – or how do you expect to be involved in this technology to get the fair value for this?.

Well we’re working very hard and when you look at this technology on what its potential value is, you’re talking magnitudes of where we are today. You’ve got a market that’s – the Tc-99 market is worldwide, $5 billion to $6 billion business and this is the controlling technology.

So what we see and hope is that over the next year and a half we can demonstrate a unit that will demonstrate the strategics and others that it has a lot more value than the 40 million. The potential value here of that unit is like I say is potentially magnitudes above it.

Perma-Fix will value as a shareholder so that the value to Perma-Fix in the end will come out of the stock that we own. Then a question is how do we get that back to the shareholders, and there's a variety ways that could be done once we demonstrated some value here..

Is there royalty income expected to come in or is there joint ventures that you expect to do? how do you get income into this entity?.

Income into Perma-Fix would, one first come through equity. If Perma-Fix ownership drops below a certain percentage there is a royalty stream also. .

But is this entity making royalties – are they going to be make profits etc.

this entity that’s set up?.

That’s our hope. We think we have a process that’s cheaper, better and more efficient. And so we think we can make some money with this process one way or another either through the equity side or throughout the royalty side..

Lou, I hope I am not – [inaudible] is finished here in that we’re finally on the way, because this has been a long sleep?.

Damn, I have the same feeling. As I said it’s been a very tough two years and – but what we’re seeing one in the market is the market has changed, the macro situation has changed back to a positive, least as far as we can see, which is two, three quarters. So – and we think it'll continue but there is always risk there..

Thank you. Our next question today is coming from Bill Nasgovitz from Heartland Funds..

So just going back to – to stay on this Tc-99 theme here, so huge market and over the next year, year and a half, you have to demonstrate that this technology you can actually put it together and it works, it’s the prototype.

Who is running this for us?.

Well what we've done is added several people to the team here. .

So they are based in the US?.

Yes. For all practical purposes everything is still in the US. Perma-Fix is -- under a service contract is doing all the research and the development of the technology. We’ve added Steve Belcher who is one of the founders of Triad. He is a expert in this field. Triad is the third-largest nuclear pharmacy in the United States.

Everyone saw the consulting agreement we did with John Climaco, one of our board members. John is a very sharp guy who is involved both from a strategic point of view and is a former CEO of a medical device company. So John has gotten more involved. .

But Lou, my question is are you running this division or is Steve running – who is running?.

Until we create escrow, we have not changed the organizational structure of the company because of terms in our agreement with bankers and on the month so that as -- until the first of the year the structure – I am still running it and you’ve got to remember this -- the number one priority over the next to three months continues to be the technology and growing the technology in terms of a generator that is much larger.

So it’s still a very technical laboratory project at this point. That will change at the first of the year. .

So at some point there’s going to be -- you will name a chief operating officer for this, let’s call it division?.

Correct. And then as we sit today we have several people actually fulfilling that role other than myself. Steve Belcher and John Climaco. .

And when possibly might this be in the market – just refresh my memory?.

Well the plan is -- if you look at it then from what I laid out earlier, the first step is to build a larger prototype generator than we have today. .

Yeah I understand all that.

But just I didn't hear -- when might it be commercial and you’d be in the market, that's all I to know? What’s your best guess?.

My best guess is that that prototype will be finished in the first quarter and it would be little over a year after that – that we should have a approval on it..

So you need FDA approval?.

We need FDA and EU approval for those two markets. And that’s a best guess without any [inaudible]..

And the idea is to sell it both in the US and Europe?.

Yes..

Thank you. Our next question today is coming from Joseph Bonn, a private investor..

I had a couple of questions about contracts. There was a – at the last conference you had predicted – you said that there were several awards that were pending, and I don’t think we got several awards actually announced and I am just wondering – there was also an omni contract, it’s like a blanket contract of $20 million.

I am just wondering – I am trying to get a better feel for what –.

Well, the problems we have is none of our clients like us to talk about their work as you can imagine. One, you’ve got the Department of Energy and Army and that even on the commercial side when we win work -- like the best example is in Canada, they have some basic rules that -- they don't want us to announce contracts.

So one of our problems has been is we’ve won a very significant number of contracts, some of them have been too small to announce, others have been large enough to announce but our clients would now allow us to announce them. So we’ve got a variety of reasons why you’ve seen a series of announcements.

The Army contract that was announced – and announced in several I guess magazines got a lot of publicity at one point was more -- what I call a math - -really the right to bid on a variety of work that was coming out. So we announced that didn’t play it up because it’s just the right to further bid on more work that the Army will have.

So but then when it was picked up in the paper, they talked about the larger number which we didn’t talk about. So we always try – there’s thresholds that which we always try to announce and then it will depend on if we can or not from our clients. So I don't know if that quite answers your questions or –.

[indiscernible].

Well the problem with that is that of course if they are very significant major then we have to figure out a way to announce. If they are smaller contracts it gets into grey areas where we don't necessarily need to announce them and then if our client says no, we always try to announce them. That’s number one rule.

But in this business there are cases where there is security issues or just client’s sensitivities. So – or if we announce them we then try to make inaugural obvious -- we do all we can with the clients to keep their names out of them and if it’s on the commercial side and they don’t want to talk about..

So when you make these projections first, profitability, cash flow etc. for next quarter or two, you’re basing that strictly on contracts already in hand, right? So –.

Yes. We don't – I have never been big on the giving you numbers that I really can't make. So that aren’t really in the back here. So when we give projections like we have today we either have the material on the waste treatment side in the warehouses or in trucks on the way or on the service side, we already have won the contracts.

If I gave you numbers, we’re bidding on magnitudes over the kind of revenue we have today. Our list of contracts we’re bidding on are 10 to 100 times bigger than our present revenue. But it’s hard to give you – take those and tell you here is what our revenue is going to be..

I wanted to ask you -- you also made some brief appearance on TV talking about all the fracing industry and how they produce radioactive substances and I know you were involved with the study to set up standards, so there is a potential market. And I am wondering how far down the road – how much longer is it going to take before you –.

We do work in the fracing industry and we have contracts with several people to provide on the service side. But our enthusiasm for both the waste treated and the business potential there has waned. We see much better opportunities in other places right now than that industry.

It’s a dramatic problem and we’re very involved in it because we’re helping write the regulations for the industry with –.

That’s no longer a major potential area. .

No, not in my mind in terms of what we focus on. It was at one time, one of several areas we were very interested in but it's dropped down in priority in terms of what we see out there and better opportunities in other places for us. With our limited resources areas come and go and that one has dropped down,.

Also I wanted to ask you about John Climaco, so okay you are paying him quite a bit of money on a monthly basis, I mean for a company your size, it’s pretty expensive.

And I am wondering what is the primary focus about this consulting with, is it on this new isotope process or is it – you mentioned lot of things, you mentioned cost reduction, you mentioned –.

His really has – as part of this committee at the board level is on our strategic committee. So his in the short run -- over the next several months his number one priority is focused on strategic issues with the company itself in terms of cost savings, in terms of where we go, what we do.

At the same time he’s very involved in the strategic side of where do we go with the Perma-Fix Medical. I think with time it will shift over more to medical and less on the parent. As we sit today he is pretty much working full-time with Perma Fix on both medical and strategic alternatives for the parent and cost initiatives with the parent..

You answers [ph] being working for a quite a while then, I mean it sounds like he’s got – it’s not year, for just couple of three, four months, right?.

On the strategic side, I think it's a little more short-term, in terms of what we do, where we go and how we do it and in terms of medical it should be longer term. .

Our next question is coming from Charles Dickenson, Private Investor..

I'm looking at the company more on a larger picture thematic sense here. I have been trying to single point certain P&L numbers or worrying about the next quarter or even two or even in the next year. If you had gotten the call on sequestration’s impact right on this company, you probably would have saved yourself 85% downside on the stock.

Had you then taken a look at the stock when sequestration got temporarily suspended here, you would have doubled or tripled your money based on where the stock is today. So what I'm getting at is your illusion earlier to the election and that you thought on preliminary sort of a first take basis that might have a positive impact on Perma-Fix.

This is a company that you guys have a tremendous amount of assets here, they are underutilized even with the good quarters, obviously you still have a lot of room for doing an awful lot of things just in terms of the contracts you mentioned you’re bidding on.

So when you talk about the election and the way things look going forward, are you referring to what might be going on with the results specifically in the state of let’s say some place like Washington or you have Hanford work, I mean if that came back on, boy, that’s blockbuster.

Or are you looking at the national level on what it means for DOE, the Republicans controlling both the Houses of Congress, maybe getting some legislation pushed through, can you add some color to that?.

Yeah, the number one is that as I have always said really looking at both – both the macro and the micro. On the macro level is that – this is a guess on our part but the sequestration was a major problem for us. We think with the present structure now I think there’s going to be a major effort to actually pass the budget. And it could be successful.

And that would have a fairly very positive effect. The continuing resolutions are fine but they don’t really answer issues that are ingrained into the system where a budget would. On a micro level, in one way Hanford, Patty Murray losing her seat as – and helping control the budget which in one way may hurt a little bit to Hanford.

But on the other hand, that’s only the negative I saw in the election. So on the other hand, Senator Alexander who has been a fair close friend of Perma-Fix and a strong supporter of the nuclear industry will now play a very major role in the Senate.

Congressman Fleischmann, a House representative from Tennessee, again close to Perma-Fix and he’s always been a very strong supporter of what goes on within DOE and the nuclear industry. And I can go through that.

Simon winning the election was under attack by the tea partiers is a strong supporter of nuclear and a strong supporter of the clean-up programs. So when you look at the politics of the states as I have said in the past is they are all very Republican. So there has always been very strong in one way bipartition support to clean up the sites.

I think that will continue and if anything with the Republic Senate actually could accelerate that. .

That’s the counter-intuitive, isn’t it, given that you typically want to probably – things of the Republicans as wanting to rein in – I understand what you are saying about –.

Good politicians are also supporters of their district. So when you have a place like Oak Ridge, the most highly educated city in the United States, when the community is yelling that they are poisoned by mercury, being positioned by nuclear politicians seeing the [indiscernible] to that.

So it’s true and it’s the general thinking they’re going to cut everything and there could be issues with cutting as part of the general cutback. But we’ve seen such strong bipartition support in the past.

When you look at the history of the DOE budget for clean-up, and also many of the programs, it’s done well – probably better than Republicans than Democrats. .

Well, what we’d certainly be able to get more legislation I would imagine – going forward the question is, I don’t know what of your potential work that comes out of the DOE that can be subject to the [pan] of the President should the Republicans at least get something on its desk, there has been nothing really going to the desk because everything has been gridlocked.

So at least there is a potential that we get something there..

Gridlock in one way for has been bad for us. And a budget would be very good for us. The numbers might not change but it allows to restructure how they spend money and we think that could help us. .

Is it fair to say with regard to Hanford and Patty Murray that where you stand vis-à-vis Hanford at this point really can’t get much worse, I mean the change in the margin could only be to the upside, is that correct or –.

The problem with Hanford for us is that a lot of money has been spent on [anodic] controlled construction projects. So – and if that changes and DOE is slowly trying to change that, and reallocating money out of that into other things, now, whether that’s – where that will go though is the DOE priorities. So I don’t – we will have to wait and see.

But the other side on Patty Murray, she will continue to be one of the highest ranking Senators. So she will continue to have tremendous cloud because of her position and her seniority.

So it will hurt and that she is not on the top but she will still be very close on the top and the experience in the Senate is that someone like Patty Murray has always been able to work both sides. So –.

So the last question I had then is what is the change of something like sequestration rearing its head again in the future or I know it’s hard to put some of a –.

If I were sitting in Congress as a Republican, they are now in -- looking ahead for two years, I would now allow anything like that ever to happen again. You could see how badly it hurt them last time. I don’t think we’d see it now. I am not sure they can all work together.

So that’s the big question over this is that can President and the Congress work together. .

I have noticed there are lot of companies that are dependent on DOE and government contracts.

So almost to a company, they are out, with the [Barbie] as now saying just in the last quarter or two, mostly in the last quarter that the funds are starting to flow, part of that is the seasonality with the fiscal year of the government but they said that there has definitely been a change, almost every company saying there has definitely been a change or seeing a change in terms of money starting to flow and flow in pretty good measure from the DOE I guess, you’d agree with that, right?.

What we have seen this year has been a turnaround in the way it’s been working from the last two years. So and we think it will continue because we think it’s – there is now a different approach.

So the agencies that had time to rethink what they are doing and how they are doing – it takes a while sometimes for them to react but –we think it should continue. But we’ve also added commercial and industrial clients to it, so that we’ve grown that part and part of our success this year has been our work on commercial..

Have you provided any guidance as to what percent of composite revenue is coming from commercial and international versus government, how that’s changed or not, or is that something you really don’t want to –.

Yes, it’s very interesting that it has – we have seen more commercial but this year we have also seen more government. So we are doing better for both right now but we have numbers I just don’t have them here at my fingertips. We’ve talked about them in the past that it’s been basically 70% government.

And that includes – in our filings we do show the government revenue. .

Thank you. We’ve reached the end of our question and answer session. I would like to turn the floor back over to management for any further or closing comment..

I would like to thank you all for participating our third quarter conference call. As I mentioned earlier, we’re very encouraged by the outlook for business. Our revenue is growing, our margin is improving. We are generating strong cash flow and we’ve strengthened our balance sheet.

We are in a very strong position from a competitive point of view and we have a medical asset we think that’s been completely overlooked by the investment community. With that, I thank you all and for your support and look forward to following up in the next quarter..