PERMA FIX ENVIRONMENTAL SERVICES INC

Previous wording

Our forward-looking statements are based on the beliefs and assumptions of our management and the information available to our management at the time these statements were prepared. Although we believe the expectations reflected in these statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on the forward-looking statements as noted above, which apply only to as of the date of this Form 10-Q. We undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

Current wording

Our forward-looking statements are based on the beliefs and assumptions of our management and the information available to our management at the time these statements were prepared. Although we believe the expectations reflected in these statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

Previous wording

We have seen steady improvements in our revenue and results of operations in each of the quarters in 2025. We believe we are positioned for improvements in the fourth quarter of 2025 and in 2026 (see a discussion of the recent federal government shutdown that may impact our results of operations below). Our Treatment Segment backlog stands at approximately $15,396,000 as of September 30, 2025, an increase of $7,537,000 or 95.9% from the December 31, 2024, balance of $7,859,000. In December 2024, BWXT Technologies and its team, of which we are a member, were awarded the West Valley Project contract for the cleanup operations at the West Valley Development Project in West Valley, New York. The contract has a 10-year ordering period with a maximum value of up to $3 billion for all of the services rendered by all members of the team that are performed for up to 15 years. Revenue contributed from this contract has been and is expected to be limited in 2025; however, we expect revenue to ramp up in 2026 as our scope under the contract is further defined, approved and transitions into operation. Also, we believe that our Perma-Fix Northwest Richland, Inc. (“PFNWR”) facility is positioned to support the DFLAW program at Hanford, Washington as hot commissioning of the Low-Activity Waste Vitrification Facility at Hanford has begun and is working toward full waste treatment operations. We continue to focus on increasing our expansion into the international markets which is reflected in revenue generated from foreign entities of approximately $4,893,000 for the nine months ended September 30, 2025, as compared to $1,377,000 for the corresponding period of 2024, an increase of $3,516,000 or 255.3%. Finally, we continue our aggressive approach in research and development (“R&D”), sales and marketing efforts and capital expenditures of our new PFAS technology which adversely impacted our results of operations for the first nine months of 2025 (See “Known Trends and Uncertainties – New Processing Technology” for a discussion of our new technology). We are continually monitoring our operating costs to ensure alignment with our revenue level.

Current wording

We are continually monitoring our operating costs to ensure alignment with our revenue levels.

Previous wording

Our Treatment and Services Segments’ business continue to be heavily dependent on services that we provide to federal governmental clients, primarily as subcontractors for others who are contractors to government entities or directly as the prime contractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including, without limitation, current economic and political conditions, government reductions, government budget issues, government shutdown and the manner in which the applicable government authority will be required to spend funding to remediate various sites. In addition, our governmental contracts and subcontracts relating to activities at federal governmental sites are generally subject to termination for convenience at any time, at the government’s option. Significant reductions in the level of governmental funding, government shutdown or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations, liquidity and cash flows.

Current wording

Our Treatment and Services Segments’ business continue to be heavily dependent on services that we provide to federal governmental clients, primarily as subcontractors for others who are contractors to government entities or directly as the prime contractor. We believe demand for our services will continue to be subject to fluctuations due to a variety of factors beyond our control, including, without limitation, current economic and political conditions, government reductions, passage of government budgets, government shutdowns and CRs, and the manner in which the applicable government authority will be required to spend funding to remediate various sites. In addition, our governmental contracts and subcontracts relating to activities at federal governmental sites are generally subject to termination for convenience at any time, at the government’s option. Significant reductions in the level of governmental funding, government shutdown or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations, liquidity and cash flows.

Previous wording

The reporting of financial results and pertinent discussions are tailored to our two reportable segments: The Treatment Segment and Services Segment.

Current wording

The reporting of financial results and pertinent discussions are tailored to our two reportable segments: The Treatment and Services.

Previous wording

Treatment Segment revenue increased by $4,050,000 or 44.7% for the three months ended September 30, 2025, over the same period in 2024. The overall increase in revenue in the Treatment Segment was primarily due to higher waste volume and higher averaged price waste from waste mix. Our Treatment Segment revenue was also positively impacted by our international initiatives, which resulted in an increase in revenue from international customers of approximately $798,000 or 310.5% as compared to the same period of last year. Services Segment revenue decreased by approximately $3,408,000 or 44.0%. The decrease in revenue in the Services Segment was due to reasons as discussed in the “Overview” section. Additionally, our Services Segment revenues are project based; as such, the scope, duration, and completion of each project vary.

Current wording

Treatment Segment revenue decreased by $1,308,000 or 14.2%, for the three months ended March 31, 2026, compared to the same period in 2025. The decline was due to lower waste volume from government- related customers, partially offset by increased waste volume from commercial clients, reflecting efforts to expand our commercial customer base. Treatment Segment revenue was also negatively impacted from lower averaged price waste mix. The decrease in revenue in the Services Segment was due to reasons as discussed in the “Overview” section. Additionally, our Services Segment revenues are project-based, and therefore subject to variability in project scope, duration, and timing of completion.

Previous wording

Cost of goods sold decreased $581,000 for the quarter ended September 30, 2025, as compared to the quarter ended September 30, 2024, as follows:

Current wording

Cost of goods sold increased $745,000 for the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025, as follows:

Previous wording

Cost of goods sold for the Treatment Segment increased by approximately $2,659,000 or 9.9%. Treatment Segment’s variable costs increased by approximately $784,000 primarily due to the following: overall material and supplies, lab, and transportation costs were higher by approximately $2,281,000; variable payroll costs (overtime) were higher by approximately $323,000 due to increased waste volume production; and disposal costs were lower by approximately $1,820,000. Within our Treatment Segment, variable cost categories can fluctuate based on waste mix. Treatment Segment’s overall fixed costs were higher by approximately $1,875,000 resulting from the following: salaries and payroll related expenses were higher by $1,691,000 due to higher headcount and COLA effected during the third quarter of 2025; general expenses were higher by $378,000 primarily due to higher utility costs; travel expenses were higher by approximately $70,000; depreciation expenses were higher by $62,000 due to more finance leases and equipment purchases; maintenance expenses were lower by approximately $97,000 as the in the prior year, the Treatment Segment experienced unexpected equipment breakdowns that required replacements and repairs; and regulatory expenses were lower by approximately $229,000 from fewer regulatory matters. Services Segment cost of goods sold decreased $6,468,000 or 35.8% primarily due to lower revenue. The decrease in cost of goods sold was primarily due to overall lower salaries/payroll related, outside services, and travel costs totaling approximately $6,492,000; lower depreciation expenses totaling approximately $24,000 as certain equipment became fully depreciated in 2025; lower general expenses of approximately $106,000 in various categories; and overall higher material and supplies, disposal, and regulatory costs totaling approximately $154,000. Included within cost of goods sold is depreciation and amortization expense of $1,256,000 and $1,218,000 for the nine months ended September 30, 2025, and 2024, respectively.

Current wording

Cost of goods sold for the Treatment Segment increased by approximately $1,775,000, or 19.9%. Variable costs rose by approximately $1,209,000, driven primarily by higher disposal costs of approximately $1,235,000, partially offset by lower transportation, materials and supplies, and laboratory costs totaling approximately $26,000. Within our Treatment Segment, variable cost categories can fluctuate based on waste mix. Treatment Segment’s overall fixed costs increased by approximately $566,000 resulting from the following: fixed salaries and payroll related expenses were higher by $313,000 due to COLA implemented in July 2025; maintenance costs were higher by approximately $81,000 due to general equipment upkeep and facility security enhancements; depreciation expenses were higher by $74,000 due to increased capitalized equipment, including our prototype PFAS reactor; regulatory expenses were higher by approximately $117,000 due to increased regulatory activities and higher fees from regulatory agencies; and overall general expenses were lower by $19,000 primarily due to lower utility costs. Services Segment cost of goods sold decreased by $1,030,000, or 23.8%, primarily due to lower revenue. The decrease was largely driven by reduced subcontract and outside services costs of approximately $931,000. Additional decreases included lower general expenses of approximately $39,000 across various categories, reduced depreciation expense of approximately $20,000 as certain equipment became fully depreciated in 2025, and an overall reduction in material and supplies, disposal, laboratory, and regulatory expenses totaling approximately $275,000. These decreases were partially offset by higher salaries and payroll-related expenses of approximately $115,000 due to COLA implemented in July 2025, as well as increased travel expenses of approximately $120,000. Within our Services Segment, fluctuations in expense categories are influenced by the type and scope of projects performed during the period. Certain projects require greater reliance on subcontractors, specialized materials, regulatory compliance efforts, or travel, while others are more labor-driven or utilize in-house resources. As a result, the mix of project work can significantly impact the composition and level of costs incurred. Included within cost of goods sold is depreciation and amortization expense of $475,000 and $421,000 for the three months ended March 31, 2026, and 2025, respectively.

Previous wording

Treatment Segment gross profit increased by $4,921,000 or approximately 586.5% and gross margin increased to 12.1% % from (3.2)% primarily due to higher revenue from higher waste volume and higher averaged price from waste mix. The increase in fixed costs within the Treatment Segment negatively impacted gross profit and gross margin. Services Segment gross profit increased by $432,000 or approximately 174.9% and gross margin improved from 1.3% to 5.5%. The increases were attributed primarily to overall improved margin on projects and lower fixed costs which were offset by the impact of lower revenue. Our Services Segment gross margin is impacted by our current projects which are competitively bid on and will therefore, have varying margin structures.

Current wording

Treatment Segment gross profit decreased by $3,083,000 or approximately 1,233.2% and gross margin declined to (36.0%) from 2.7% primarily due to lower revenue driven by lower waste volume and a less favorable waste mix. The increase in fixed costs within the Treatment Segment also negatively impacted gross margin and contributed to the gross loss. Services Segment gross profit decreased by $455,000 or 111.8% and gross margin decreased to (1.5%) from 8.6% mainly due to lower revenue, partially offset by reduced fixed costs. Additionally, overall Services Segment gross margin is impacted by the nature of its projects, which are competitively bid and therefore have varying margin structures.

Previous wording

SG&Aexpenses increased $451,000 for the three months ended September 30, 2025, as compared to the corresponding period for 2024, as follows:

Current wording

SG&Aincreased $284,000 for the three months ended March 31, 2026, as compared to the corresponding period for 2025, as follows:

Previous wording

Our cash flow requirements during the nine months ended September 30, 2025, were financed by our Liquidity (defined under our Loan Agreement as borrowing availability under the revolving credit plus cash in our MMDA maintained with our lender). Our MMDA consist of cash received in connection with the sale of our Common Stock completed in 2024 as discussed below under “Financing Activities.” We believe our cash flow requirements for the next twelve months will consist primarily of general working capital needs, scheduled principal payments on our debt obligations, remediation projects, R&D on our PFAS technology and capital expenditures (which include our PFAS technology) (see “Known Trends and Uncertainties – New Processing Technology” within this MD&A for a discussion of this technology). We plan to fund these requirements from our operations and our Liquidity. We are continually reviewing operating costs and reviewing the possibility of further reducing operating costs and non-essential expenditures to bring them in line with revenue levels. As of September 30, 2025, we had no outstanding borrowing under our Revolving Credit and our Liquidity was approximately $23,844,000. We believe that our cash flows from operations and our Liquidity should be sufficient to fund our operations for the next twelve months. Assuming the federal government shutdown is quickly resolved, we believe our operations should improve in the fourth quarter of 2025 and in 2026. If we continue to incur losses such as in the first nine months of 2025, this could cause a reduction in our Liquidity and have a material adverse effect on our results of operations and our business.

Current wording

Our cash flow requirements during the three months ended March 31, 2026, were primarily financed by our Liquidity, defined under our PNC Loan Agreement as borrowing availability under the Revolving Credit portion of our Credit Facility plus cash in our MMDA maintained with our lender.

Previous wording

The following table reflects the cash flow activities during the first nine months of 2025 and 2024.

Current wording

The following table reflects the cash flow activities during the first three months of 2026 and 2025:

Previous wording

As of September 30, 2025, we were in a positive cash position with no revolving credit balance. As of September 30, 2025, we had cash on hand of approximately $16,412,000.

Current wording

As of March 31, 2026, we had cash on hand of approximately $6,664,000.

Previous wording

Cash used in operating activities of our continuing operations during the first nine months of 2025 consisted mostly of the net loss that we incurred of approximately $7,844,000, adjusted for certain non-cash items, such as $597,000 of stock-based compensation expenses and $1,299,000 of depreciation and amortization expenses. Cash flow decrease of approximately $2,838,000 resulting from net change in assets and liabilities reflects increases in unbilled and accounts receivable (net of provision for credit losses) totaling approximately $3,771,000, a net decrease in accounts payables, accrued expenses, deferred revenue and other accruals totaling approximately $745,000, offset by a net decrease in inventories, prepaids and other assets totaling approximately of $1,678,000. Our accounts receivables are impacted by timing of invoicing and collections. Our contracts with our customers are subject to various payment terms and conditions.

Current wording

Cash used in operating activities of our continuing operations during the first quarter of 2026 consisted mostly of the net loss that we incurred of approximately $7,375,000, adjusted for certain non-cash items, such as $216,000 of stock-based compensation expenses and $490,000 of depreciation and amortization expenses. Cash flow increase of approximately $2,860,000 resulting from net change in assets and liabilities reflects decreases in unbilled and accounts receivables (net of provision for credit losses) totaling approximately $2,772,000, a net increase in accounts payables, accrued expenses, deferred revenue and other accruals totaling approximately $440,000, offset by a net increase in inventories, prepaids and other assets totaling approximately of $352,000. Our accounts receivables are impacted by timing of invoicing and collections. Our unbilled receivables are impacted by differences between invoicing timing and our revenue recognition methodology.

Previous wording

Cash used in operating activities of our continuing operations during the first nine months of 2024 consisted primarily of the significant net loss that we incurred of approximately $16,049,000, adjusted for certain non-cash items, which included $466,000 of stock-based compensation expenses, $1,295,000 of depreciation and amortization expenses and $4,300,000 of deferred income tax expenses. Cash flow decrease of approximately $1,383,000 resulting from net change in assets and liabilities included a net decrease in accounts payables, accrued expenses, deferred revenue and other accruals totaling approximately $5,805,000, offset by decreases in accounts receivable (net of recovery in credit losses) and unbilled receivables totaling approximately $2,145,000, and a net decrease in inventories and prepaid and other assets totaling approximately of $2,277,000.

Current wording

Cash used in operating activities of our continuing operations during the first quarter of 2025 consisted mostly of the net loss that we incurred of approximately $3,500,000, adjusted for certain non-cash items, such as $196,000 of stock-based compensation expenses and $436,000 of depreciation and amortization expenses. Cash flow increase of approximately $668,000 resulting from net change in assets and liabilities included a decrease in accounts receivables (net of provision for credit losses) of $2,248,000, offset by an increase in unbilled receivables of $178,000, a net increase in inventories, prepaids and other assets totaling approximately $30,000 and a net decrease in accounts payables, accrued expenses, deferred revenue and other accruals totaling approximately $1,372,000

Previous wording

Cash used in operating activities of our discontinued operations in the first nine months of 2025 and 2024 consisted primarily of expenses incurred in connection with management and administration of regulatory matters for the Company’s remediation projects.

Current wording

Cash used in operating activities of our discontinued operations in the first quarter of 2026 and 2025 consisted primarily of expenses incurred in connection with management of administrative and regulatory matters related to our remediation projects.

Previous wording

We had working capital of $18,393,000 (which included working capital of our discontinued operations) as of September 30, 2025, as compared to working capital of $28,283,000 as of December 31, 2024. The decrease in our working capital was primarily due to the losses incurred from our operations during the nine months of 2025 as previously discussed.

Current wording

We had working capital of $5,894,000 (which included working capital of our discontinued operations) as of March 31, 2026, compared to working capital of $13,803,000 as of December 31, 2025. The decrease in our working capital was primarily driven by the net loss incurred from our operations as previously discussed and increase in capital expenditures discussed below.

Previous wording

Cash used in investing activities of our discontinued operations in the first nine months of 2025 consisted of payments made in connection with a certain regulatory permit at our Perma-Fix South Georgia, Inc. (“PFSG”) subsidiary and improvements made to the existing building.

Current wording

Cash used in investing activities of our discontinued operations in the first quarter of 2026 and 2025 consisted of payments made in connection with a certain regulatory permit at our PFSG subsidiary.

Previous wording

We anticipate making capital expenditures of up to approximately $3,230,000 for the remainder of 2025 to maintain operations and regulatory compliance requirements and support revenue growth. Our remaining anticipated capital expenditures for 2025 include certain strategic project initiatives which include our second-generation unit for our PFAS technology (see “Known Trends and Uncertainties – New Processing Technology”). We plan to fund our capital expenditures for the remainder of 2025 from cash from operations, Liquidity and/or financing. The initiation and timing of our capital expenditures for the remainder of 2025 are subject to a number of factors which include, among other things, cost/benefit analysis, the pace of our strategic project initiatives, improvement in our operations and resolution of the federal government shutdown.

Current wording

We anticipate making capital expenditures of approximately $3,000,000 to $5,500,000 in 2026 to maintain operations and regulatory compliance requirements and support revenue growth. In 2025, we made capital expenditure for our continuing operations of approximately $5,172,000, which included our PFAS reactors. Our anticipated capital expenditures for 2026 include certain strategic project initiatives which include expenditures to complete our second generation reactor for our PFAS technology. We plan to fund our capital expenditures for 2026 from cash from operations, Liquidity and/or financing. The initiation and timing of our capital expenditures in 2026 are subject to a number of factors which include, among other things, cost/benefit analysis, the pace of our strategic project initiatives and improvement in our operations. However, continuing losses may require us to consider various reductions to operations, including, but not limited to, reduction in R&D activities.

Previous wording

Our cash provided in financing during the first nine months of 2024 consisted primarily of net proceeds of $18,495,000 received from the sale of our Common Stock in May 2024 and proceeds received from option and warrant exercises totaling approximately $264,000, partially offset by principal payments of approximately $675,000 for our Term and Capital Loans under our Credit Facility and principal payments of $218,000 for our finance leases.

Current wording

Our cash used in financing during the first quarter of 2026 consisted mostly of principal payments of approximately $162,000 primarily for our Term and Capital Loans under our Credit Facility (see below for a discussion of our Credit Facility), principal payments of $81,000 for our finance leases, partially offset by proceeds received from option exercises of approximately $16,000.

Previous wording

Our cash used in financing during the first nine months of 2025 consisted mostly of principal payments of approximately $470,000 primarily for our Term and Capital Loans under our Credit Facility (see below for a discussion of our Credit Facility) principal payments of $228,000 for our finance leases, payments of $194,000 of offering costs from the equity raise that we completed in December 2024, partially offset by proceeds received from option exercises of approximately $79,000.

Current wording

Our cash used in financing during the first quarter of 2025 consisted mostly of principal payments of approximately $157,000 primarily for our Term and Capital Loans under our Credit Facility, principal payments of $71,000 for our finance leases, payments of $194,000 of offering costs from the equity raise that we completed in December 2024, partially offset by proceeds received from option exercises of approximately $41,000.

Previous wording

Our Loan Agreement, as amended, with PNC, contains certain financial covenant requirements, along with customary representations and warranties. A breach of any of these financial covenant requirements, unless waived by PNC, could result in a default under our Loan Agreement allowing our lender to immediately require the repayment of all outstanding debt under our Loan Agreement and terminate all commitments to extend further credit. We met all of our financial covenant requirements in the first, second and third quarters of 2025. We expect to meet our covenant requirements under our Loan Agreement for the next twelve months.

Current wording

Our PNC Loan Agreement contains certain financial covenant requirements, along with customary representations and warranties. A breach of any of these financial covenant requirements, unless waived by our lender, could result in a default under our PNC Loan Agreement allowing our lender to immediately require the repayment of all outstanding debt under our PNC Loan Agreement and terminate all commitments to extend further credit. We met all of our financial covenant requirements in the first quarter of 2026, including maintenance of a minimum of $5,000,000 in daily Liquidity. We expect to meet our financial covenant requirements for the next twelve months.

Previous wording

From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. As of September 30, 2025, the total amount of standby letters of credit outstanding totaled approximately $3,350,000, and the total amount of bonds outstanding totaled approximately $16,044,000. We also provide closure and post-closure requirements through a financial assurance policy for certain of our Treatment Segment facilities through AIG. As of September 30, 2025, the closure and post-closure requirements for these facilities were approximately $23,951,000.

Current wording

From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. As of March 31, 2026, the total amount of standby letters of credit outstanding totaled approximately $3,350,000 and the total amount of bonds outstanding totaled approximately $12,296,000. We also provide closure and post-closure requirements through a financial assurance policy for certain of our Treatment Segment facilities through AIG. As of March 31, 2026, the closure and post-closure requirements for these facilities were approximately $24,550,000.

Previous wording

See “Note 2 – Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” for the recent accounting pronouncement that was adopted in the first nine months of 2025 and recent accounting pronouncements that will be adopted in future periods.

Current wording

See “Note 2 – Summary of Significant Accounting Policies” in the “Notes to Condensed Consolidated Financial Statements” for the recent accounting pronouncement that was adopted in the first quarter of 2026 and recent accounting pronouncements that will be adopted in future periods.

Previous wording

Significant Customers. The contracts that we are a party to with others as subcontractors to the federal government or directly with the federal government generally provide that the government may terminate the contract at any time for convenience at the government’s option. Our inability to continue under existing contracts that we have with the federal government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition. We performed services relating to waste generated by federal government clients, either directly as a prime contractor or indirectly for others as a subcontractor to federal government entities, representing approximately $11,666,000 or 66.8% and $29,275,000 or 63.7% of our total revenues generated during the three and nine months ended September 30, 2025, respectively, as compared to $11,749,000 or 69.9% and $31,748,000 or 71.5% of our total revenues generated during the three and nine months ended September 30, 2024, respectively.

Current wording

Significant Customers. The contracts that we are a party to with others as subcontractors to the federal government or directly with the federal government generally provide that the government may terminate the contract at any time for convenience at the government’s option. Our inability to continue under existing contracts that we have with the federal government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations and financial condition. We performed services relating to waste generated by federal government clients, either indirectly as a subcontractor or directly as a prime contractor to federal government entities, representing approximately $6,836,000 or 61.4% of our total revenue during the three months ended March 31, 2026, as compared to $8,404,00 or 60.4% of our total revenue during the corresponding period of 2025.

Previous wording

Market Trends and Uncertainties. Macroeconomic conditions which include recent government and policy changes implemented in the United States, government budget issues, tariff actions and uncertainties related to trade wars, ambiguity around interest rates, softening labor markets, have created significant uncertainty in the global economy, volatility in the capital markets and recessionary pressures. We continue to monitor potential effects from these conditions that could impact our revenue and profitability which include supply chain challenges, cost volatility in goods that we utilize in our revenue production, and economic pressures on our customers that may result in reduced and/or delayed spending. We continue to monitor, evaluate and implement a range of strategic options which we believe will assist us to manage potential impacts from these factors, including supply chain optimization, pricing strategies, sourcing adjustments and cost reduction measures in order to minimize impacts to our financial results.

Current wording

Market Trends and Uncertainties. Macroeconomic conditions which include recent government and policy changes implemented in the United States, government budget issues, tariff actions and uncertainties related to trade wars, ambiguity around interest rates, softening labor markets and geopolitical instability, including ongoing conflicts and unrest in the Middle East, have created significant uncertainty in the global economy, volatility in the capital markets and recessionary pressures. We continue to monitor potential effects from these conditions that could impact our revenue and profitability which include supply chain challenges, cost volatility in goods that we utilize in our revenue production, and economic pressures on our customers that may result in reduced and/or delayed spending. We continue to monitor, evaluate and implement a range of strategic options which we believe will assist us to manage potential impacts from these factors, including supply chain optimization, pricing strategies, sourcing adjustments and cost reduction measures in order to minimize impacts to our financial results.

Previous wording

*New Processing Technology.*We have completed the fabrication, installation, commissioning and startup of our first full scale commercial Perma-FAS system (“System”) for PFAS destruction, located at our Perma-Fix Florida, Inc. facility. PFAS, commonly known as “forever chemicals,” is the acronym for Perfluoroalkyl and Polyfluoroalkyl Substances, a diverse group of thousands of human-made chemical pollutants that have the potential to persist in both the environment and the human body. An increasing number of studies have documented adverse health risks that are associated with PFAS exposure, including increased risks of some cancers, reduced immune function, and developmental delays in children. Commercial destruction of PFAS offers a promising new source of revenue for us, as it complements our core waste remediation technologies, and we have filed patent applications relating to our System technology for PFAS destruction. We have already processed commercial quantities of PFAS-containing waste materials with our pilot System. We believe there are limited current treatment options for these materials, and we expect that our process will exceed the performance of other methods. Some of the sizable markets for PFAS include AFFF firefighting foams, both expired concentrate and flushing liquids, contaminated liquids from PFAS systems, and other water-based separation products from a variety of industrial systems. We have already secured and treated approximately 15,000 gallons of AFFF liquids through the prototype reactor and have approximately 20,000 gallons in backlog. We believe that we will receive an additional 50,000 gallons in the coming months.

Current wording

*New Processing Technology.*With significant upgrades to our prototype Perma-FAS system (“System”) for PFAS destruction substantially completed in the latter part of 2025, our System has achieved commercial operational status at our PFF facility. PFAS, commonly known as “forever chemicals,” is a diverse group of thousands of human-made chemical pollutants that have the potential to persist in both the environment and the human body. An increasing number of studies have documented adverse health risks that are associated with PFAS exposure, including increased risks of some cancers, reduced immune function, and developmental delays in children.

Previous wording

Our strategy for our System includes continued treatment of PFAS liquids over the coming months and targeting engineering refinements to support larger-scale Systems. With significant upgrades to our prototype currently being completed, we anticipate deployment of the second-generation unit in the first quarter of 2026 at one of our other existing treatment facilities. We believe our second-generation system will allow us to triple our production capacity. In the next several calendar quarters, we expect to advance the Perma-FAS technology from demonstrated successful bench-scale testing to pilot-scale applications for soil, biosolids, and filter media, broadening the reach of our System’s PFAS destruction capabilities.

Current wording

With commercial operation of our System, we anticipate deployment of our second-generation unit in the second half of 2026 at our EWOC facility in Oak Ridge, Tennessee, which we believe will allow us to triple our production capacity. We continue to market our System technology through various channels. In December 2025, we entered into a joint distribution agreement with a U.S.-based company that manufactures fluorine-free firefighting agents and compressed air foam system, to promote our PFAS destruction technology as a preferred treatment options for customers requiring, compliant, long-term destruction of legacy PFAS stockpiles. In the next several calendar quarters, we expect to further advance our Perma-FAS technology from demonstrated successful bench-scale testing to pilot-scale applications for soil, biosolids, and filter media, broadening the reach of our System’s PFAS destruction capabilities.

Previous wording

We have three environmental remediation projects, all within our discontinued operations, which principally entail the removal/remediation of contaminated soil, and, in most cases, the remediation of surrounding ground water. We expect to fund the expenses to remediate these sites from funds generated from operations. As of September 30, 2025, we had total accrued environmental remediation liabilities of $764,000, a decrease of $3,000 from the December 31, 2024 balance of $767,000. The decrease represents payments for our PFSG remediation project. As of September 30, 2025, $630,000 of the total accrued environmental remediation liabilities was recorded as current.

Current wording

We have three environmental remediation projects, all within our discontinued operations, which principally entail the removal/remediation of contaminated soil, and, in most cases, the remediation of surrounding ground water. We expect to fund the expenses to remediate these sites from funds generated from operations. As of March 31, 2026, we had total environmental remediation liabilities of $3,472,000, a decrease of approximately $13,000 from the December 31, 2025 balance of $3,485,000. The decrease reflects payments for our PFSG remediation project. As of March 31, 2026, approximately $63,000 of the total environmental remediation liabilities were recorded as current.