PERMA FIX ENVIRONMENTAL SERVICES INC

Current report

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

Current report

We have incurred recurring losses and negative operating cash flows, which have reduced our liquidity and raise substantial doubt about our ability to continue as a going concern.

Current report

Our Liquidity (defined under our PNC Loan Agreement as borrowing availability under the Revolving Credit facility plus cash in our MMDA maintained with our lender) declined from $18,126,000 at December 31, 2025 to $10,720,000 at March 31, 2026, driven by ongoing operating losses, investments in PFAS technology, and infrastructure expansion, among other things. While we expect to fund operations through cash on hand, anticipated operating cash flows, and availability under our Revolving Credit facility, these sources are subject to uncertainty, including federal budget constraints and compliance with financial covenants. If these sources are insufficient, we may need to obtain additional financing or reduce expenditures, including R&D, which could materially adversely affect our business.

Current report

On May 1, 2026, subsequent to the end of the fiscal quarter ended March 31, 2026, and within four business days prior to the filing of this Quarterly Report on Form 10-Q, the Company entered into executive employment agreements with certain of its executive officers. These agreements provide for, among other things, specified terms of employment, compensation arrangements, and severance and change-in-control provisions, as described below. In accordance with Exchange Act Form 8-K Compliance and Disclosure Interpretation (“CDI”) 101.01, the Company is disclosing this information in this Quarterly Report on Form 10-Q in lieu of filing a separate Current Report on Form 8-K.

Current report

On May 1, 2026, the Compensation Committee and the Board approved, and the Company entered into employment agreements, which became effective May 1, 2026, with each of the Company’s executive officers (each, an “Executive” and, collectively, the “Executives”): Mark Duff, President and CEO; Ben Naccarato, CFO and EVP; Dr. Louis Centofanti, EVP of Strategic Initiatives; Richard Grondin, EVP of Hanford Waste Operations; and Troy Eshleman, COO (each such employment agreement is, individually, a “New Employment Agreement” and, collectively, the “New Employment Agreements”). The New Employment Agreements effectively replace existing employment agreements that the Company had previously entered into with each of the Executives, all of which had expired on April 20, 2026.

Current report

The New Employment Agreements are substantially identical, except for compensation amounts and certain post-termination covenants. Pursuant to the New Employment Agreements, each of the Executives is provided an annual salary, which annual salary may be increased from time to time, but not reduced, as determined by the Compensation Committee. The base salary under the New Employment Agreement of each Executive is as follows: Mark Duff, $429,670; Troy Eshleman, $329,600; Ben Naccarato, $342,795; Dr. Louis Centofanti, $285,666; and Richard Grondin, $324,725. In addition, each of the Executives is entitled to participate in the Company’s broad-based benefit plans and is eligible to receive equity awards under the Company’s employee stock option plan and to receive certain performance-based compensation that may be payable under the specific MIP applicable to each such Executive as approved by the Compensation Committee and the Board. Individual MIPs for the 2026 fiscal year commencing January 1, 2026, were previously approved by the Compensation Committee and the Board on January 22, 2026, each of which remains effective for fiscal year 2026 (See “Note 13 – Executive Compensation MIPs” for further discussion of the 2026 MIPs).

Current report

Each of the New Employment Agreements is effective for three years from May 1, 2026 through April 30, 2029, unless earlier terminated by the Company or the Executive under the circumstances described in the New Employment Agreements and discussed below.

Current report

Pursuant to the New Employment Agreements, if the Executive’s employment is terminated due to death or disability (as defined in the New Employment Agreements), the Company will pay to the Executive or to his estate an amount equal to (a) the sum of any accrued and unpaid base salary, reimbursement for any unreimbursed expenses properly incurred through the date of termination, accrued unused vacation time through the date of termination, and any benefits due to the Executive under any employee benefit plan (the “Accrued Amounts”), (b) performance compensation payable pursuant to the MIP with respect to the fiscal year immediately preceding the date of termination, if not already paid (“Prior Year Unpaid Bonuses”), (c) a pro-rata portion of the performance compensation payable pursuant to the MIP for the year of termination based on the number of days employed during the year (“Pro Rata Incentive Bonus”), and (d) a lump-sum payment (the “Cash Medical Continuation Benefit”) equal to eighteen times the monthly premium that would be required to be paid, pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), to continue group health coverage for the Executive’s eligible covered dependents (in the event of death) or for the Executive and his eligible covered dependents (in the event of disability), as in effect on the date of the Executive’s termination of employment, based on the premium for the first month of COBRA coverage. Such cash payment will be taxable and will be made regardless of whether COBRA continuation coverage is elected by the Executive.

Current report

If the Executive terminates his employment for “good reason” (as defined in the New Employment Agreements) or is terminated by the Company “without cause” (as defined in the New Employment Agreements), under circumstances not constituting a Change in Control (as defined in the New Employment Agreements), the Company will pay the Executive, (a) the Accrued Amounts, (b) Prior Year Unpaid Bonuses, (c) two years of full base salary, (d) performance compensation amount under the MIP in effect for the year in which the Executive is terminated, assuming for purpose of this payment that the Executive has achieved 100% of the performance target level identified in the MIP (the “Target Bonus”), and (e) the Cash Medical Continuation Benefit.

Current report

If the Executive terminates his employment for “good reason” or is terminated by the Company without cause within 24 months following a “Change in Control (as defined in the New Employment Agreements), the Company will pay the Executive (a) the Accrued Amounts, (b) Prior Year Unpaid Bonuses, (c) two years of full base salary, (d) two times the Target Bonus, and (e) the Cash Medical Continuation Benefit.

Current report

If the Executive’s employment is terminated by the Company for “cause” (as defined in the New Employment Agreement) or the Executive terminates his employment for a reason other than for “good reason,” the Company will pay to the Executive the Accrued Amounts and Prior Year Unpaid Bonuses.

Current report

Additionally, pursuant to the New Employment Agreements, in the event of the death or termination of the executive officer due to disability, all outstanding stock options to purchase Common Stock of the Company held by the Executive will immediately become exercisable in full commencing on the date of death or termination due to disability, with such options remaining exercisable for the earlier of the original option term or twelve months from the date of the Executive’s death or termination due to disability. In the event an Executive terminates his employment for “good reason” or is terminated by the Company without cause, under circumstances not involving a change in control, all then vested options at the time of termination will remain exercisable for the earlier of 12 months from the date of the Executive’s date of termination or the original term of the options. In the event an Executive terminates his employment for “good reason” or is terminated by the Company without cause within 24 months following a Change in Control, all outstanding stock options to purchase Common Stock held by the Executive will immediately become exercisable in full commencing on the date of termination with such options remaining exercisable for the earlier of the original option term or twelve months from the date of termination.

Current report

Severance benefits payable with respect to a termination (other than Accrued Amounts) shall not be payable until the termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A.

Current report

Each of the New Employment Agreements contain covenants relating to confidentiality and non-solicitation of employees, and, in the case of the New Employment Agreements of the CEO and COO, non-competition covenants, all of which covenants extend for the twelve (12) month period immediately following the Executive’s termination of employment with the Company for any reason.

Current report

The descriptions of the material terms of the New Employment Agreements contained herein are qualified in their entirety by reference to the text of the New Employment Agreements attached as exhibits 10.6 to 10.10 to this Form 10-Q and incorporated herein by reference.

Previous report

The following additional Risk Factor under “Risks Relating to our Business Operations” is as follows:

Previous report

A prolonged federal government shutdown may materially impact our results of operations.

Previous report

On October 1, 2025, the U.S. federal government entered into a partial shutdown as Congress failed to pass a new fiscal year funding bill. As a result of the government shutdown, we have been recently informed by certain government related clients that waste shipments are likely to be delayed until the government shutdown is resolved. Although the impact of the government shutdown has been limited at this time, a prolonged shutdown may create uncertainty and disruption for us from additional delayed and/or cancelled waste shipments, suspension and/or slowdown of active projects, and/or delayed/cancelled procurement requests. Additionally, the recent government shutdown has resulted in furloughed and terminated employees which may result in contract award delays, delayed payments for services already rendered and restricted communication with agency counterparts who may not be working. These aforementioned impacts could negatively impact our result of operations and liquidity, the extent of which is unknown at this time. However, we believe that negative impact to our results of operations and liquidity from a prolonged government shutdown may be lessened by our Treatment Segment backlog, along with increased receipts from international and commercial clients.