<SUBMISSION>
<ACCESSION-NUMBER>0000891092-04-002374
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20040331
<FILING-DATE>20040510
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>PERMA FIX ENVIRONMENTAL SERVICES INC
<CIK>0000891532
<ASSIGNED-SIC>4955
<IRS-NUMBER>581954497
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-11596
<FILM-NUMBER>04792285
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>1940 NORTHWEST 67TH PLACE
<STREET2>SUITE A
<CITY>GAINESVILLE
<STATE>FL
<ZIP>32653
<PHONE>3523734200
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>1940 NW 67TH PL
<STREET2>SUITE A
<CITY>GAINESVILLE
<STATE>FL
<ZIP>32653
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>e17839_10q.txt
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
 ===============================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              --------------------

                                   Form 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the quarterly period ended March 31, 2004

                                       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. 111596

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)

                Delaware                                 58-1954497
      (State or other jurisdiction          (IRS Employer Identification Number)
    of incorporation or organization)

  1940 N.W. 67th Place, Gainesville, FL                    32653
(Address of principal executive offices)                 (Zip Code)

                                 (352) 373-4200
                         (Registrant's telephone number)

                                       N/A
             -------------------------------------------------------

              (Former name, former address and former fiscal year,
                         if changed since last report)

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 |X| No |_|

Indicate by checkmark whether the registrant is an accelerated filer (as defined
in Rule 12b-2 of the Act).
Yes  |X|    No |_|

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common Stock, as of the close of the latest practical date.

             Class                                Outstanding at May 5, 2004
             -----                                --------------------------
 Common Stock, $.001 Par Value                            41,427,725
                                                   (excluding 988,000 shares
                                                   held as treasury stock)

================================================================================

<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                                      INDEX


PART I   FINANCIAL INFORMATION                                          Page No.
                                                                        --------
         Item 1.    Financial Statements

                    Consolidated Balance Sheets -
                             March 31, 2004 and December 31, 2003..............2

                    Consolidated Statements of Operations -
                             Three Months Ended March 31, 2004 and 2003........4

                    Consolidated Statements of Cash Flows -
                             Three Months Ended March 31, 2004 and 2003........5

                    Consolidated Statement of Stockholders' Equity -
                             Three Months Ended March 31, 2004.................6

                    Notes to Consolidated Financial Statements.................7

         Item 2.    Management's Discussion and Analysis of
                             Financial Condition and Results of Operations....14

         Item 3.    Quantitative and Qualitative Disclosures
                             About Market Risk................................27

         Item 4.    Controls and Procedures...................................28


PART II  OTHER INFORMATION

         Item 1.    Legal Proceedings.........................................29

         Item 2.    Changes in Securities and Use of Proceeds.................29

         Item 6.    Exhibits and Reports on Form 8-K..........................31

<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.
                        CONSOLIDATED FINANCIAL STATEMENTS

                                 PART I, ITEM 1

The consolidated  financial statements included herein have been prepared by the
Company (which may be referred to as we, us or our), without an audit,  pursuant
to the rules and regulations of the Securities and Exchange Commission.  Certain
information  and note  disclosures  normally  included in  financial  statements
prepared in accordance with generally accepted  accounting  principles have been
condensed  or omitted  pursuant  to such  rules and  regulations,  although  the
Company  believes  the  disclosures  which  are  made are  adequate  to make the
information  presented  not  misleading.  Further,  the  consolidated  financial
statements reflect, in the opinion of management, all adjustments (which include
only normal  recurring  adjustments)  necessary to present  fairly the financial
position and results of operations as of and for the periods indicated.

It is  suggested  that  these  consolidated  financial  statements  be  read  in
conjunction  with the  consolidated  financial  statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2003.

The results of  operations  for the three months  ended March 31, 2004,  are not
necessarily  indicative  of results to be  expected  for the fiscal  year ending
December 31, 2004.


                                       1
<PAGE>

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS

                                                    March 31,
                                                       2004         December 31,
(Amounts in Thousands, Except for Share Amounts)   (Unaudited)          2003
--------------------------------------------------------------------------------

ASSETS
Current assets:
      Cash                                          $     517         $     411
      Restricted cash                                      61                30
      Accounts receivable, net of allowance
         for doubtful accounts of $863 and $703        23,526            24,622
      Inventories                                         957               589
      Prepaid expenses                                  2,332             2,332
      Other receivables                                   467               397
                                                    ---------         ---------
                                                       27,860            28,381
           Total current assets

Property and equipment:
      Buildings and land                               22,349            21,391
      Equipment                                        33,183            32,121
      Vehicles                                          3,245             2,881
      Leasehold improvements                           11,235            11,082
      Office furniture and equipment                    2,139             2,153
      Construction-in-progress                          3,148             2,636
                                                    ---------         ---------
                                                       75,299            72,264

      Less accumulated depreciation and
        amortization                                  (20,328)          (19,195)
                                                    ---------         ---------
                                                       54,971            53,069
          Net property and equipment

Intangibles and other assets:
      Permits                                          16,680            16,680
      Goodwill                                          6,216             6,216
      Finite Risk Sinking Fund                          2,225             1,234
      Other assets                                      4,377             4,635
                                                    ---------         ---------
          Total assets                              $ 112,329         $ 110,215
                                                    =========         =========

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


                                       2
<PAGE>

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS, CONTINUED

                                                       March 31,
                                                          2004      December 31,
(Amounts in Thousands, Except for Share Amounts)      (Unaudited)      2003
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                    $  7,553      $  6,359
      Current environmental accrual                        1,107         1,143
    Accrued expenses                                      11,912        11,553
    Unearned revenue                                       1,694         2,271
    Current portion of long-term debt                      2,570         2,896
                                                        --------      --------
         Total current liabilities                        24,836        24,222

Environmental accruals                                     1,910         1,432
Accrued closure costs                                      4,999         4,965
Other long-term liabilities                                1,777         1,677
Long-term debt, less current portion                      18,281        26,192
                                                        --------      --------
       Total long-term liabilities                        26,967        34,266
                                                        --------      --------
       Total liabilities                                  51,803        58,488

Commitments and Contingencies (see Note 4)                    --            --

Preferred Stock of subsidiary, $1.00 par value;
  1,467,396 shares authorized, 1,284,730 shares
  issued and outstanding, liquidation value
  $1.00 per share                                          1,285         1,285

Stockholders' equity:
    Preferred Stock, $.001 par value; 2,000,000
      shares authorized, 2,500 shares issued
      and outstanding                                         --            --
    Common Stock, $.001 par value; 75,000,000
      shares authorized,  42,415,725 and 37,241,881
      shares issued, including 988,000 shares held as
      treasury stock, respectively                            42            37
    Additional paid-in capital                            80,467        69,640
    Accumulated deficit                                  (19,288)      (17,243)
    Interest rate swap                                      (118)         (130)
                                                        --------      --------
                                                          61,103        52,304
    Less Common Stock in treasury at cost;
      988,000 shares                                      (1,862)       (1,862)
                                                        --------      --------
       Total stockholders' equity                         59,241        50,442
                                                        --------      --------
       Total liabilities and stockholders' equity       $112,329      $110,215
                                                        ========      ========

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


                                       3
<PAGE>

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

                                                            Three Months Ended
                                                                 March 31,
                                                         -----------------------
(Amounts in Thousands, Except for Per Share Amounts)       2004           2003
--------------------------------------------------------------------------------

Net revenues                                             $ 17,469      $ 19,518
Cost of goods sold                                         13,908        14,457
                                                         --------      --------
       Gross profit                                         3,561         5,061

Selling, general and administrative expenses                4,390         4,380
                                                         --------      --------
       Income (loss) from operations                         (829)          681

Other income (expense):
       Interest income                                          1             2
       Interest expense                                      (670)         (702)
       Interest expense-financing fees                       (256)         (301)
       Other                                                 (244)          (65)
                                                         --------      --------
Net loss                                                   (1,998)         (385)

Preferred Stock dividends                                     (47)          (46)
                                                         --------      --------
Net loss applicable to Common Stock                      $ (2,045)     $   (431)
                                                         ========      ========
Net loss per common share:
      Basic                                              $   (.06)     $   (.01)
                                                         --------      --------
      Diluted                                            $   (.06)     $   (.01)
                                                         --------      --------
Number of shares and potential common shares
  used in net loss per common share:
      Basic                                                37,040        34,605
                                                         --------      --------
      Diluted                                              37,040        34,605
                                                         --------      --------

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


                                       4
<PAGE>

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

<TABLE>
<CAPTION>

                                                                    Three Months Ended
                                                                        March 31,
                                                                  ---------------------
(Amounts in Thousands)                                              2004         2003
--------------------------------------------------------------------------------------
<S>                                                              <C>          <C>
Cash flows from operating activities
Net loss                                                         $ (1,998)    $  (385)
     Adjustments to reconcile net loss to cash provided by
         (used in) operations:
     Depreciation and amortization                                  1,236       1,140
     Debt discount amortization                                        81          81
     Provision for bad debt and other reserves                         36          52
     Gain on sale of plant, property and equipment                    (17)         --
     Changes in assets and liabilities:
     Accounts receivable                                            3,263        (376)
     Prepaid expenses, inventories and other assets                   (36)       (243)
     Accounts payable and accrued expenses                             47         668
                                                                 --------    --------
       Net cash provided by operations                              2,612         937

Cash flows from investing activities:
     Purchases of property and equipment, net                      (1,073)       (896)
     Proceeds from sale of plant, property and equipment               19          --
     Change in restricted cash, net                                    --          (1)
     Change in finite risk sinking fund                              (991)         --
     Funds used for acquisitions (net of cash acquired)            (2,903)         --
                                                                 --------    --------
       Net cash used in investing activities                       (4,948)       (897)

Cash flows from financing activities:
     Net repayments of revolving credit                            (7,800)       (258)
     Principal repayments of long-term debt                          (517)       (492)
     Proceeds from issuance of stock                               10,759         591
                                                                 --------    --------
       Net cash provided by (used in) financing activities          2,442        (159)
                                                                 --------    --------
Increase (decrease) in cash                                           106        (119)
Cash at beginning of period                                           411         212
                                                                 --------    --------
Cash at end of period                                            $    517    $     93
                                                                 ========    ========
Supplemental disclosure
     Interest paid                                               $    509    $    540
Non-cash investing and financing activities:
Issuance of Common Stock for services                                  10          10
Issuance of Common Stock for payment of dividends                      63          63
Gain on interest rate swap                                             12          14
Long-term debt incurred for purchase of property and equipment         --         308
</TABLE>

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


                                       5
<PAGE>

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited, for the three months ended March 31, 2004)

<TABLE>
<CAPTION>

                                                                                                         Common
                                 Preferred Stock       Common Stock    Additional             Interest    Stock       Total
                                 ---------------    -----------------    Paid-In  Accumulated   Rate     Held In   Stockholders'
(Amounts in thousands,            Shares  Amount      Shares   Amount    Capital     Deficit    Swap    Treasury     Equity
except for share amounts)
-----------------------------------------------------------------------------------------------------------------------------
<S>                               <C>     <C>      <C>          <C>     <C>        <C>        <C>       <C>       <C>
Balance at December 31, 2003      2,500   $  --    37,241,881   $ 37    $69,640     $(17,243)  $ (130)   $(1,862)  $  50,442

Comprehensive loss:
   Net loss                          --      --            --     --         --       (1,998)      --         --      (1,998)
   Other Comprehensive income:
     Gain on interest rate swap      --      --            --     --         --           --       12         --          12
                                                                                                                    --------
       Comprehensive loss                                                                                             (1,986)
Preferred Stock dividends            --      --            --     --         --          (47)      --         --         (47)
Issuance of Common Stock for         --      --        19,643     --         63           --       --         --          63
   Preferred Stock dividend
Issuance of stock for cash           --      --       538,088     --        898           --       --         --         898
   and services
Issuance of Common Stock in          --      --     4,616,113      5      9,866           --       --         --       9,871
   private placement
                                  -----   -----    ----------   ----    -------    ---------    -----   --------    --------
Balance at March 31, 2004         2,500   $  --    42,415,725   $ 42    $80,467    $ (19,288)   $(118)  $ (1,862)   $ 59,241
                                  =====   =====    ==========   ====    =======    =========    =====   ========    ========
</TABLE>

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


                                       6
<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 2004
                                   (Unaudited)

Reference  is made  herein to the  notes to  consolidated  financial  statements
included in our Annual Report on Form 10-K for the year ended December 31, 2003.

1.   Summary of Significant Accounting Policies

Our accounting policies are as set forth in the notes to consolidated  financial
statements referred to above.

Reclassifications

Certain prior period amounts have been  reclassified to conform with the current
period presentation.

Stock-Based Compensation

We account for our stock-based employee  compensation plans under the accounting
provisions of APB Opinion 25, Accounting for Stock Issued to Employees, and have
furnished  the pro forma  disclosures  required  under  Statement  of  Financial
Accounting Standards ("SFAS") 123, Accounting for Stock-Based Compensation,  and
SFAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure.

SFAS 123 requires pro forma  information  regarding  net income and earnings per
share as if  compensation  cost for our employee and director  stock options had
been determined in accordance with the fair market value-based method prescribed
in SFAS 123. We estimate  the fair value of each stock  option at the grant date
by using the Black-Scholes  option-pricing model with the following  assumptions
used for grants in 2003:  no  dividend  yield;  an  expected  life of ten years;
expected  volatility  between  23.8% and  23.2%;  and risk free  interest  rates
between 2.75% and 3.27%. No stock options have been granted in 2004.

Under the accounting provisions of SFAS 123, our net loss and net loss per share
would have been increased to the pro forma amounts indicated below (in thousands
except for per share amounts):

                                                              Three Months Ended
                                                                   March 31,
                                                             -------------------
(Unaudited)                                                    2004       2003
--------------------------------------------------------------------------------
Net loss applicable to Common Stock, as reported             $(2,045)   $  (431)
Deduct:  Total Stock-based employee compensation
   expense determined under fair value based method for
   all awards, net of related tax effects                        (96)       (96)
                                                             -------    -------
Pro forma net loss applicable to Common Stock                $(2,141)   $  (527)
                                                             =======    =======
Loss per share:
   Basic - as reported                                       $  (.06)   $  (.01)
                                                             =======    =======
   Basic - pro-forma                                         $  (.06)   $  (.02)
                                                             =======    =======
   Diluted - as reported                                     $  (.06)   $  (.01)
                                                             =======    =======
   Diluted - pro-forma                                       $  (.06)   $  (.02)
                                                             =======    =======


                                       7
<PAGE>

2.   Earnings Per Share

Basic EPS is based on the  weighted  average  number  of shares of Common  Stock
outstanding  during the period.  Diluted EPS  includes  the  dilutive  effect of
potential common shares. Diluted loss per share for the three months ended March
31, 2004 and 2003,  does not include  potential  common  shares as their  effect
would be anti-dilutive.

The  following  are  potential  shares  excluded  from  weighted  average  share
calculations due to their anti-dilutive  effect for the three months ended March
31, 2004 and 2003:

                                                          Three Months Ended
                                                              March 31,
                                                      --------------------------
   (Unaudited)                                          2004              2003
--------------------------------------------------------------------------------
Upon exercise of Options                              3,139,950        3,675,000
Upon exercise of Warrants                            12,980,493       13,749,827
Upon conversion of Preferred Stock                    1,666,667        1,666,667

3.   Long Term Debt

Long-term  debt  consists of the  following at March 31, 2004,  and December 31,
2003:

<TABLE>
<CAPTION>

                                                                                                  March 31,
                                                                                                    2004       December 31,
(Amounts in Thousands)                                                                           (Unaudited)       2003
---------------------------------------------------------------------------------------------------------------------------
  <S>                                                                                              <C>            <C>
  Revolving  Credit  facility  dated  December 22, 2000,  borrowings  based upon eligible
     accounts  receivable,   subject  to  monthly  borrowing  base  calculation,
     variable  interest  paid  monthly at prime rate plus 1% (5.00% at March 31,
     2004), balance due in December 2005.                                                          $ 1,685        $ 9,235
  Term Loan dated December 22, 2000,  payable in equal monthly  installments  of
     principal of $83,  balance due in December  2005,  variable  interest  paid
     monthly at prime rate plus 1 1/2% (5.50% at March 31, 2004).                                    3,833          4,083
  Three  promissory  notes dated May 27, 1999,  payable in equal monthly  installments of
     principal and interest of $90 over 60 months, due June 2004, interest at 7.0%.                    268            531
  Unsecured  promissory  note dated August 31, 2000,  payable in lump sum in August 2005,
     interest paid annually at 7.0%.                                                                 3,500          3,500
  Senior  subordinated  notes dated July 31, 2001,  payable in lump sum on July 31, 2006,
     interest  payable  quarterly at an annual interest rate of 13.5%, net of unamortized
     debt discount of $757 at March 31, 2004 and $838 at December 31, 2003.                          4,868          4,787
  Promissory note dated June 25, 2001, payable in semiannual  installments on June 30 and
     December 31 through  December 31, 2008,  variable  interest  accrues at the
     applicable  law rate  determined  under the IRS Code Section (7.0% on March
     31, 2004) and is payable in one lump sum at the end of installment period.                      3,354          3,354
  Installment  agreement dated June 25, 2001, payable in semiannual  installments on June
     30 and December 31 through December 31, 2008,  variable interest accrues at
     the  applicable  law rate  determined  under the IRS Code Section  (7.0% on
     March 31, 2004) and is payable in one lump sum at the end of installment period.                  833            833
  Various capital lease and promissory note obligations,  payable 2004 to 2008,  interest
     at rates ranging from 5.2% to 17.9%.                                                            2,510          2,765
                                                                                                   -------        -------
                                                                                                    20,851         29,088
    Less current portion of long-term debt                                                           2,570          2,896
                                                                                                   -------        -------
                                                                                                   $18,281        $26,192
                                                                                                   =======        =======
</TABLE>


                                       8
<PAGE>

Revolving Credit and Term Loan

On December 22, 2000, we entered into a Revolving Credit, Term Loan and Security
Agreement ("Agreement") with PNC Bank, National Association,  a national banking
association ("PNC") acting as agent ("Agent") for lenders,  and as issuing bank.
The  Agreement  provided,  at  inception,  for a term loan ("Term  Loan") in the
amount  of  $7,000,000,   which  requires  principal  repayments  based  upon  a
seven-year  amortization,  payable over five years, with monthly installments of
$83,000 and the remaining unpaid principal balance due on December 22, 2005. The
Agreement also provided for a revolving line of credit ("Revolving Credit") with
a  maximum  principal  amount  outstanding  at any one time of  $18,000,000,  as
amended.  The Revolving  Credit advances are subject to limitations of an amount
up to the sum of (a) up to 85% of  Commercial  Receivables  aged 90 days or less
from invoice date, (b) up to 85% of Commercial Broker Receivables aged up to 120
days  from  invoice  date,  (c)  up  to  85%  of  acceptable  Government  Agency
Receivables  aged  up to  150  days  from  invoice  date,  and  (d) up to 50% of
acceptable  unbilled  amounts  aged  up to 60  days,  less  (e)  reserves  Agent
reasonably deems proper and necessary. The Revolving Credit advances are due and
payable  in full on  December  22,  2005.  As of  March  31,  2004,  the  excess
availability  under our Revolving  Credit was $11,437,000  based on our eligible
receivables,  and after reducing the outstanding balance of our Revolving Credit
with  approximately  $6,966,000 of the net proceeds from our recently  completed
private placement.

Pursuant to the Agreement the Term Loan bears  interest at a floating rate equal
to the prime  rate plus 1 1/2 %, and the  Revolving  Credit at a  floating  rate
equal to the prime rate plus 1%. The loans are subject to a prepayment  fee of 1
1/2 % in the first  year,  1% in the second and third  years and 3/4 % after the
third anniversary until termination date.

Three Promissory Notes

Pursuant to the terms of the Stock  Purchase  Agreements in connection  with the
acquisition of Perma-Fix of Orlando,  Inc. ("PFO"),  Perma-Fix of South Georgia,
Inc.  ("PFSG")  and  Perma-Fix  of  Michigan,  Inc.  ("PFMI"),  a portion of the
consideration  was paid in the form of the  Promissory  Notes,  in the aggregate
amount of $4,700,000  payable to the former  owners of PFO,  PFSG and PFMI.  The
Promissory  Notes  are paid in  equal  monthly  installments  of  principal  and
interest of approximately $90,000 over five years and having an interest rate of
5.5% for the first three years and 7% for the remaining two years. The aggregate
outstanding  balance of the  Promissory  Notes total $268,000 at March 31, 2004,
which  is in  the  current  portion.  Payments  of  such  Promissory  Notes  are
guaranteed by PFMI under a non-recourse guaranty, which non-recourse guaranty is
secured by certain real estate owned by PFMI. These Promissory Notes are subject
to subordination agreements with our senior and subordinated lenders.

Unsecured Promissory Note

On August 31, 2000, as part of the consideration for the purchase of Diversified
Scientific  Services,  Inc. ("DSSI"),  we issued to Waste Management  Holdings a
long-term  unsecured  promissory note (the "Unsecured  Promissory  Note") in the
aggregate  principal amount of $3,500,000,  bearing interest at a rate of 7% per
annum  and  having a  five-year  term  with  interest  to be paid  annually  and
principal due in one lump sum at the end of the term of the Unsecured Promissory
Note (August 2005).

Senior Subordinated Notes

On July 31,  2001,  we issued  approximately  $5,625,000  of our  13.50%  Senior
Subordinated  Notes due July 31,  2006 (the  "Notes").  The  Notes  were  issued
pursuant to the terms of a Note and Warrant Purchase  Agreement,  dated July 31,
2001 (the  "Purchase  Agreement"),  between the  Company,  Associated  Mezzanine
Investors - PESI, L.P. ("AMI"), and Bridge East Capital, L.P. ("BEC"). The Notes
are  unsecured  and are  unconditionally  guaranteed  by our  subsidiaries.  Our
payment  obligations under the Notes are subordinate to our payment  obligations
to our  primary  lender  and to  certain  other of our debts up to an  aggregate
amount of $25,000,000.


                                       9
<PAGE>

Under  the  terms  of the  Purchase  Agreement,  we also  issued  to AMI and BEC
Warrants  to  purchase  up to  1,281,731  shares of our Common  Stock  ("Warrant
Shares")  at an  initial  exercise  price of $1.50 per share  (the  "Warrants"),
subject to adjustment  under certain  conditions which were valued at $1,622,000
and  recorded as a debt  discount and are being  amortized  over the term of the
Notes.  As of March 31, 2004, the  unamortized  portion of the debt discount was
$757,000.  The Warrants,  as issued, also contain a cashless exercise provision.
The Warrant Shares are registered under an S-3  Registration  Statement that was
declared effective on November 27, 2002.

Promissory Note

In  conjunction  with our  acquisition  of East  Tennessee  Materials and Energy
Corporation  ("M&EC"),  M&EC issued a promissory note for a principal  amount of
$3,714,000 to PDC, dated June 25, 2001, for monies  advanced to M&EC for certain
services  performed by PDC. The promissory note is payable over eight years on a
semiannual  basis  on  June 30 and  December  31.  Interest  is  accrued  at the
applicable law rate  ("Applicable  Rate")  pursuant to the provisions of section
6621 of the Internal  Revenue Code of 1986 as amended,  (7.0% on March 31, 2004)
and payable in lump sum at the end of the loan period.  On March 31,  2004,  the
outstanding  balance was $4,363,000  including accrued interest of approximately
$1,009,000. PDC has directed M&EC to make all payments under the promissory note
directly  to the IRS to be applied to PDC's  obligations  under its  installment
agreement with the IRS.

Installment Agreement

Additionally,  M&EC  entered  into an  installment  agreement  with the Internal
Revenue  Service ("IRS") for a principal  amount of $923,000  effective June 25,
2001, for certain  withholding taxes owed by M&EC. The installment  agreement is
payable  over eight  years on a  semiannual  basis on June 30 and  December  31.
Interest is accrued at the Applicable  Rate and is adjusted on a quarterly basis
and payable in lump sum at the end of the installment  period. On March 31, 2004
the  Applicable  Rate was 7.0%. On March 31, 2004, the  outstanding  balance was
$1,078,000 including accrued interest of approximately $245,000.

4. Commitments and Contingencies

Hazardous Waste

In connection with our waste management  services,  we handle both hazardous and
non-hazardous  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,  we could be a potentially  responsible party
for the costs of the cleanup notwithstanding any absence of fault on our part.

Legal

In the normal  course of  conducting  our  business,  we are involved in various
litigations.  Except as stated below, there has been no material change in legal
proceedings  from those disclosed  previously in the Company's Form 10-K for the
year ended December 31, 2003.

In March 2004,  we settled the lawsuit,  Bryson Adams,  et al. v.  Environmental
Purification Advancement  Corporation,  et al.; Civil Action No. 99-1998, United
States District Court,  Western District of Louisiana.  We paid in settlement of
this  lawsuit the sum of $60,000 in April 2004,  and accrued the expense  during
the three months ended March 31, 2004.

We recently discovered that our Tulsa,  Oklahoma subsidiary,  which has a permit
to treat and store  hazardous  waste in certain areas of its facility,  had been
improperly   accepting  and  storing  a  substantial  amount  of  hazardous  and
non-hazardous  waste in  violation  of certain  environmental  laws in areas not
permitted  to accept  and/or to store  hazardous  and  non-hazardous  waste.  We
voluntarily  reported this matter to the  appropriate  Oklahoma  authorities and
have  removed  this  waste  to  permitted   treated,   storage  and/or  disposal
facilities.  We are  working  with  the  Oklahoma  authorities  to  provide  the
information they requested as to this matter.  As of the date of this report, we
have not been notified by the Oklahoma


                                       10
<PAGE>

authorities  as to what action or actions,  if any,  they will take  against our
subsidiary as a result of this  improper  acceptance  and storage of waste.  The
Oklahoma  authorities  could  assert  monetary  fines or penalties or take other
action against our subsidiary (including,  but not limited to, loss of permits),
which may have a material adverse effect on us.

Insurance

We believe we maintain  insurance  coverage  adequate for our needs and which is
similar to, or greater than, the coverage  maintained by other  companies of our
size in the industry.  There can be no assurances,  however,  those liabilities,
which may be incurred by us, will be covered by our insurance or that the dollar
amount of such  liabilities,  which are  covered,  will not  exceed  our  policy
limits.   Under  our  insurance   contracts,   we  usually  accept  self-insured
retentions,  which we believe is appropriate for our specific business risks. We
are required by EPA  regulations  to carry  environmental  impairment  liability
insurance providing coverage for damages on a claims-made basis in amounts of at
least  $1,000,000 per  occurrence  and $2,000,000 per year in the aggregate.  To
meet the requirements of customers, we have exceeded these coverage amounts.

In June 2003,  we entered into a 25-year  finite risk  insurance  policy,  which
provides  financial  assurance  to  the  applicable  states  for  our  permitted
facilities  in the event of unforeseen  closure.  Prior to obtaining or renewing
operating permits we are required to provide financial  assurance that guarantee
to the states that, in the event of closure,  our permitted  facilities  will be
closed in accordance with the  regulations.  The policy provides  $35,000,000 of
financial  assurance  coverage  and has  available  capacity to allow for annual
inflation and other performance and surety bond requirements.  On the fourth and
subsequent  anniversaries  of the contract  inception,  the Company may elect to
terminate  this  contract.  During the second quarter of 2003 we made an upfront
payment of $4,000,000,  of which $2,766,000  represents the full premium for the
25-year term of the policy,  and the  remaining  $1,234,000,  was deposited in a
sinking fund account.  Additionally,  in February 2004 we paid the first of nine
required annual  installments of $1,004,000,  of which $991,000 was deposited in
the sinking fund account,  the remaining $13,000 represents a terrorism premium.
As of March 31, 2004,  we have  recorded  $2,225,000  in our Finite Risk Sinking
Fund on the balance sheet.

5. Acquisitions

On March  23,  2004,  our  subsidiary,  Perma-Fix  of  Maryland,  Inc.  ("PFMD")
completed it's acquisition of certain assets of USL Environmental Services, Inc.
d/b/a A&A Environmental  ("A&A"),  primarily located in Baltimore,  Md., and our
subsidiary,  Perma-Fix of Pittsburgh,  Inc. ("PFP") completed its acquisition of
certain assets of US Liquids of Pennsylvania, Inc. d/b/a EMAX ("EMAX"). Both A&A
and EMAX are wholly owned subsidiaries of US Liquids Inc. ("USL"). PFMD is using
the acquired assets of A&A to provide a full line of  environmental,  marine and
industrial maintenance services.  PFMD offers expert environmental services such
as 24-hour  emergency  response,  vacuum services,  hazardous and  non-hazardous
waste disposal,  marine  environmental  and other remediation  services.  PFP is
utilizing  the  acquired  assets of EMAX to provide a variety  of  environmental
services  such as  transportation  of  drums  and  bulk  loads,  tank  cleaning,
industrial maintenance,  dewatering, drum management and chemical packaging. PFP
also has a wastewater  treatment  group,  which  provides  for the  treatment of
non-hazardous  wastewaters such as leachates,  oily waters,  industrial  process
waters and off-spec products.

We paid  $2,915,000  in  cash  for  the  acquired  assets  and  assumed  certain
liabilities  of A&A and EMAX.  The  acquisitions  were  accounted  for using the
purchase method  effective March 23, 2004, and  accordingly,  the estimated fair
values of the assets acquired and liabilities assumed of A&A and EMAX as of this
date,  and the  results  of  operations  since this date,  are  included  in the
accompanying  consolidated  financial  statements.  As of  March  23,  2004,  we
performed   preliminary   purchase  price  allocations  based  upon  information
available as of this date,  and we are in the process of  obtaining  third party
evaluations


                                       11
<PAGE>

of certain  assets,  thus, the allocation of the purchase  prices are subject to
refinement. Accordingly, the purchase prices were preliminarily allocated to the
net assets and net  liabilities so acquired and assumed based on their estimated
fair values.  Included in these  preliminary  allocations were current assets of
$2,481,000,  property  and  equipment  of  $2,066,000,  current  liabilities  of
approximately  $1,141,000  and  long-term  environmental  liability of $491,000.
Based on the preliminary purchase price allocations no goodwill was recorded.

6. Private Placement

On March 22,  2004,  we  completed  a private  placement  for gross  proceeds of
approximately  $10,386,000  through the sale of  4,616,113  shares of our Common
Stock at $2.25 per share and Warrants to purchase an additional 1,615,638 shares
of our Common  Stock  exercisable  at $2.92 per share and a term of three years.
The private  placement was sold to fifteen  accredited  investors.  The net cash
proceeds received of $9,946,000, after paying placement agent fees, were used in
connection  with the  acquisitions  of certain  acquired  assets of A&A and EMAX
discussed  above,  and to pay down the  Revolving  Credit.  We have  incurred an
additional $75,000 for expenses related to the private  placement.  We intend to
use our  availability  under our Revolving  Credit to repay higher interest debt
such as the Notes with an interest  rate of 13.5%.  We also  issued  Warrants to
purchase an  aggregate of 160,000  shares of our Common  Stock,  exercisable  at
$2.92 per share and with a three year term, for consulting  services  related to
the private placement.

7. Operating Segments

Pursuant to FAS 131, we define an operating segment as:

      o  A business activity from which we may earn revenue and incur expenses;

      o  Whose operating  results are regularly  reviewed by the chief operating
         decision maker to make decisions about resources to be allocated to the
         segment and assess its performance; and

      o  For which discrete financial information is available.

We have three operating  segments,  which are defined as each business line that
we  operate.  This  however,  excludes  corporate  headquarters,  which does not
generate revenue.

Our operating segments are defined as follows:

The Industrial Waste Management Services segment, which provides on-and-off site
treatment,  storage,  processing  and  disposal of hazardous  and  non-hazardous
industrial waste,  commercial waste and wastewater through our eight facilities;
Perma-Fix Treatment Services,  Inc., Perma-Fix of Dayton, Inc., Perma-Fix of Ft.
Lauderdale,  Inc., Perma-Fix of Orlando, Inc., Perma-Fix of South Georgia, Inc.,
Perma-Fix of Michigan, Inc., Perma-Fix of Maryland, Inc. (which acquired certain
assets and assumed certain liabilities of A&A) and Perma-Fix of Pittsburgh, Inc.
(which  acquired  certain  assets of EMAX) We provide  through  Perma-Fix  Field
Services various waste management services to certain governmental agencies.

The  Nuclear  Waste  Management  Services  segment,  which  provides  treatment,
storage,  processing and disposal services for waste which is both hazardous and
low-level   radioactive   ("Mixed   Waste").   Included  in  such  is  research,
development,  on and off-site  waste  remediation of nuclear mixed and low-level
radioactive  waste  through our three  facilities;  Perma-Fix of Florida,  Inc.,
Diversified  Scientific  Services,  Inc. and East Tennessee Materials and Energy
Corporation.


                                       12
<PAGE>

The Consulting Engineering Services segment provides  environmental  engineering
and regulatory compliance services through Schreiber,  Yonley & Associates, Inc.
which includes oversight management of environmental  restoration projects,  air
and  soil  sampling  and  compliance  and  training  activities,   as  well  as,
engineering support as needed by our other segments.

The table below presents certain financial  information in thousands by business
segment for the three months ended March 31, 2004 and 2003.

Segment Reporting for the Quarter Ended March 31, 2004

<TABLE>
<CAPTION>

                                  Industrial      Nuclear
                                     Waste         Waste                       Segments                     Consolidated
                                   Services      Services     Engineering        Total       Corporate(2)      Total
                                 -------------   ----------  -------------   ------------   -------------   --------------
<S>                                 <C>          <C>            <C>            <C>              <C>            <C>
Revenue from external customers     $ 7,266      $ 9,475(3)     $   728        $ 17,469         $    --        $17,469
Intercompany revenues                   275          988             61           1,324              --          1,324
Interest income                           1           --             --               1              --              1
Interest expense                        166          454             --             620              50            670
Interest expense-financing fees          --           --             --              --             256            256
Depreciation and amortization           575          649              7           1,231               5          1,236
Segment profit (loss)                (2,533)         484              4          (2,045)             --         (2,045)
Segment assets(1)                    44,572       56,749          2,076         103,397           8,932        112,329
Expenditures for segment assets         359          662              8           1,029              44          1,073
</TABLE>


Segment Reporting for the Quarter Ended March 31, 2003

<TABLE>
<CAPTION>

                                  Industrial      Nuclear
                                     Waste         Waste                       Segments                    Consolidated
                                   Services      Services     Engineering        Total      Corporate(2)      Total
                                 -------------   ----------  -------------   -----------   -------------   --------------
<S>                                 <C>          <C>            <C>            <C>             <C>           <C>
Revenue from external customers     $10,243      $ 8,386(3)    $    889        $ 19,518        $    --        $ 19,518
Intercompany revenues                 1,143          407            133           1,683             --           1,683
Interest income                           2           --             --               2             --               2
Interest expense                        182          485             (3)            664             38             702
Interest expense-financing fees          --            2             --               2            299             301
Depreciation and amortization           534          577             10           1,121             19           1,140
Segment profit (loss)                  (828)         316             81            (431)            --            (431)
Segment assets(1)                    41,597       58,176          2,155         101,928          4,559         106,487
Expenditures for segment assets         446          669              2           1,117             87           1,204
</TABLE>

(1)   Segment  assets have been  adjusted for  intercompany  accounts to reflect
      actual assets for each segment.

(2)   Amounts  reflect the activity for corporate  headquarters  not included in
      the segment information.

(3)   The  consolidated  revenues  within the  Nuclear  Waste  Services  segment
      include the Bechtel Jacobs  revenues for the quarter ended March 31, 2004,
      which total $1,516,000 or (8.7%) of total revenue and $1,733,000 (or 8.9%)
      for the same quarter in 2003.


                                       13
<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                 PART I, ITEM 2

Forward-looking Statements

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

      o     improve our operations and liquidity;

      o     anticipated improvement in the financial performance of the Company;

      o     ability  to  comply  with  the  Company's  general  working  capital
            requirements;

      o     ability  to be  able to  continue  to  borrow  under  the  Company's
            revolving line of credit;

      o     ability to generate sufficient cash flow from operations to fund all
            costs of  operations  and  remediation  of certain  formerly  leased
            property in Dayton,  Ohio, and the Company's  facilities in Memphis,
            Tennessee; Detroit, Michigan; and Valdosta, Georgia;

      o     ability  to  remediate  certain  contaminated  sites  for  projected
            amounts;

      o     ability to fund up to  $5,625,000 of budgeted  capital  expenditures
            during 2004;

      o     as  the  M&EC   facility   continues   to  enhance  its   processing
            capabilities and completes certain expansion  projects,  the Company
            could see higher total revenues under Oak Ridge Contracts;

      o     increasing other sources of revenue at M&EC;

      o     growth of our Nuclear segment;

      o     positive results in our Industrial segment from our strategy;

      o     improvement in the second and third quarters;

      o     Actions to be taken against our Oklahoma subsidiary;

      o     use of  proceeds  from  the  private  placement  to pay  off  higher
            interest debt; and

      o     ability under the joint ventures to win contract  awards and perform
            remedial activities.

While the Company  believes the expectations  reflected in such  forward-looking
statements are reasonable, it can give no assurance such expectations will prove
to have been 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:

      o     general economic conditions;

      o     material reduction in revenues;

      o     inability  to  collect  in a timely  manner  a  material  amount  of
            receivables;

      o     increased competitive pressures;

      o     the ability to maintain and obtain required permits and approvals to
            conduct operations;

      o     the ability to develop new and existing  technologies in the conduct
            of operations;

      o     ability to retain or renew certain required permits;

      o     discovery of additional contamination or expanded contamination at a
            certain Dayton, Ohio, property formerly leased by the Company or the
            Company's facilities at Memphis,  Tennessee;  Valdosta,  Georgia and
            Detroit,  Michigan,  which  would  result in a material  increase in
            remediation expenditures;

      o     changes in federal, state and local laws and regulations, especially
            environmental laws and regulations, or in interpretation of such;


                                       14
<PAGE>

      o     potential  increases in equipment,  maintenance,  operating or labor
            costs;

      o     management retention and development;

      o     financial  valuation of intangible assets is substantially less than
            expected;

      o     termination  of the Oak Ridge  Contracts  as a result of our lawsuit
            against Bechtel Jacobs or otherwise;

      o     the  requirement to use internally  generated funds for purposes not
            presently anticipated;

      o     inability to continue to be profitable on an annualized basis;

      o     the  inability  of the Company to maintain the listing of its Common
            Stock on the NASDAQ;

      o     Oklahoma  authorities  could assert  monetary  fines or penalties or
            other  action  against  our  Tulsa  subsidiary  (including,  but not
            limited to, loss of permits);

      o     the  determination  that PFMI or PFO was  responsible for a material
            amount of remediation at certain superfund sites; and

      o     Terminations  of  contracts  with federal  agencies or  subcontracts
            involving  federal  agencies,   or  reduction  in  amount  of  waste
            delivered to the Company under these contracts or subcontracts.

The Company  undertakes no  obligations to update  publicly any  forward-looking
statement, whether as a result of new information, future events or otherwise.

Overview

We provide services through three reportable operating segments.  The Industrial
Waste Management Services segment  ("Industrial  segment") is engaged in on-site
and off-site  treatment,  storage,  disposal and processing of a wide variety of
by-products and industrial,  hazardous and  non-hazardous  wastes,  and with the
recent  acquisitions,  added 24-hour  emergency  response,  vacuum  services and
marine and industrial  maintenance services.  The segment operates and maintains
facilities and businesses in the waste by-product  brokerage,  on-site treatment
and stabilization, and off-site blending, treatment and disposal industries. The
Nuclear  Waste  Management   Services  segment  ("Nuclear   segment")   provides
treatment,  storage,  processing  and  disposal  services of mixed waste  (waste
containing  both  hazardous and low-level  radioactive  materials) and low-level
radioactive  wastes,  including  research,  development and on-site and off-site
waste   remediation.   The  presence  of  nuclear  and   low-level   radioactive
constituents within the waste streams processed by this segment create different
and unique operational,  processing and  permitting/licensing  requirements from
those  contained  within the  Industrial  segment.  Our  Consulting  Engineering
Services segment provides a wide variety of environmental related consulting and
engineering  services to both industry and  government.  These services  include
oversight  management  of  environmental  restoration  projects,  air  and  soil
sampling,  compliance  reporting,  surface and subsurface water treatment design
for removal of pollutants, and various compliance and training activities.

The  results,  on a  consolidated  basis,  for the  first  quarter  of 2004 were
disappointing.   However,  we  were  able  to  achieve  a  number  of  important
developments during the quarter, including the acquisitions of certain assets by
Perma-Fix of Maryland, Inc. ("PFMD") and Perma-Fix of Pittsburgh,  Inc. ("PFP").
These acquisitions enable us to expand the Industrial  segment's presence within
one of its most  consistent and profitable  markets.  Also, the Nuclear  segment
continues  to  grow  the  business,  to  reduce  its  processing  costs  and  to
demonstrate its capabilities. We are working on several strategic initiatives to
not only treat, but also  characterize  and handle  radioactive and mixed waste,
which should ultimately  improve the flow of waste into our Nuclear  facilities.
The Industrial segment's revenues and gross margin were down dramatically during
the first quarter of 2004, due  principally to the recent  restructuring,  which
included the elimination of low-margin,  high volume services, and the reduction
in the segment's dependence on outside broker disposal services. The quarter was
also affected by an exaggerated seasonal slowdown in this first quarter, coupled
with the ongoing  disruption of our Michigan  facility  resulting from a fire in
the fourth quarter of 2003, and a reduction in our government revenue within the
Industrial segment.


                                       15
<PAGE>

Results of Operations

The table  below  should  be used when  reviewing  management's  discussion  and
analysis for the three months ended March 31, 2004 and 2003:

                                                     Three Months Ended
                                                           March 31,
                                              ----------------------------------
Consolidated (amounts in thousands)              2004       %      2003      %
--------------------------------------------------------------------------------
Net Revenues                                  $17,469    100.0   $19,518   100.0
Cost of good sold                              13,908     79.6    14,457    74.1
                                              -------    -----   -------   -----
     Gross Profit                               3,561     20.4     5,061    25.9

Selling, general and administrative             4,390     25.1     4,380    22.4
                                              -------    -----   -------   -----
     Income (loss) from operations            $  (829)    (4.7)  $  681     3.5
                                              =======    =====   ======    ====
Interest expense                                 (670)    (3.8)   (702)    (3.6)

Interest expense-financing fees                  (256)    (1.5)   (301)    (1.5)

Preferred Stock dividends                         (47)     (.3)    (46)     (.2)

Summary - Three Months Ended March 31, 2004 and 2003

Net Revenue

Consolidated  net revenues  decreased to $17,469,000 for the quarter ended March
31, 2004, as compared to $19,518,000 for the same quarter in 2003.  Historically
we experience  reduced revenues during the first quarter of our fiscal year. See
"Known Trends and Uncertainties - Seasonality" of this  Management's  Discussion
and  Analysis.  During the first quarter 2004 this trend was more severe than we
normally experienced during the first quarter in previous years. The decrease of
$2,049,000 or 10.5% is primarily  attributable  to a decrease in the  Industrial
segment of  approximately  $2,977,000  resulting  principally from the continued
restructuring  of the segment.  The  Industrial  segment has made the  strategic
decision to  eliminate  low margin  broker  business  and replace it with higher
margin generator direct revenue, which resulted in reduced revenues in the first
quarter of 2004. We have noticed  revenues  turning upward during the last month
of the  quarter  as we  believe  that our  strategy  has begun to show  positive
results.  Other  reductions  were  due to the  Industrial  segment  suffering  a
temporary  disruption in their bulking  services at our Michigan  facility since
November  of last  year  due to a fire  and  from  the  first  quarter  seasonal
slowdown.  The remaining decrease for the segment is attributable to the decline
in government revenues of approximately $993,000,  partially a result of special
event  work that was  performed  in the  first  quarter  of 2003,  which was not
available in 2004,  and roughly  $336,000 due to a contract that expired  during
the second quarter of 2003. Partially offsetting the decrease within the segment
is $505,000 of revenue  contributed from two facilities acquired as of March 23,
2004.  See  "Acquisitions"  of this  Management's  Discussion  and  Analysis for
further information on the acquired facilities. Positively impacting 2003, which
was not duplicated in 2004, was the Newport Hydrolysate  project,  from which we
recognized  revenue of $560,000 during the first quarter of 2003. The Consulting
Engineering  Service  segment  also  experienced  a  decrease  of  approximately
$161,000.  Offsetting these decreases, was an increase in the Nuclear segment of
approximately  $1,089,000,  resulting  from the continued  expansion  within the
mixed waste market as our  facilities  demonstrate  their  ability to accept and
process more complex waste streams,  and we receive new contracts for additional
services  such as the  characterization  and handling of  radioactive  and mixed
waste. Consolidated revenues with Bechtel Jacobs Company, which includes the Oak
Ridge  contracts,  totaled  $1,516,000  or 8.7% of total  revenues for the three
months ended March 31, 2004, compared to $1,733,000 or 8.9% for the three months
ended  March 31,  2003.  See


                                       16
<PAGE>

"Known Trends and  Uncertainties - Significant  Contracts" of this  Management's
Discussion and Analysis.  The backlog of stored waste within the Nuclear segment
at March 31, 2004,  was  approximately  $5,040,000,  compared to  $5,782,000  at
December 31, 2003.

Cost of Goods Sold

Cost of goods sold  decreased  $549,000 or 3.8% for the quarter  ended March 31,
2004, as compared to the quarter ended March 31, 2003.  This decrease in cost of
goods  sold  principally  reflects  a  decrease  in the  Industrial  segment  of
approximately  $1,058,000,  which primarily relates to the decrease in revenues.
This  decrease,  included  the  reduction  in costs from 2003 due to the Newport
hydrolysate  project,  not duplicated in 2004. Partially offsetting the decrease
was the additional  costs to process and dispose of waste related to the loss of
our Michigan facility's ability to perform bulking services in November 2003, as
this facility is still unable to perform  certain  services,  and the additional
transportation  and  disposal  costs  incurred  as  the  segment  completes  its
restructuring and integration  efforts. The first quarter of 2004 also reflected
additional  operating costs related to revenue from the two facilities acquired,
as of March 23, 2004. Additionally,  the Consulting Engineering Services segment
experienced  a decrease of $37,000,  which  corresponds  with the  reduction  in
revenue.  Partially  offsetting these decreases was an increase in cost of goods
sold for the Nuclear  segment of  $546,000  due to the  correlating  increase in
sales.  Depreciation expense of $1,140,000 and $1,036,000 for the quarters ended
March 31, 2004 and 2003, respectively,  is included in cost of goods sold, which
reflects an increase of $104,000.

Gross Profit

The  resulting  gross  profit for the quarter  ended March 31,  2004,  decreased
$1,500,000 to $3,561,000, which as a percentage of revenue is 20.4%, as compared
to 25.9% for the quarter  ended March 31,  2003.  The  decrease in gross  profit
percentage  principally reflects a decrease in the Industrial segment from 19.0%
in 2003 to 0.4% in 2004.  The  segment's  decrease  reflects  the fixed costs of
operating the facilities being spread over reduced revenues, relating in part to
the  restructuring,  as well as the  decrease  in  margin  from  the loss of the
Michigan  facility's  ability  to  perform  bulking  services  after the fire in
November of last year.  The effects of the March 23, 2004  acquisitions  and the
loss of the Newport  hydrolysate  project included in the first quarter of 2003,
principally   offset  each  other  for  the  quarter   ended  March  31,   2004.
Additionally,  there  was a  decrease  in the  Consulting  Engineering  Services
segment from 32.7% in 2003 to 22.9% in 2004,  which reflects the impact of lower
revenues during the quarter  covering certain fixed costs. The decrease in gross
profit percentage is partially offset by an increase in the Nuclear segment from
33.6% in 2003 to 35.5% in 2004,  reflecting  mainly the  favorable  product  mix
during  the  quarter,  improvements  within the waste  processing  lines and the
benefit from the fixed cost nature of these facilities as revenues increase.

Selling, General and Administrative

Selling,  general and administrative  expenses increased $10,000 or 0.2% for the
quarter  ended March 31, 2004,  as compared to the quarter ended March 31, 2003.
This  increase is  partially  due to the  Nuclear  segment  expenses  increasing
$139,000,  over the first  quarter of 2003 as a result of increased  payroll and
related expense, as the segment builds stronger  infrastructures.  Additionally,
the Company as a whole experienced  increases of $232,000,  from payroll related
expenses,  as well as additional legal, audit and public company expenses in the
normal course of business for 2004,  which included  Sarbanes  Oxley  Compliance
activities.  The first  quarter of 2003 was  positively  impacted  by a one time
insurance  credit of  $90,000.  Offsetting  the  increase  was a decrease in the
Industrial and Consulting  Engineering  Services  segments.  The majority of the
savings  for these two  segments  relates to payroll and  related  expenses  and
outside services,  with the decrease in the Industrial  segment partially due to
the  restructuring  of the segment.  Depreciation  and  amortization  expense of
$97,000 and $104,000 was included  within  selling,  general and  administrative
expenses for the first quarters of 2004 and 2003, respectively.  As a percentage
of revenue,  selling, general and administrative expenses increased to 25.1% for
the quarter ended March 31, 2004, compared to 22.4% for the same period in 2003.


                                       17
<PAGE>

Interest Expense

Interest  expense  decreased  $32,000 for the quarter  ended March 31, 2004,  as
compared to the  corresponding  period of 2003.  This  decrease  reflects  lower
borrowing  levels and interest rates on our PNC revolving  credit and term loan,
resulting  in a decrease in  interest  expense of  $40,000.  Additionally,  this
decrease  reflects  the impact of the  reduction  in debt  associated  with past
acquisitions resulting in a decrease in interest expense of $18,000.  Offsetting
these decreases was an increase in interest  expense of $26,000  associated with
debt  entered  into in  2003,  principally  related  to  facility  and  computer
upgrades.

Interest Expense - Financing Fees

Interest  expense-financing  fees  decreased  $45,000 for the three months ended
March 31,  2004,  as  compared  to the  corresponding  period  for  2003.  These
financing fees are principally associated with the credit facility and term loan
with PNC and the senior  subordinated  notes,  and are amortized to expense over
the term of the loan  agreements.  This decrease was primarily due to a one-time
write-off of fees in March 2003, associated with other short term financing.

Preferred Stock Dividends

Preferred Stock dividends  remained  relatively  constant at $47,000 and $46,000
for the  quarters  ended March 31, 2004 and 2003,  respectively.  The  Preferred
Stock dividends are comprised of  approximately  $31,000 accrued  dividends from
our Series 17  Preferred  Stock,  and  $16,000  from the  accrual  of  preferred
dividends on the Preferred Stock of our subsidiary, M&EC.

Liquidity and Capital Resources of the Company

Our capital  requirements  consist of general working  capital needs,  scheduled
principal  payments  on our debt  obligations  and capital  leases,  remediation
projects  and  planned  capital  expenditures.  Our  capital  resources  consist
primarily of cash generated from operations, funds available under our revolving
credit  facility and proceeds  from  issuance of our Common  Stock.  Our capital
resources are impacted by changes in accounts  receivable as a result of revenue
fluctuation,  economic trends,  collection activities,  and the profitability of
the segments.

At March 31, 2004, we had cash of $517,000. This cash total reflects an increase
of  $106,000  from  December  31,  2003,  as a result  of net cash  provided  by
operations of $2,612,000 and cash provided by financing activities of $2,442,000
(principally  proceeds  from the  issuance of Common  Stock in  connection  with
Warrant and option  exercises and issuances  under our employee  stock  purchase
plan of  approximately  $888,000  and net  proceeds  of  $9,871,000  received in
connection with the private placement  discussed below under "Private Placement"
of this  Management's  Discussion  and  Analysis,  and  partially  offset by net
repayments of our revolving credit facility and repayments of our long-term debt
of  approximately  $8,317,000)  offset by cash used in investing  activities  of
$4,948,000 (principally funds used for acquisitions of $2,903,000, net purchases
of equipment,  totaling $1,073,000 and a deposit to the finite risk sinking fund
of $991,000).  We are in a net borrowing  position and therefore attempt to move
all excess cash balances immediately to the revolving credit facility,  so as to
reduce debt and  interest  expense.  We utilize a  centralized  cash  management
system,  which  includes  remittance  lock boxes and is structured to accelerate
collection  activities and reduce cash  balances,  as idle cash is moved without
delay to the  revolving  credit  facility.  The cash  balance at March 31,  2004
represents  payroll  account  fundings,  which were not  withdrawn  until  after
quarter-end and from proceeds received from Warrant exercises.

Operating Activities

Accounts   receivable,   net  of  allowances  for  doubtful  accounts,   totaled
$23,526,000,  a decrease of  $1,096,000  from the  December  31, 2003 balance of
$24,622,000.  This decrease reflects the impact of decreased revenues within the
Industrial segment, which resulted in a decrease of $819,000.  This decrease was
offset by an increase in accounts  receivable  of  $2,095,000 as a result of the
assets  purchased


                                       18
<PAGE>

in the acquisitions discussed below in this Management's  Discussion & Analysis.
Additionally the Nuclear segment experienced a decrease of $2,310,000  primarily
due to increased  collections  within this segment.  The Consulting  Engineering
Services segment also experienced a decrease of $62,000 reflecting the impact of
decreased revenues during the quarter for this segment.

As of March 31, 2004, total  consolidated  accounts  payable was $7,553,000,  an
increase of $1,194,000 from the December 31, 2003,  balance of $6,359,000.  This
increase in accounts  payable  reflects  the impact of the  acquisitions,  which
resulted in an increase of $992,000.  Additionally,  accounts payable  increased
due to unfinanced capital expenditures.

Working  capital at March 31,  2004,  was  $3,024,000,  as  compared  to working
capital of $4,159,000 at December 31, 2003, reflecting a decrease of $1,135,000.
This  working  capital  decrease  principally  reflects the  decreased  accounts
receivable  balance net of the increased  accounts payable balance at the end of
the period.

Investing Activities

Our purchases of capital  equipment for the  three-month  period ended March 31,
2004, totaled  approximately  $1,073,000.  These expenditures were for expansion
and  improvements to the operations  principally  within both our Industrial and
Nuclear  segments.  The capital  expenditures  were  funded by cash  provided by
operations  and from  proceeds  from the  issuance  of stock,  upon  exercise of
Warrants  and  Options.   We  had  budgeted   capital   expenditures  of  up  to
approximately  $5,600,000 for 2004,  which includes an estimated  $1,675,000 for
completion  of certain  2003  projects in process,  as well as other  identified
capital  purchases for the expansion and  improvement  to the operations and for
certain  compliance  related  enhancements.  Our  purchases  during 2004 include
approximately  $517,000 to complete certain of the 2003 projects in process.  We
anticipate  funding capital  expenditures  by a combination of lease  financing,
internally generated funds, and/or the proceeds received from Option and Warrant
exercises.

Financing Activities

We have a Revolving Credit, Term Loan and Security Agreement  ("Agreement") with
PNC Bank,  National  Association,  a national banking association  ("PNC").  The
Agreement provided, at inception, for a term loan ("Term Loan") in the amount of
$7,000,000,   which  requires  principal  repayments  based  upon  a  seven-year
amortization,  payable over five years, with monthly installments of $83,000 and
the remaining unpaid  principal  balance due on December 22, 2005. The Agreement
also provided for a revolving line of credit ("Revolving Credit") with a maximum
principal  amount  outstanding at any one time of $18,000,000,  as amended.  The
Revolving  Credit advances are subject to limitations of an amount up to the sum
of (a) up to 85% of  Commercial  Receivables  aged 90 days or less from  invoice
date, (b) up to 85% of Commercial  Broker  Receivables  aged up to 120 days from
invoice date, (c) up to 85% of acceptable  Government Agency Receivables aged up
to 150 days from invoice date, and (d) up to 50% of acceptable  unbilled amounts
aged up to 60 days, less (e) reserves PNC reasonably deems proper and necessary.
The Revolving  Credit  advances shall be due and payable in full on December 22,
2005. As of March 31, 2004, the excess  availability  under our Revolving Credit
was  $11,437,000  based on our  eligible  receivables,  and after  reducing  the
outstanding balance of our Revolving Credit with approximately $6,966,000 of the
net proceeds from our recently completed private  placement.  We intend to use a
portion of the unused excess  availability to pay off higher interest debt, such
as our 13.5 % Senior Subordinated Notes.

Pursuant to the Agreement the Term Loan bears  interest at a floating rate equal
to the prime  rate plus 1 1/2 %, and the  Revolving  Credit at a  floating  rate
equal to the prime rate plus 1%. The loans are subject to a prepayment  fee of 1
1/2 % in the first  year,  1% in the second and third  years and 3/4 % after the
third anniversary until termination date.


                                       19
<PAGE>

Pursuant to the terms of the Stock  Purchase  Agreements in connection  with the
acquisition of Perma-Fix of Orlando,  Inc. ("PFO"),  Perma-Fix of South Georgia,
Inc.  ("PFSG")  and  Perma-Fix  of  Michigan,  Inc.  ("PFMI"),  a portion of the
consideration  was paid in the form of the  Promissory  Notes,  in the aggregate
amount of $4,700,000  payable to the former  owners of PFO,  PFSG and PFMI.  The
Promissory  Notes  are paid in  equal  monthly  installments  of  principal  and
interest of approximately $90,000 over five years and having an interest rate of
5.5% for the first three years and 7% for the remaining two years. The aggregate
outstanding  balance of the  Promissory  Notes total $268,000 at March 31, 2004,
which  is  in  current  liabilities.  Payments  of  such  Promissory  Notes  are
guaranteed by PFMI under a non-recourse guaranty, which non-recourse guaranty is
secured by certain real estate owned by PFMI. These Promissory Notes are subject
to subordination agreements with our senior and subordinated lenders.

On August 31, 2000, as part of the consideration for the purchase of Diversified
Scientific  Services,  Inc. ("DSSI"),  we issued to Waste Management  Holdings a
long-term  unsecured  promissory note (the "Unsecured  Promissory  Note") in the
aggregate  principal amount of $3,500,000,  bearing interest at a rate of 7% per
annum  and  having a  five-year  term  with  interest  to be paid  annually  and
principal due in one lump sum at the end of the term of the Unsecured Promissory
Note (August 2005).

On July 31,  2001,  we issued  approximately  $5,625,000  of our  13.50%  Senior
Subordinated  Notes due July 31,  2006 (the  "Notes").  The  Notes  were  issued
pursuant to the terms of a Note and Warrant Purchase  Agreement,  dated July 31,
2001 (the  "Purchase  Agreement"),  between the  Company,  Associated  Mezzanine
Investors - PESI, L.P. ("AMI"), and Bridge East Capital, L.P. ("BEC"). The Notes
are  unsecured  and are  unconditionally  guaranteed  by our  subsidiaries.  Our
payment  obligations under the Notes are subordinate to our payment  obligations
to our  primary  lender  and to  certain  other of our debts up to an  aggregate
amount of $25,000,000. It is our intent to prepay the Notes as discussed above.

Under  the  terms  of the  Purchase  Agreement,  we also  issued  to AMI and BEC
Warrants  to  purchase  up to  1,281,731  shares of our Common  Stock  ("Warrant
Shares")  at an  initial  exercise  price of $1.50 per share  (the  "Warrants"),
subject to adjustment  under certain  conditions which were valued at $1,622,000
and  recorded as a debt  discount and are being  amortized  over the term of the
Notes.  As of March 31, 2004, the  unamortized  portion of the debt discount was
$757,000.  The Warrants,  as issued, also contain a cashless exercise provision.
The Warrant Shares are registered under an S-3  Registration  Statement that was
declared effective on November 27, 2002.

In  conjunction  with our  acquisition  of East  Tennessee  Materials and Energy
Corporation  ("M&EC"),  M&EC issued a promissory note for a principal  amount of
$3,714,000 to PDC, dated June 25, 2001, for monies  advanced to M&EC for certain
services  performed by PDC. The promissory note is payable over eight years on a
semiannual  basis  on  June 30 and  December  31.  Interest  is  accrued  at the
applicable law rate  ("Applicable  Rate")  pursuant to the provisions of section
6621 of the Internal  Revenue Code of 1986 as amended,  (7.0% on March 31, 2004)
and payable in lump sum at the end of the loan period.  On March 31,  2004,  the
outstanding  balance was $4,363,000  including accrued interest of approximately
$1,009,000. PDC has directed M&EC to make all payments under the promissory note
directly  to the IRS to be applied to PDC's  obligations  under its  installment
agreement with the IRS.

Additionally,  M&EC  entered  into an  installment  agreement  with the Internal
Revenue  Service ("IRS") for a principal  amount of $923,000  effective June 25,
2001, for certain  withholding taxes owed by M&EC. The installment  agreement is
payable  over eight  years on a  semiannual  basis on June 30 and  December  31.
Interest is accrued at the Applicable  Rate and is adjusted on a quarterly basis
and payable in lump sum at the end of the installment  period. On March 31, 2004
the  Applicable  Rate was 7.0%. On March 31, 2004, the  outstanding  balance was
$1,078,000 including accrued interest of approximately $245,000.


                                       20
<PAGE>

The accrued dividends on the outstanding  Preferred Stock for the period July 1,
2003,  through  December 31, 2003, in the amount of  approximately  $63,000 were
paid in  February  2004 in the form of  19,643  shares  of  Common  Stock of the
Company.  The dividends for the period January 1, 2004,  through March 31, 2004,
total $31,000,  and will be paid in August 2004. Under our loan  agreements,  we
are prohibited from paying cash dividends on our outstanding capital stock.

As previously discussed, a fire at our Michigan facility did considerable damage
to the  facility.  The  facility had also  incurred  minor  disruption  from off
specification  waste from a customer  shipment received during the first quarter
of 2003. We intend to replace and repair this facility using insurance proceeds.
However,  we have a  $500,000  deductible  under  our  policy,  which we will be
required to pay. We have brought litigation against the customer that we believe
contributed  to the  disruption  during the first  quarter of 2003,  and at this
time, there are no assurances that we will be successful in our lawsuit.

In  summary,  we have  continued  to take steps to improve  our  operations  and
liquidity as discussed above. However, we continue to invest our working capital
back into our facilities to fund capital additions for expansion within both the
nuclear and industrial segments.  The first quarter,  which is traditionally our
slowest period,  experienced an exaggerated  seasonal  slowdown.  This slowdown,
combined with the continued weak performance from the economy, the disruption of
our  Michigan  facility  from a fire  in the  fourth  quarter  of  2003  and the
elimination of low margin  business and reduction in government  revenues in the
Industrial segment,  has negatively impacted our liquidity.  If we are unable to
improve our operations and become  profitable in the  foreseeable  future,  such
would have a material adverse effect on our liquidity position.

Acquisitions

On March 23, 2004, our  subsidiary,  PFMD completed it's  acquisition of certain
assets of A&A and our  subsidiary,  PFP  completed  its  acquisition  of certain
assets of EMAX. We paid  $2,915,000 in cash for the acquired  assets and assumed
liabilities of A&A and EMAX, using funds received in connection with the private
placement  discussed  below.  A&A and EMAX had  unaudited  combined  revenues of
approximately  $15.0  million  in 2003  and a  combined  loss  of  approximately
$299,000.

Private Placement

On March 22,  2004,  we  completed  a private  placement  for gross  proceeds of
approximately  $10,386,000  through the sale of  4,616,113  shares of our Common
Stock at $2.25 per share and Warrants to purchase an additional 1,615,638 shares
of our Common  Stock  exercisable  at $2.92 per share and a term of three years.
The private  placement was sold to fifteen  accredited  investors.  The net cash
proceeds received of $9,946,000, after paying placement agent fees, were used in
connection  with the  acquisitions  of certain  acquired  assets of A&A and EMAX
discussed  above,  and to pay down the  Revolving  Credit.  We have  incurred an
additional $75,000 for expenses related to the private  placement.  We intend to
use our  availability  under our Revolving  Credit to repay higher interest debt
such as the Notes with an interest  rate of 13.5%.  We also  issued  Warrants to
purchase an  aggregate of 160,000  shares of our Common  Stock,  exercisable  at
$2.92 per share and with a three year term, for consulting  services  related to
the private placement. See Item 2, Part II of this report for further discussion
as to the private placement.


                                       21
<PAGE>

Contractual Obligation

The following table  summarizes our  contractual  obligations at March 31, 2004,
and the effect such  obligations  are expected to have on our liquidity and cash
flow in future periods, (in thousands):

                                                  Payments due by period
                                           -------------------------------------
                                                                          After
Contractual Obligations           Total      2004   2005-2007 2008-2009   2009
--------------------------------------------------------------------------------
Long-term debt                   $20,851   $ 2,570   $17,480   $   801   $    --
Interest on long-term debt         1,254        --        --     1,254        --
Operating leases                   3,848     1,092     2,671        85        --
Finite risk policy                 8,030        --     3,011     2,008     3,011
Purchase obligations (1)              --        --        --        --        --
                                 -------   -------   -------   -------   -------
  Total contractual obligations  $33,983   $ 3,662   $23,162   $ 4,148   $ 3,011
                                 =======   =======   =======   =======   =======

(1) We are not a party to any significant  long-term service or supply contracts
with respect to our  processes.  We refrain  from  entering  into any  long-term
purchase commitments in the ordinary course of business.

In June 2003,  we entered into a 25-year  finite risk  insurance  policy,  which
provides  financial  assurance  to  the  applicable  states  for  our  permitted
facilities  in the event of unforeseen  closure.  Prior to obtaining or renewing
operating permits we are required to provide financial assurance that guarantees
to the states  that in the event of closure  our  permitted  facilities  will be
closed in accordance with the  regulations.  The policy provides  $35,000,000 of
financial  assurance  coverage  and has  available  capacity to allow for annual
inflation and other performance and surety bond  requirements.  This finite risk
insurance policy required an upfront payment of $4,000,000,  of which $2,766,000
represents  the  full  premium  for  the  25-year  term of the  policy,  and the
remaining $1,234,000, was deposited in a sinking fund account.  Additionally, in
February  2004  we paid  the  first  of nine  required  annual  installments  of
$1,004,000,  of which  $991,000 was deposited in the sinking fund  account,  the
remaining $13,000 represents a terrorism premium.  As of March 31, 2004, we have
recorded $2,225,000 in our sinking fund on the balance sheet. In comparison,  we
paid $1,121,000 of non-returnable insurance premiums for the year 2002 financial
assurance program, along with an additional collateral requirement of $4,000,000
in the form of a letter of credit  issued by PNC,  at an annual fee of  $160,000
per year. On the fourth and subsequent  anniversaries of the contract inception,
we may elect to terminate this contract. If we so elect, the Insurer will pay us
an amount  equal to 100% of the  sinking  fund  account  balance  in return  for
complete releases of liability from both us and any applicable regulatory agency
using  this  policy  as  an  instrument  to  comply  with  financial   assurance
requirements.

Warrant and Option Exercises

During the first quarter of 2004, Capital Bank Grawe Gruppe, AG ("Capital Bank")
exercised three of its outstanding  warrants and a portion of two other warrants
to  purchase  an  aggregate  of 329,262  shares of our  Common  Stock at a total
exercise price of approximately $625,000. Additionally,  various other investors
exercised  Warrants  to purchase  86,787  shares of our Common  Stock,  of which
36,787  shares were issued on a cashless  basis,  and  proceeds of $85,000  were
received  for the  remaining  shares.  Holders  of certain  outstanding  options
exercised  their  options to purchase  77,240  shares of our Common Stock for an
aggregate  purchase price of  approximately  $107,000.  The Warrants and options
were exercised in accordance with the terms of their respective  documents.  The
proceeds  of the  Warrant  and  options  exercise  were  used  to  fund  capital
expenditures and current working capital needs.


                                       22
<PAGE>

Critical Accounting Policies

In preparing the consolidated financial statements in conformity with accounting
principles  generally accepted in the United States,  management makes estimates
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. We believe the following critical  accounting  policies affect
the more significant estimates used in preparation of the consolidated financial
statements:

Revenue  Recognition  Estimates.  Effective  September  1, 2003 we  refined  our
percentage of completion  methodology for purposes of revenue recognition in our
Nuclear  Segment.  As we accept more complex waste streams in this segment,  the
treatment  of those  waste  streams  becomes  more  complicated  and  more  time
consuming.  We have  continued to enhance our waste  tracking  capabilities  and
systems,  which  has  enabled  us to  better  match  the  revenue  earned to the
processing   milestones   achieved.    The   major   milestones   are   receipt,
treatment/processing, and shipment/final disposition. Upon receiving mixed waste
we recognize 33% of revenue as we incur costs for transportation, analytical and
labor  associated  with the receipt of mixed wastes.  As the waste is processed,
shipped  and  disposed  of we  recognize  the  remaining  67% of revenue and all
associated costs.

Allowance for Doubtful Accounts.  The carrying amount of accounts  receivable is
reduced by an allowance for doubtful  accounts,  which is a valuation  allowance
that reflects  management's best estimate of the amounts that are uncollectable.
We regularly review all accounts  receivable balances and based on an assessment
of current credit worthiness,  estimate the portion, if any, of the balance that
are  uncollectable.  This allowance was approximately  0.8%, of revenue for both
2003 and 2002, and approximately  3.6%, and 2.9% of accounts  receivable for the
three month periods ended March 31, 2004 and 2003, respectively.

Intangible  Assets.  Intangible assets relating to acquired  businesses  consist
primarily of the cost of purchased  businesses in excess of the  estimated  fair
value of net assets acquired ("goodwill") and the recognized permit value of the
business.  We  continually  reevaluate  the propriety of the carrying  amount of
permits and  goodwill to  determine  whether  current  events and  circumstances
warrant adjustments to the carrying value. Effective January 1, 2002, we adopted
SFAS 142.  We  utilized  an  independent  appraisal  firm to test  goodwill  and
permits,  separately,  for  impairment.  The  initial  report  provided  by  the
appraiser  indicated that no impairment existed as of January 1, 2002.  Goodwill
and permits  were again  tested as of October 1, 2002 and  October 1, 2003,  and
each of these tests also indicated no impairment.  Effective January 1, 2002, we
discontinued amortizing indefinite life intangible assets (goodwill and permits)
as  required  by SFAS  142.  The  appraisers  estimated  the  fair  value of our
operating  segments  using a  discounted  cash  flow  valuation  approach.  This
approach  is  dependent  on  estimates  for  future  sales,   operating  income,
depreciation   and   amortization,   working   capital   changes,   and  capital
expenditures,  as well as,  expected  growth rates for cash flows and  long-term
interest rates, all of which are impacted by economic  conditions related to our
industry as well as conditions in the U.S. capital markets.

Accrued   Closure   Costs.   Accrued   closure  costs   represent  a  contingent
environmental  liability to clean up a facility in the event we cease operations
in an  existing  facility.  The accrued  closure  costs are  estimates  based on
guidelines developed by federal and/or state regulatory  authorities under RCRA.
Such costs are evaluated annually and adjusted for inflationary  factors and for
approved changes or expansions to the facilities.  Increases due to inflationary
factors for 2004 and 2003, have been  approximately  1.6% and 1.1% respectively,
and based on the historical  information,  we do not expect future  inflationary
changes to differ  materially.  Increases or decreases in accrued  closure costs
resulting from changes or expansions at the  facilities are determined  based on
specific RCRA  guidelines  applied to the  requested  change.  This  calculation
includes certain estimates, such as disposal pricing, external labor, analytical
costs  and


                                       23
<PAGE>

processing costs, which are based on current market conditions. However, we have
no intention, at this time, to close any of our facilities.

Accrued Environmental  Liabilities.  We have four remediation projects currently
in progress.  The current and long-term accrual amounts for the projects are our
best  estimates  based on proposed  or  approved  processes  for  clean-up.  The
circumstances that could affect the outcome range from new technologies that are
being   developed   every  day  to  reduce  our  overall  costs,   to  increased
contamination  levels that could arise as we  complete  remediation  which could
increase our costs,  neither of which we  anticipate  at this time. In addition,
significant changes in regulations could adversely or favorably affect our costs
to  remediate  existing  sites  or  potential  future  sites,  which  cannot  be
reasonably quantified.  We have also accrued long term environmental liabilities
for our  recently  acquired  facilities,  however  as  these  are not  permitted
facilities we are currently under no obligation to clean up the contamination.

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

Known Trends and Uncertainties

Seasonality. Historically we have experienced reduced revenues, operating losses
or  decreased  operating  profits  during the first and fourth  quarters  of our
fiscal  years  due to a  seasonal  slowdown  in  operations  from  poor  weather
conditions and overall reduced  activities during the holiday season and through
January and  February of the first  quarter.  During our second and third fiscal
quarters  there has  historically  been an increase in  revenues  and  operating
profits. Management expects this trend to continue in future years. As discussed
above,  this trend  continued in the first  quarter  2004,  but the reduction in
revenues  and the net loss for the first  quarter  2004 was greater than we have
historically experienced in prior first quarter periods as previously discussed.
The  DOE  and  DOD  represent  major  customers  for  the  Nuclear  segment.  In
conjunction  with the federal  government's  September 30 fiscal  year-end,  the
Nuclear segment experiences seasonably large shipments during the third quarter,
leading up to this  government  fiscal  year-end,  as a result of incentives and
other quota  requirements.  Correspondingly  for a period of approximately three
months following September 30, the Nuclear segment is generally seasonably slow,
as the governmental budgets are still being finalized, planning for the new year
is occurring and we enter the holiday season.

Economic Conditions. Economic downturns or recessionary conditions can adversely
affect the demand for our services,  principally within the Industrial  segment.
Reductions in industrial  production  generally follow such economic conditions,
resulting  in  reduced  levels  of waste  being  generated  and/or  sent off for
treatment.  We believe that our revenues  and profits were  negatively  affected
within this segment by the recessionary  conditions in 2003, and that this trend
continued into 2004.

Significant  contracts.  Our revenues are principally  derived from numerous and
varied customers.  However,  our Nuclear segment has a significant  relationship
with Bechtel  Jacobs,  who manages the Oak Ridge  contracts  under which our Oak
Ridge Tennessee  subsidiary ("M&EC") operates.  Our revenues with Bechtel Jacobs
contributed 8.7% of total consolidated  revenues in the three months ended March
31, 2004 and 8.9% of total consolidated revenues during the same period in 2003.
As the M&EC  facility  continues  to enhance  its  processing  capabilities  and
completes  certain  expansion  projects and with the amended  pricing  structure
under the Oak Ridge  contracts,  we could see higher total  revenue with Bechtel
Jacobs  and under the Oak Ridge  contracts.  The Oak Ridge  contracts  have been
extended  for a period of


                                       24
<PAGE>

two years,  through June 2005, with several pricing  modifications.  In February
2003, M&EC commenced  legal  proceedings  against  Bechtel  Jacobs,  the general
contractor under the Oak Ridge contracts, seeking payment from Bechtel Jacobs of
approximately  $4.3 million in surcharges  relating to certain  wastes that were
treated by M&EC in 2001 and 2002 under the Oak Ridge contracts. These surcharges
have not yet been billed.  Bechtel Jacobs continues to deliver waste to M&EC for
treatment,  and M&EC continues to accept such waste. In addition,  subsequent to
the filing of the lawsuit,  M&EC has entered  into a new  contract  with Bechtel
Jacobs to treat DOE waste.  There is no guarantee of future  business  under the
Oak Ridge  contracts,  and either party may terminate the Oak Ridge contracts at
any time. Termination of these contracts could have a material adverse effect on
us. We are  working  towards  increasing  other  sources of  revenues at M&EC to
reduce the risk of reliance on one major source of revenues.

During the first quarter of 2004, we finalized negotiations on two joint venture
agreements  with other remedial  waste  companies for the purposes of bidding on
certain  contracts  and,  if such  contracts  are  awarded,  to perform  various
remedial activities.  If the joint ventures are awarded the contracts,  we would
be  required  to make an initial  contribution  of working  capital to the newly
formed  joint  venture   companies.   The  potential   initial  working  capital
contribution  for the two joint ventures in the aggregate would be approximately
$500,000.

Insurance.  We maintain  insurance  coverage  similar to, or greater  than,  the
coverage  maintained  by other  companies of the same size and  industry,  which
complies with the requirements under applicable  environmental laws. We evaluate
our insurance  policies annually to determine  adequacy,  cost effectiveness and
desired deductible levels. Due to the downturn in the economy and changes within
the environmental insurance market, we have no guarantee that we will be able to
obtain  similar  insurance in future years,  or that the cost of such  insurance
will not increase materially.

Environmental  Contingencies.  We are engaged in the waste  management  services
segment of the  pollution  control  industry.  As a  participant  in the on-site
treatment,  storage and disposal market and the off-site  treatment and services
market, we are subject to rigorous federal,  state and local regulations.  These
regulations  mandate  strict  compliance and therefore are a cost and concern to
us. Because of their integral role in providing quality environmental  services,
we make every  reasonable  attempt to maintain  complete  compliance  with these
regulations.  However, even with a diligent commitment,  we, as with many of our
competitors,  may be required to pay fines for  violations  or  investigate  and
potentially remediate our waste management facilities.

We routinely  use third party  disposal  companies,  who  ultimately  destroy or
secure landfill residual materials  generated at our facilities or at a client's
site.  Compared to certain of our competitors,  we dispose of significantly less
hazardous  or  industrial  by-products  from  our  operations  due to  rendering
material  non-hazardous,   discharging  treated  wastewaters  to  publicly-owned
treatment works and/or  processing wastes into saleable  products.  In the past,
numerous  third  party  disposal  sites  have  improperly  managed  wastes  that
subsequently required remedial action;  consequently,  any party utilizing these
sites  may  be  liable  for  some  or all of the  remedial  costs.  Despite  our
aggressive compliance and auditing procedures for disposal of wastes, we have in
the past and may in the  future,  be  notified  that we are a PRP at a  remedial
action site, which could have a material adverse effect on us.

We have budgeted for 2004 approximately $1,143,000 in environmental expenditures
to  comply  with  federal,  state  and  local  regulations  in  connection  with
remediation of certain contaminates at four locations.  The four locations where
these expenditures will be made are the Leased Property in Dayton, Ohio (EPS), a
former RCRA  storage  facility as  operated by the former  owners of PFD,  PFM's
facility in Memphis,  Tennessee, PFSG's facility in Valdosta, Georgia and PFMI's
facility in Detroit, Michigan. We have estimated the expenditures for 2004 to be
approximately  $592,000 at the EPS site, $216,000 at the PFM location,  $246,000
at the PFSG site and $89,000 at the PFMI site of which $7,000; $17,000;


                                       25
<PAGE>

$13,000; and $12,000, respectively,  were spent during the first three months of
2004.  Additional  funds will be  required  for the next seven years to properly
remediate  these sites.  We expect to fund the 2004 expenses to remediate  these
four sites from funds generated  internally,  our revolving  credit facility and
from the exercise of Warrants and Options,  however,  no assurances  can be made
that we will be able to do so.

We recently discovered that our Tulsa,  Oklahoma subsidiary,  which has a permit
to treat and store  hazardous  waste in certain areas of its facility,  had been
improperly   accepting  and  storing  a  substantial  amount  of  hazardous  and
non-hazardous  waste in  violation  of certain  environmental  laws in areas not
permitted  to accept  and/or to store  hazardous  and  non-hazardous  waste.  We
voluntarily  reported this matter to the  appropriate  Oklahoma  authorities and
have  removed  this  waste  to  permitted   treated,   storage  and/or  disposal
facilities.  We are  working  with  the  Oklahoma  authorities  to  provide  the
information they requested as to this matter.  As of the date of this report, we
have not been notified by the Oklahoma authorities as to what action or actions,
if any,  they will take  against  our  subsidiary  as a result of this  improper
acceptance and storage of waste. The Oklahoma  authorities could assert monetary
fines or penalties or take other action against our subsidiary  (including,  but
not limited to, loss of permits),  which may have a material  adverse  effect on
us.

In connection with our acquisitions  discussed above, we have accrued  long-term
environmental liabilities of $391,000 and $100,000, respectively. As part of our
acquisition due diligence process we completed environmental assessments of each
facility and  determined a best  estimate of the cost to remediate the hazardous
and/or  non-hazardous  contamination  on certain of the properties owned by PFMD
and a property leased by PFP. These facilities are currently under no obligation
to clean up the  contamination,  and we do not intend in the immediate future to
begin remediation.  If environmental  regulations  change, we could be forced to
clean up the contamination.

At March 31, 2004, we had accrued environmental liabilities totaling $3,017,000,
which  reflects an increase of $442,000  from the December 31, 2003,  balance of
$2,575,000.  The increase  represents  the  additional  environmental  liability
accrued  for PFMD and PFP,  partially  offset by  payments  made on  remediation
projects.  The March 31,  2004,  current  and  long-term  accrued  environmental
balance is recorded as follows:

<TABLE>
<CAPTION>

                       PFD        PFM       PFSG       PFMI      PFMD        PFP        Total
                    --------   --------   --------   -------   --------   --------   ----------
<S>                 <C>        <C>        <C>        <C>       <C>        <C>        <C>
Current Accrual     $598,000   $199,000   $233,000   $77,000   $     --   $     --   $1,107,000
Long-term accrual    150,000    603,000    666,000        --    391,000    100,000    1,910,000
                    --------   --------   --------   -------   --------   --------   ----------
      Total         $748,000   $802,000   $899,000   $77,000   $391,000   $100,000   $3,017,000
                    ========   ========   ========   =======   ========   ========   ==========
</TABLE>

Interest Rate Swap

We entered into an interest rate swap agreement  effective December 22, 2000, to
modify the  interest  characteristics  of our  outstanding  debt from a floating
basis to a fixed rate,  thus  reducing  the impact of interest  rate  changes on
future income.  This agreement  involves the receipt of floating rate amounts in
exchange for fixed rate interest payments over the life of the agreement without
an exchange of the underlying  principal amount.  The differential to be paid or
received is accrued as interest  rates change and recognized as an adjustment to
interest  expense  related  to  the  debt.  The  related  amount  payable  to or
receivable from counter  parties is included in other assets or liabilities.  At
March 31, 2004, the market value of the interest rate swap was in an unfavorable
value  position of $118,000 and was  recorded as a  liability.  During the three
months  ended March 31, 2004,  we recorded a gain on the  interest  rate swap of
$12,000 that offset other  comprehensive  loss in the Statement of Stockholders'
Equity.


                                       26
<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


                                 PART I, ITEM 3

We are exposed to certain market risks arising from adverse  changes in interest
rates,  primarily  due to the  potential  effect of such changes on our variable
rate loan arrangements with PNC. We entered into an interest rate swap agreement
to modify the interest characteristics of $3,500,000 of its $7,000,000 term loan
with PNC Bank,  from a floating  rate basis to a fixed rate,  thus  reducing the
impact of interest rate changes on this portion of the debt.


                                       27
<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.
                             CONTROLS AND PROCEDURES


                                 PART 1, ITEM 4

We maintain  disclosure controls and procedures that are designed to ensure that
information  required to be disclosed in the periodic  reports  filed by us with
the  Securities  and Exchange  Commission  (the "SEC") is  recorded,  processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC and that such  information is  accumulated  and  communicated  to our
management.  Based on the most recent evaluation,  which was completed as of the
end of the period  covered  by this  Quarterly  Report on Form  10-Q,  our Chief
Executive  Officer  and Chief  Financial  Officer  believe  that our  disclosure
controls and procedures (as defined in Rules 13a-14 and 15d-14 of the Securities
Exchange  Act of 1934,  as amended)  are  effective.  There were no  significant
changes in our internal  controls or in other  factors that could  significantly
affect  these  internal  controls  subsequent  to the  date of the  most  recent
evaluation.


                                       28
<PAGE>

                     PERMA-FIX ENVIRONMENTAL SERVICES, INC.

                           PART II - Other Information

Item 1. Legal Proceedings

      There are no additional  material  legal  proceedings  pending  against us
      and/or our  subsidiaries  not  previously  reported by us in Item 3 of our
      Form 10-K for the year ended  December  31,  2003,  which is  incorporated
      herein by reference, except as follows:

      In  March  2004,  we  settled  the  lawsuit,   Bryson  Adams,  et  al.  v.
      Environmental  Purification Advancement Corporation,  et al.; Civil Action
      No. 99-1998,  United States District Court, Western District of Louisiana.
      We paid in settlement of this lawsuit the sum of $60,000 in April 2004.

      We recently discovered that our Tulsa,  Oklahoma  subsidiary,  which has a
      permit  to  treat  and  store  hazardous  waste  in  certain  areas of its
      facility,  had been improperly  accepting and storing a substantial amount
      of hazardous and non-hazardous waste in violation of certain environmental
      laws in areas not  permitted  to  accept  and/or  to store  hazardous  and
      non-hazardous   waste.   We  voluntarily   reported  this  matter  to  the
      appropriate  Oklahoma authorities and have removed this waste to permitted
      treated,  storage  and/or  disposal  facilities.  We are working  with the
      Oklahoma  authorities to provide the information they requested as to this
      matter.  As of the date of this report,  we have not been  notified by the
      Oklahoma  authorities as to what action or actions, if any, they will take
      against our subsidiary as a result of this improper acceptance and storage
      of  waste.  The  Oklahoma  authorities  could  assert  monetary  fines  or
      penalties or take other action against our subsidiary (including,  but not
      limited to, loss of permits),  which may have a material adverse effect on
      us.

Item 2. Changes in Securities and Use of Proceeds

 (c)  During the quarter  ended March 31, 2004,  we sold equity  securities,  as
      such term is defined  under 12b-2 of the Exchange Act of 1934, as amended,
      that were not  registered  under the  Securities  Act of 1933, as amended,
      other than as previously reported, as follows:

      On or about  January 7, 2004,  Capital  Bank,  exercised  a portion of its
      outstanding  Warrants  to purchase an  aggregate  of 11,762  shares of our
      Common Stock at a total exercise price of approximately  $21,000, or $1.75
      per share, in accordance  with the terms of the Warrants.  The shares were
      issued  under the  exemption  from  registration  provided by Section 4(2)
      and/or Rule 506 of  Regulation D based on Capital  Bank's  representations
      contained in the Warrant and prior dealings with us.

      On or about  January 29,  2004,  Capital Bank Grawe  Gruppe,  AG ("Capital
      Bank"),  exercised  one of its  outstanding  warrants to purchase  105,000
      shares of our  Common  Stock at a total  exercise  price of  approximately
      $207,000,  or  $1.9688  per  share,  in  accordance  with the terms of the
      warrant.  The shares were issued  under the  exemption  from  registration
      provided by Section 4(2) and/or Rule 506 of  Regulation D based on Capital
      Bank's  representations  contained in the Warrant and prior  dealings with
      us.

      On or  about  February  27,  2004,  Capital  Bank,  exercised  one  of its
      outstanding  Warrants to purchase  105,000 shares of our Common Stock at a
      total exercise price of approximately  $203,000,  or $1.9375 per share, in
      accordance with the terms of the Warrant. The shares were issued under the
      exemption  from  registration  provided by Section 4(2) and/or Rule 506 of
      Regulation  D based on Capital  Bank's  representations  contained  in the
      Warrant and prior capital needs.


                                       29
<PAGE>

      On or about March 31, 2004, Capital Bank, exercised one of its outstanding
      Warrants  to  purchase  105,000  shares  of our  Common  Stock  at a total
      exercise  price of  approximately  $190,000,  or  $1.8125  per  share,  in
      accordance with the terms of the Warrant. The shares were issued under the
      exemption  from  registration  provided by Section 4(2) and/or Rule 506 of
      Regulation  D based on Capital  Bank's  representations  contained  in the
      Warrant  and  prior  dealings  with us.  The  proceeds  from  all  Warrant
      exercises  were used to fund  capital  expenditures  and  current  working
      capital needs.

      During March 2004,  we  completed a private  placement of our Common Stock
      and Warrants for the purchase of our Common Stock,  and for gross proceeds
      of approximately  $10,386,000 in connection with this offering. We sold to
      15  accredited  investors  4,616,113  shares of Common  Stock at $2.25 per
      share and  Warrants  for the  purchase  of up to an  additional  1,615,638
      shares of Common Stock.  The Warrants have an exercise  price of $2.92 per
      share and a three year term.  The Warrants may be exercised  pursuant to a
      cashless  exercise  option if, at any time after one year from the date of
      issuance of the  Warrants,  there is no effective  registration  statement
      registering  the  resale  of the  shares  issuable  upon  exercise  of the
      Warrants  and such  shares are not  eligible  to be sold  pursuant to Rule
      144(k) of the Securities  Act.  Effective,  May 7, 2004, we registered the
      shares of Common  Stock  issued in the  private  placement,  the shares of
      Common Stock issuable upon exercise of the Warrants  issued in the private
      placement  and the shares of Common Stock  issuable  upon  exercise of the
      Consultant Warrants discussed below.

      We realized net proceeds from the private placement of approximately  $9.9
      million,  after paying fees of $440,000 to the placement agent and certain
      expenses of the placement agent. The net proceeds were used as follows:

            o     $2.9 million in connection with certain acquisitions; and

            o     the  remaining  $7.0 million,  as discussed  elsewhere in this
                  Form 10-Q.

      As  compensation  for consulting  services in connection  with the private
      placement,   we  issued  Warrants   ("Consultant   Warrants")  to  outside
      consultant to purchase an aggregate of 160,000 shares of our Common Stock,
      subject to adjustment.  The Consultant  Warrants have an exercise price of
      $2.92 per share and a three year term.

      The exercise  price of, and number of shares of Common Stock issuable upon
      exercise  of, the  Warrants  and  Consulting  Warrants are each subject to
      adjustment upon certain events. These events include,  among others, stock
      splits  and   reclassifications   of  our  Common   Stock,   and   certain
      reorganizations, mergers and consolidations.

      The issuance of shares,  Warrants and Consultant  Warrants described above
      was made  pursuant to a private  placement  under Section 4(2) and/or Rule
      506 of Regulation D of the Act. The shares issued in the private placement
      and issuable upon exercise of the Warrants issued in the private placement
      (excluding the shares issuable under the Consultant  Warrants) are subject
      to demand and piggyback registration rights.


                                       30
<PAGE>


Item 6. Exhibits and Reports on Form 8-K

  (a) Exhibits

      4.1   Securities  Purchase  Agreement  dated March 16,  2004,  between the
            Company and Alexandra  Global Master Fund,  Ltd.,  Alpha Capital AG,
            Baystar Capital II, L.P.,  Bristol  Investment Fund, Ltd.,  Crescent
            International  Ltd,  Crestview  Capital  Master LLC,  Geduld Capital
            Partners LP, Gruber & McBaine International,  Irwin Geduld Revocable
            Trust,  J  Patterson  McBaine,  Jon D.  Gruber and Linda W.  Gruber,
            Lagunitas Partners LP, Omicron Master Trust,  Palisades Master Fund,
            L.P.,  Stonestreet LP, is incorporated by reference from Exhibit 4.1
            of our  Registration  Statement  No.  333-115061.  The Company  will
            furnish  supplementally  a copy  of  all  omitted  schedules  to the
            Commission upon request.

      4.2   Registration  Rights  Agreement,  dated March 16, 2004,  between the
            Company and Alexandra  Global Master Fund,  Ltd.,  Alpha Capital AG,
            Baystar Capital II, L.P.,  Bristol  Investment Fund, Ltd.,  Crescent
            International  Ltd,  Crestview  Capital  Master LLC,  Geduld Capital
            Partners LP, Gruber & McBaine International,  Irwin Geduld Revocable
            Trust,  J  Patterson  McBaine,  Jon D.  Gruber and Linda W.  Gruber,
            Lagunitas Partners LP, Omicron Master Trust,  Palisades Master Fund,
            L.P.,  Stonestreet LP, is incorporated by reference from Exhibit 4.2
            of our Registration Statement No. 333-115061.

      4.3   Common Stock Purchase  Warrant,  dated March 16, 2004, issued by the
            company to Alexandra  Global Master Fund,  Ltd., for the purchase of
            262,500 shares of the Company's  common stock,  is  incorporated  by
            reference  from  Exhibit  4.3  of  our  Registration  Statement  No.
            333-115061.  Substantially  similar  warrants  were  issued  by  the
            Company to the following:  (1) Alpha Capital AG, for the purchase of
            up to 54,444 shares;  (2)Baystar  Capital II, L.P., for the purchase
            of up to 63,000 shares;  (3) Bristol  Investment Fund, Ltd., for the
            purchase of up to 62,222 shares; (4) Crescent International Ltd, for
            the purchase of up to 105,000 shares;  (5) Crestview  Capital Master
            LLC, for the purchase of up to 233,334  shares;  (6) Geduld  Capital
            Partners LP, for the purchase of up to 26,250  shares;  (7) Gruber &
            McBaine International,  for the purchase of up to 38,889 shares; (8)
            Irwin  Geduld  Revocable  Trust,  for the  purchase  of up to 17,500
            shares;  (9) J Patterson  McBaine,  for the purchase of up to 15,555
            shares;  (10) Jon D. Gruber and Linda W. Gruber, for the purchase of
            up to 38,889 shares; (11) Lagunitas Partners LP, for the purchase of
            up to 93,333 shares;  (12) Omicron Master Trust, for the purchase of
            up to 77,778  shares;  (13)  Palisades  Master Fund,  L.P.,  for the
            purchase of up to 472,500 shares;  and (14)  Stonestreet LP, for the
            purchase  of up to 54,444  shares.  Copies  will be  provided to the
            Commission upon request.

      10.1  Asset Purchase  Agreement dated March 23, 2004,  between the Company
            and USL Environmental Services, Inc., a Maryland corporation,  d/b/a
            A & A  Environmental,  is incorporated by reference from Exhibit 5.1
            of our Current Report on Form 8-K dated March 23, 2004, and filed on
            April 8, 2004. The Company will furnish supplementally a copy of all
            omitted schedules to the Commission upon request.

      10.2  Asset Purchase  Agreement dated March 23, 2004,  between the Company
            and US Liquids of  Pennsylvania,  Inc., a Pennsylvania  corporation,
            d/b/a EMAX of  Pittsburgh,  Pa., is  incorporated  by reference from
            Exhibit 5.2 of our Current  Report on Form 8-K dated March 23, 2004,
            and filed on April 8, 2004. The Company will furnish  supplementally
            a copy of all omitted schedules to the Commission upon request.

      10.3  Common Stock Purchase Warrant,  dated March 16, 2004, granted by the
            Company  to R. Keith  Fetter,  is  incorporated  by  reference  from
            Exhibit 10.3 of our Form S-3  Regisration  Statement dated April 30,
            2004.  Substantially  similar  warrants were granted to Joe Dilustro
            and Chet  Dubov,  each for the  purchase  of  30,000  shares  of the
            Company's  common stock.  Copies will be provided to the  Commission
            upon request.

      31.1  Certification by Dr. Louis F. Centofanti, Chief Executive Officer of
            the Company pursuant to Rule 13a-14(a) or 15d-14(a).


                                       31
<PAGE>

      31.2  Certification by Richard T. Kelecy,  Chief Financial  Officer of the
            Company pursuant to Rule 13a-14(a) or 15d-14(a).

      32.1  Certification by Dr. Louis F. Centofanti, Chief Executive Officer of
            the Company furnished pursuant to 18 U.S.C. Section 1350.

      32.2  Certification by Richard T. Kelecy,  Chief Financial  Officer of the
            Company furnished pursuant to 18 U.S.C. Section 1350.

      Reports on Form 8-K

            A current  report on Form 8-K (Item 12 - Results of  Operations  and
            Financial  Condition)  was filed by the  Company  on March 2,  2004,
            regarding the  financial  results and  conference  call for the year
            ended December 31, 2003.

            A current  report on Form 8-K (Item 5 - Other  Events)  was filed by
            the  Company  on March 23,  2004,  announcing  the  completion  of a
            private placement of its Common Stock.

            A current  report on Form 8-K/A (Item 5 - Other Events) was filed by
            the Company on April 4, 2004, to correct the previous Form 8-K filed
            on March 23, 2004.

            A current  report on Form 8-K (Item 5 - Other  Events)  was filed by
            the  Company  on April 8,  2004,  to report  the  completion  of the
            acquisitions of two facilities.

            A current  report on Form 8-K (Item 5 - Other  Events  and Item 12 -
            Results of  Operations  and  Financial  Condition)  was filed by the
            Company on April 30, 2004, to report improper acceptance and storage
            of  waste  at our  Tulsa  ,Oklahoma  facility  and to  announce  the
            financial  results and  conference  call for the three  months ended
            March 31, 2004.


                                       32
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, hereunto duly authorized.


                                                PERMA-FIX ENVIRONMENTAL SERVICES



Date:  May 10, 2004                        By:  /s/ Dr. Louis F. Centofanti
                                                --------------------------------
                                                Dr. Louis F. Centofanti
                                                Chairman of the Board
                                                Chief Executive Officer



Date:  May 10, 2004                        By:  /s/ Richard T. Kelecy
                                                --------------------------------
                                                Richard T. Kelecy
                                                Chief Financial Officer



                                       33

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>e17839_ex31-1.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
                                  EXHIBIT 31.1

                                 CERTIFICATIONS

I, Louis F. Centofanti, certify that:

1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  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)) 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)    (Intentionally omitted);

      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:  May 10, 2004

/s/ Dr. Louis F. Centofanti
---------------------------
Dr. Louis F. Centofanti
Chairman of the Board
Chief Executive Officer




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>e17839_ex31-2.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
                                  EXHIBIT 31.2

                                 CERTIFICATIONS

I, Richard T. Kelecy, certify that:

1.    I  have  reviewed  this  quarterly   report  on  Form  10-Q  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)) 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)    (Intentionally omitted);

      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: May 10, 2004

/s/ Richard T. Kelecy
-----------------------
Richard T. Kelecy
Chief Financial Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>e17839_ex32-1.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
                                  EXHIBIT 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


      In  connection  with  the  Quarterly  Report  of  Perma-Fix  Environmental
Services,  Inc.  ("PESI")  on Form 10-Q for the period  ended  March 31, 2004 as
filed with the Securities and Exchange  Commission on the date hereof (the "Form
10-Q"),  I Dr.  Louis F.  Centofanti,  Chief  Executive  Officer of the Company,
certify,  pursuant to 18 U.S.C.  ss.1350,  as adopted  pursuant to ss.906 of the
Sarbanes-Oxley Act of 2002, that:

      (1) The Form 10-Q fully complies with the requirements of Section 13(a) or
      15(d)  of the  Securities  Exchange  Act of  1934  (15  U.S.C.  ss.78m  or
      ss.78o(d)); and

      (2) The  information  contained in the Form 10-Q fairly  presents,  in all
      material  respects,  the financial  condition and results of operations of
      the Company.


Dated: May 10, 2004


/s/ Dr. Louis F. Centofanti
----------------------------
Dr. Louis F. Centofanti
President and
Chief Executive Officer

This certification is furnished to the Securities and Exchange Commission solely
for purpose of 18 U.S.C.  ss.1350  subject to the knowledge  standard  contained
therein, and not for any other purpose.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>e17839_ex32-2.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
                                  EXHIBIT 32.2


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                       AS ADOPTED PURSUANT TO SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002


      In  connection  with  the  Quarterly  Report  of  Perma-Fix  Environmental
Services,  Inc.  ("PESI")  on Form 10-Q for the period  ended  March 31, 2004 as
filed with the Securities and Exchange  Commission on the date hereof (the "Form
10-Q"), I Richard T. Kelecy,  Chief Financial  Officer of the Company,  certify,
pursuant  to  18  U.S.C.   ss.1350,   as  adopted  pursuant  to  ss.906  of  the
Sarbanes-Oxley Act of 2002, that:

      (1) The Form 10-Q fully complies with the requirements of Section 13(a) or
      15(d)  of the  Securities  Exchange  Act of  1934  (15  U.S.C.  ss.78m  or
      ss.78o(d)); and

      (2) The  information  contained in the Form 10-Q fairly  presents,  in all
      material  respects,  the financial  condition and results of operations of
      the Company.


Dated: May 10, 2004


/s/ Richard T. Kelecy
------------------------
Richard T. Kelecy
Chief Financial Officer

This certification is furnished to the Securities and Exchange Commission solely
for purpose of 18 U.S.C.  ss.1350  subject to the knowledge  standard  contained
therein, and not for any other purpose.


</TEXT>
</DOCUMENT>
</SUBMISSION>
