PERMA FIX ENVIRONMENTAL SERVICES INC

Previous wording

Activity in our Services Segment is also increasing. During the first quarter of 2026, the segment was awarded a two-year master task agreement with an estimated value of approximately $24 million for demolition and disposal services at Lawrence Livermore National Laboratory (“LLNL”). In addition, during the second quarter we were awarded nearly $15 million of additional contracts supporting multiple DOE and commercial sites.

Current wording

Our Services Segment revenue increased during the third quarter of 2026 compared with the corresponding period of 2025, primarily driven by increased project activity, including projects awarded since the beginning of 2026. These awards included a two-year master task agreement awarded in the first quarter of 2026 with an estimated value of approximately $24 million for demolition and disposal services at Lawrence Livermore National Laboratory (“LLNL”). However, revenue growth was partially constrained by customer-related delays in the mobilization of a project awarded during the early part of the second quarter of 2026. The project has since been mobilized.

Previous wording

On August 10 2026, we were awarded a Master IDIQ Subcontract by Hanford Tank Waste Operations & Closure, LLC (“H2C”) for the treatment and disposal of pretreated liquid mixed low-level waste from DOE’s Hanford Site (the “Company’s Master Subcontract”). H2C also awarded Master IDIQ Subcontracts to two other companies. H2C is the prime contractor to DOE’s Office of Environmental Management for tank waste operations and closure at the Hanford Site in southeastern Washington State. Work awarded to us under future task orders, if any, under the Company’s Master Subcontract, would be performed at our PFNW facility in Richland, Washington and would include the receipt and treatment of pretreated mixed low-level waste, with treated waste transported by rail for final disposal at a licensed commercial mixed low-level waste disposal facility outside the State of Washington. Task orders may be issued from January 1, 2027 through December 31, 2041, with performance of task orders issued before the end of the ordering period permitted for up to five years beyond the end of the ordering period. The multiple-award IDIQ procurement provides for a maximum cumulative quantity of 50 million gallons, with a maximum cumulative value of approximately $4.4 billion. These amounts represent procurement ceilings shared among all Master IDIQ Subcontract holders and do not represent amounts awarded or committed to us. The number, size and timing of task orders to be issued to us, if any, cannot be assured. Under our Performance Work Statement, we are required to maintain the capability to treat and dispose of pretreated tank waste at a rate of 100,800 gallons per week in accordance with facility license and permit conditions.

Current wording

On August 10, 2026, we were awarded a Master IDIQ Subcontract by Hanford Tank Waste Operations & Closure, LLC (“H2C”) for the treatment and disposal of pretreated liquid mixed low-level waste from DOE’s Hanford Site (the “Company’s Master Subcontract”). H2C also awarded Master IDIQ Subcontracts to two other companies. H2C is the prime contractor to DOE’s Office of Environmental Management for tank waste operations and closure at the Hanford Site in southeastern Washington State. Work awarded to us under future task orders, if any, would be performed at our PFNW facility in Richland, Washington, and would include the receipt and treatment of pretreated mixed low-level waste, with treated waste transported by rail for final disposal at a licensed commercial mixed low-level waste disposal facility outside the State of Washington. Task orders may be issued from January 1, 2027, through December 31, 2041, with performance of task orders issued before the end of the ordering period permitted for up to five years beyond the end of the ordering period. However, the commencement and timing of task orders, if any, are subject to applicable regulatory requirements, operational considerations, and other factors outside of our control. The multiple-award IDIQ procurement provides for a maximum cumulative quantity of 50 million gallons and a maximum cumulative value of approximately $4.4 billion. These amounts represent procurement ceilings shared among all Master IDIQ Subcontract holders and do not represent amounts awarded or committed to us. The number, size, and timing of task orders that might be issued to us under the Company’s Master Subcontract, if any, cannot be determined or assured. Under our Performance Work Statement, we are required to maintain the capability to treat and dispose of pretreated tank waste at a rate of 100,800 gallons per week in accordance with applicable facility license and permit conditions.

Previous wording

We believe the investments we have made in personnel, operational readiness, facility upgrades, capacity enhancements, as well as the acquisition of the rail-line land parcel that connects the PFNW property to the Port of Benton short-line railroad (see “Note 8 – Long-Term Debt – Promissory Note” to the accompanying Condensed Consolidated Financial Statements for further discussion of rail-line land parcel) have positioned us to support increasing Hanford-related activity. The commencement of Hanford-related waste receipts during the second quarter, the start of DFLAW liquid effluent waste receipts subsequent to quarter-end, the H2C contract award in August 2026 discussed below, and the growth in our Treatment Segment backlog indicate that these investments are beginning to translate into increased operating activity.

Current wording

We believe our investments, together with our continued focus on personnel and operational readiness and our acquisition of the rail-line land parcel connecting the PFNW property to the Port of Benton short-line railroad, position us to support increasing Hanford-related activity. See “Note 8 – Long-Term Debt – Promissory Note” to the accompanying Condensed Consolidated Financial Statements for further discussion of the rail-line land parcel.

Previous wording

See “Federal Funding” and “Market Trends and Uncertainties” in “Known Trends and Uncertainties” within this MD&A for a discussion of factors that could negatively impact our results of operations for the remainder of 2026.

Current wording

See “Federal Funding” and “Market Trends and Uncertainties” in “Known Trends and Uncertainties” within this MD&A for a discussion of factors that could negatively impact our results of operations for the remainder of 2026 and 2027.

Previous wording

See below “Results of Operations” for a discussion of our financial results for the three and six months ended June 30, 2026 as compared to the corresponding period of 2025.

Current wording

See below “Results of Operations” for a discussion of our financial results for the three and nine months ended September 30, 2026 as compared to the corresponding period of 2025.

Previous wording

Despite the positive developments discussed above, management concluded that substantial doubt continues to exist about our ability to continue as a going concern within one year after the date the accompanying Condensed Consolidated Financial Statements are issued (see “Liquidity and Capital Resources” within this MD&A for a discussion of the factors and conditions underlying this conclusion).

Current wording

Management concluded that substantial doubt continues to exist about our ability to continue as a going concern within one year after the date the accompanying Condensed Consolidated Financial Statements are issued (see “Liquidity and Capital Resources” within this MD&A for a discussion of the factors and conditions underlying this conclusion).

Previous wording

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

Current wording

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

Previous wording

(1) Includes wastes generated by government clients of $702,000 and $567,000 for the three months ended June 30, 2026 and the corresponding period of 2025, respectively.

Current wording

(1) Includes waste generated by government clients of $685,000 and $560,000 for the three months ended September 30, 2026, and the corresponding period of 2025, respectively.

Previous wording

(1) Includes wastes generated by government clients of $1,214,000 and $1,007,000 for the six months ended June 30, 2026, and the corresponding period of 2025, respectively.

Current wording

(1) Includes waste generated by government clients of $1,899,000 and $1,569,000 for the nine months ended September 30, 2026, and the corresponding period of 2025, respectively.

Previous wording

Treatment Segment revenue decreased by $4,415,000, or 21.4%, for the six months ended June 30, 2026, compared with the same period in 2025. The decline was primarily due to lower waste volumes and a less favorable revenue mix. The less favorable revenue mix reflected lower average pricing, which was impacted in part by the processing of certain previously stored waste inventories that carried lower average pricing. These previously stored waste inventories were processed as part of our preparation for anticipated increases in Hanford-related waste volumes.

Current wording

Treatment Segment revenue decreased by $5,928,000, or 17.6%, for the nine months ended September 30, 2026, compared with the same period in 2025. The decline was primarily due to lower waste volumes and a less favorable revenue mix. The less favorable revenue mix reflected lower average pricing, which was impacted in part by the processing of certain previously stored waste inventories that carried lower average pricing. These previously stored waste inventories were processed as part of our preparation for anticipated increases in Hanford-related waste volumes and were substantially processed by the end of the second quarter of 2026.

Previous wording

The decrease in revenue in our Services Segment was primarily attributable to a lower volume of project work during the first quarter of 2026. The lower project volume reflected, in part, the impact of typical winter weather and post-holiday slowdowns that reduced field activity. Revenue in our Services Segment is project-based, and the scope, duration, timing, and completion of individual projects vary from period to period. As a result, revenue may fluctuate significantly between reporting periods based on the timing, scope, and mix of projects performed.

Current wording

The increase in revenue in our Services Segment was primarily attributable to a higher volume of project activity beginning in the second quarter of 2026, partially offset by lower project activity during the first quarter of 2026. The lower project activity in the first quarter reflected, in part, seasonal factors, including typical winter weather conditions and post-holiday slowdowns that reduced field activity. Revenue in our Services Segment is project-based, with the scope, duration, timing, and completion of individual projects varying from period to period. As a result, revenue may fluctuate significantly between reporting periods depending on the timing, scope, and mix of projects performed.

Previous wording

Cost of goods sold for the Treatment Segment increased by approximately $1,110,000, or 11.3%. Variable costs increased by approximately $477,000, primarily due to higher materials and supplies, transportation, and outside services costs totaling approximately $444,000, as well as higher overtime expense of approximately $217,000 incurred in processing previously stored waste inventories in anticipation of increases in Hanford-related waste volumes. These increases were partially offset by lower disposal costs of approximately $184,000. Within our Treatment Segment, the composition and level of variable costs can fluctuate based on the waste mix. Treatment Segment fixed costs increased by approximately $633,000. Fixed salaries and payroll-related expenses increased by approximately $499,000, primarily due to COLA adjustments implemented in July 2025 and increased headcount. Maintenance costs increased by approximately $45,000 due to general equipment upkeep and facility security enhancements. Depreciation expense increased by approximately $59,000 due to additional capitalized equipment, including our prototype PFAS reactor. Regulatory expenses increased by approximately $74,000 due to increased regulatory activities and higher fees assessed by regulatory agencies. These increases were partially offset by a decrease of approximately $44,000 in general expenses, primarily due to lower utility costs.

Current wording

Cost of goods sold for the Treatment Segment increased by approximately $978,000, or 9.0%. Treatment Segment fixed costs increased by approximately $1,094,000. Fixed salaries and payroll-related expenses increased by approximately $756,000, primarily due to increased headcount. Maintenance costs increased by approximately $196,000 due to scheduled equipment maintenance and facility security enhancements. Depreciation expense increased by approximately $66,000 due to additional capitalized equipment, including our prototype PFAS reactor. Regulatory expenses increased by approximately $49,000 due to increased regulatory activities and higher fees assessed by regulatory agencies. The remaining increases were from higher travel and general expenses totaling approximately $27,000. Treatment Segment variable costs decreased by approximately $116,000, primarily due to lower materials and supplies, transportation, and outside services costs totaling approximately $312,000, partially offset by higher disposal costs of approximately $29,000 and higher overtime expenses of approximately $167,000. Within our Treatment Segment, the composition and level of variable costs can fluctuate based on the waste mix.

Previous wording

Services Segment cost of goods sold increased by $1,239,000, or 38.6%, primarily due to higher revenue during the period. The increase was primarily driven by higher subcontract and outside services costs of approximately $655,000 and higher salaries and payroll-related expenses of approximately $419,000. The increase in salaries and payroll-related expenses primarily reflected the COLA implemented in July 2025, as well as increased labor associated with the higher volume of project work. Cost of goods sold also increased due to higher travel costs of approximately $118,000 and increased materials and supplies, disposal, and regulatory costs totaling approximately $108,000. These increases were partially offset by lower general expenses of approximately $48,000 across various categories and lower depreciation expense of approximately $13,000, as certain equipment became fully depreciated in 2025. Within our Services Segment, the composition and level of cost of goods sold are influenced by the type, scope, and timing of projects performed during the period. Certain projects require greater reliance on subcontractors, specialized materials, regulatory compliance activities, or travel, while others are more labor-intensive or utilize primarily in-house resources. As a result, the mix of project work can significantly affect both the composition and level of costs incurred and may not be directly proportional to changes in revenue.

Current wording

Services Segment cost of goods sold increased by $1,521,000, or 37.6%, primarily reflecting the higher volume of project work during the period. The increase was primarily attributable to higher subcontract and outside services costs of approximately $736,000 and higher salaries and payroll-related expenses of approximately $362,000, reflecting increased labor requirements from higher volume of project work. Additional increases included materials and supplies, laboratory services, disposal, and regulatory costs totaling approximately $464,000. These increases were partially offset by lower travel expenses of approximately $41,000. Within our Services Segment, the composition and level of cost of goods sold are influenced by the type, scope, and timing of projects performed during the period. Certain projects require greater reliance on subcontractors, specialized materials, regulatory compliance activities, or travel, while others are more labor-intensive or utilize primarily in-house resources. As a result, the mix of project work can significantly affect the composition and level of costs incurred, which may not change proportionately with revenue.

Previous wording

Cost of goods sold for the Treatment Segment increased by approximately $2,886,000, or 15.4%. Variable costs increased by approximately $1,686,000, primarily due to higher disposal, materials and supplies, transportation and lab costs totaling approximately $1,453,000, as well as higher overtime expense of approximately $233,000 incurred in processing previously stored waste inventories in anticipation of increases in Hanford-related waste volumes. Within our Treatment Segment, the composition and level of variable costs can fluctuate based on waste mix. Treatment Segment fixed costs increased by approximately $1,200,000. Fixed salaries and payroll-related expenses increased by approximately $810,000, primarily due to COLA adjustments implemented in July 2025 and increased headcount. Maintenance costs increased by approximately $127,000 due to general equipment upkeep and facility security enhancements. Depreciation expense increased by approximately $133,000 due to additional capitalized equipment, including our prototype PFAS reactor. Regulatory expenses increased by approximately $192,000 due to increased regulatory activities and higher fees assessed by regulatory agencies. These increases were partially offset by a decrease of approximately $62,000 in general expenses, primarily due to lower utility costs.

Current wording

Cost of goods sold for the Treatment Segment increased by approximately $3,865,000, or 13.1%. Variable costs increased by approximately $1,571,000, primarily due to higher disposal, materials and supplies, transportation, and laboratory costs totaling approximately $1,170,000, as well as higher overtime expenses of approximately $401,000 incurred in processing previously stored waste inventories in preparation for anticipated increases in Hanford-related waste volumes. Within our Treatment Segment, the composition and level of variable costs can fluctuate based on the mix of waste processed. Treatment Segment fixed costs increased by approximately $2,294,000, primarily due to higher salaries and payroll-related expenses of approximately $1,567,000, resulting from COLA implemented in July 2025 and increased headcount. Maintenance costs increased by approximately $323,000 due to scheduled maintenance, general equipment upkeep, and facility security enhancements. Depreciation expense increased by approximately $199,000 due to additional capitalized equipment, including our prototype PFAS reactor. Regulatory expenses increased by approximately $241,000 due to increased regulatory activities and higher fees assessed by regulatory agencies. These increases were partially offset by a decrease of approximately $36,000 in general expenses, primarily due to lower utility costs.

Previous wording

Services Segment cost of goods sold increased by $208,000, or 2.8%. The increase was primarily driven by higher salaries and payroll-related expenses of approximately $534,000, reflecting the COLA implemented in July 2025, as well as increased labor associated with the higher volume of project work. Cost of goods sold also increased due to higher travel costs of approximately $237,000. These increases were partially offset by lower outside services costs of approximately $276,000, lower materials and supplies, disposal and regulatory costs totaling approximately $171,000, lower general expenses of approximately $83,000 across various categories, and lower depreciation expense of approximately $33,000 as certain equipment became fully depreciated in 2025. Within our Services Segment, the composition and level of cost of goods sold are influenced by the type, scope, and timing of projects performed during the period. Certain projects require greater reliance on subcontractors, specialized materials, regulatory compliance activities, or travel, while others are more labor-intensive or utilize primarily in-house resources. As a result, the mix of project work can significantly affect both the composition and level of costs incurred and may not be directly proportional to changes in revenue.

Current wording

Services Segment cost of goods sold increased by $1,729,000, or 14.9%. The increase was primarily driven by higher salaries and payroll-related expenses of approximately $897,000, reflecting COLA implemented in July 2025, as well as increased labor required by the higher volume of project work. Additional increases included higher subcontract and outside services costs of approximately $461,000, higher travel expenses of approximately $193,000, and higher materials and supplies, laboratory services, disposal, and regulatory costs totaling approximately $299,000. These increases were partially offset by lower general expenses of approximately $88,000 across various categories and lower depreciation expenses of approximately $33,000 as certain equipment became fully depreciated in 2025. Within our Services Segment, the composition and level of cost of goods sold are influenced by the type, scope, and timing of projects performed during the period. Certain projects require greater reliance on subcontractors, specialized materials, regulatory compliance activities, or travel, while others are more labor-intensive or utilize primarily in-house resources. As a result, the mix of project work can significantly affect the composition and level of costs incurred, which may not change proportionately with revenue.

Previous wording

Gross profit for the quarter ended June 30, 2026 decreased $4,050,000 over the same period in 2025 as follows:

Current wording

Gross profit for the quarter ended September 30, 2026, decreased $2,005,000 over the same period of 2025, as follows:

Previous wording

Treatment Segment incurred a gross loss of $2,652,000 for the three months ended June 30, 2026, compared with a gross profit of $1,566,000 for the same period in 2025. Gross margin declined to (32.0%) from 13.7%. The decline in gross profit and gross margin was primarily due to lower revenue resulting from reduced waste volumes and a less favorable waste mix. In addition, the Treatment Segment’s higher fixed operating costs were spread over a lower revenue base, further reducing gross margin and contributing to the gross loss.

Current wording

Treatment Segment incurred a gross loss of $225,000 for the three months ended September 30, 2026, compared with a gross profit of $2,266,000 for the same period in 2025. Gross margin declined to (1.9%) from 17.3%. The decline in gross profit and gross margin was primarily due to lower revenue resulting from reduced waste volumes and higher fixed operating costs, which were spread over a lower revenue base, further adversely impacting gross margin.

Previous wording

Services Segment gross profit decreased by $287,000, and gross margin declined to 1.3% from 4.9% in the prior-year period, primarily due to lower revenue and a less favorable project margin mix. Gross margins within our Services Segment are influenced by the type, scope, and mix of projects performed, which are generally competitively bid and have varying margin structures. As a result, gross margins may fluctuate from period to period based on the timing and mix of projects completed.

Current wording

Services Segment gross profit increased by approximately $486,000, and gross margin improved to 12.2% from 6.7% in the prior-year period, primarily due to higher revenue and a more favorable mix of projects performed. Gross margins within our Services Segment are influenced by the type, scope, and mix of projects performed, which are generally competitively bid and have varying margin structures. As a result, gross margins may fluctuate from period to period based on the timing and mix of projects completed.

Previous wording

Gross profit for the six months ended June 30, 2026 decreased $7,588,000 over 2025 as follows:

Current wording

Gross profit for the nine months ended September 30, 2026, decreased $9,594,000 over the same period in 2025, as follows:

Previous wording

Treatment Segment incurred a gross loss of $5,485,000 for the six months ended June 30, 2026, compared a gross profit of $1,816,000 for the same period of 2025. Gross margin declined to (33.9%) from 8.8%, primarily due to lower revenue from lower waste volume and a less favorable waste mix. In addition, higher operating fixed costs within the Treatment Segment, which were spread over a lower revenue base, further reduced gross margin and contributed to the gross loss.

Current wording

The Treatment Segment incurred a gross loss of $5,711,000 for the nine months ended September 30, 2026, compared with a gross profit of $4,082,000 for the same period in 2025. Gross margin declined to (20.6%) from 12.1%, primarily due to lower revenue resulting from reduced waste volumes and a less favorable revenue mix. In addition, higher fixed operating costs, which were spread over a lower revenue base, further reduced gross margin and contributed to the gross loss.

Previous wording

Services Segment gross profit increased by approximately $168,000, and gross margin improved to 3.2% from (0.6%) in the prior-year period, primarily due to higher revenue. Gross margins within our Services Segment are influenced by the type, scope, and mix of projects performed, which are generally competitively bid and have varying margin structures. As a result, gross margins may fluctuate from period to period based on the timing and mix of projects completed.

Current wording

Services Segment gross profit increased by $199,000, and gross margin improved to 6.2% from 5.5% in the prior-year period, primarily due to higher revenue from increased project work. Gross margins within our Services Segment are influenced by the type, scope, and mix of projects performed, which are generally competitively bid and have varying margin structures. As a result, gross margins may fluctuate from period to period based on the timing and mix of projects completed.

Previous wording

SG&Aexpenses decreased $379,000 for the three months ended June 30, 2026, compared to the corresponding period for 2025, as follows:

Current wording

SG&Aexpenses decreased $85,000 for the three months ended September 30, 2026, as compared to the corresponding period for 2025, as follows:

Previous wording

SG&Aexpenses decreased $96,000 for the six months ended June 30, 2026, compared to the corresponding period for 2025, as follows:

Current wording

SG&Aexpenses decreased $181,000 for the nine months ended September 30, 2026, as compared to the corresponding period for 2025, as follows:

Previous wording

Administrative SG&A increased primarily due to approximately $184,000 of higher outside services costs associated with increased legal and business activities. The remaining increase was primarily attributable to higher salaries and payroll-related expenses resulting from COLA implemented in July 2025 for employees and January 2026 for executives. Treatment Segment SG&A increased primarily due to approximately $53,000 of higher outside services costs associated with increased consulting and business activities and approximately $31,000 of higher travel expenses incurred by information technology personnel. These increases were partially offset by lower salaries and payroll-related expenses, as fewer employee hours were required to support administrative and marketing functions. Services Segment SG&A declined primarily due to a decrease in provision for credit losses resulting from the settlement of a receivable that had previously been determined to be uncollectible.

Current wording

Administrative SG&A expenses increased primarily due to higher outside services costs of approximately $240,000 associated with increased legal and business activities. The remaining increase was primarily attributable to higher salaries and payroll-related expenses resulting from COLA implemented in July 2025 for employees and January 2026 for executives.

Previous wording

Interest income decreased by approximately $98,000 and $252,000 for the three and six months ended June 30, 2026, respectively, compared with the same periods in 2025. The decreases were primarily due to lower interest income earned on lower balances maintained in our MMDA. Interest income also declined due to lower interest earned on our finite risk sinking funds, primarily as a result of lower interest rates.

Current wording

Interest income decreased by approximately $26,000 and $277,000 for the three and nine months ended September 30, 2026, respectively, compared with the corresponding periods of 2025. The decreases were primarily attributable to lower average balances maintained in our MMDA and lower interest rates earned on our finite risk sinking fund. The higher average MMDA balances in 2025 were primarily attributable to proceeds received from two equity offerings completed in May and December 2024.

Previous wording

Interest expense decreased by approximately $51,000 and $103,000 for the three and six months ended June 30, 2026, respectively, compared with the same periods in 2025. The decreases were primarily due to the capitalization of approximately $40,000 and $74,000 of interest in the three and six months ended June 30, 2026, respectively, related to debt incurred for construction projects, including our second PFAS reactor.

Current wording

Interest expense decreased by approximately $36,000 and $138,000 for the three and nine months ended September 30, 2026, respectively, compared to the corresponding periods of 2025. The decreases were primarily attributable to capitalization of approximately $33,000 and $107,000 of interest expense during the three and nine months ended September 30, 2026, respectively, associated with debt incurred for construction projects, including our second PFAS reactor.

Previous wording

We had no income tax expense for continuing operations for the three and six months ended June 30, 2026 and 2025. Our effective tax rate was 0% for each period as a result of the full valuation allowance recognized against its U.S. federal and state deferred tax assets during the quarter ended September 30, 2024.

Current wording

We had no income tax expense for continuing operations for the three and nine months ended September 30, 2026 and 2025. Our effective tax rate was 0% for each period as a result of the full valuation allowance recognized against its U.S. federal and state deferred tax assets during the quarter ended September 30, 2024.

Previous wording

Our cash flow requirements during the six months ended June 30, 2026, were funded primarily from available PNC Liquidity. Our PNC Liquidity includes cash held in our MMDA, which includes net proceeds from the sale of 2,628,571 shares of our Common Stock completed in May 2026 (see “Financing Activities” below within this MD&A and “Note 13—Sale of Common Stock” to the accompanying Condensed Consolidated Financial Statements for further discussion of the equity offering).

Current wording

Our cash flow requirements during the nine months ended September 30, 2026, were funded primarily from available PNC Liquidity. Our PNC Liquidity includes cash held in our MMDA, which includes net proceeds from the sale of 2,628,571 shares of our Common Stock completed in May 2026 (see “Financing Activities” below within this MD&A and “Note 13—Sale of Common Stock” to the accompanying Condensed Consolidated Financial Statements for further discussion of the equity offering).

Previous wording

As of June 30, 2026, we had no outstanding borrowings under our Revolving Credit and our PNC Liquidity was approximately $25,584,000, which included approximately $20,338,000 of cash held in our MMDA. As of December 31, 2025, we had no outstanding borrowing under our Revolving Credit and our PNC Liquidity was approximately $18,126,000, which included approximately $11,529,000 of cash held in our MMDA.

Current wording

As of September 30, 2026, we had no outstanding borrowings under our Revolving Credit. PNC Liquidity is provided by two sources: cash, the substantial majority of which is held in our MMDA with our lender and borrowing availability under our Revolving Credit. As of September 30, 2026, cash held in our MMDA was approximately $14,331,000, compared to approximately $11,529,000 as of December 31, 2025, with the increase reflecting the net proceeds of approximately $21,114,000 from our May 2026 equity offering, substantially offset by cash used in operations and for capital expenditures during the first nine months of 2026. Borrowing availability under our Revolving Credit, which is determined by a borrowing base of eligible receivables and reduced by outstanding standby letters of credit ($3,420,000) and lender-imposed discretionary reserves ($750,000), was approximately $5,533,000 as of September 30, 2026, compared to approximately $6,597,000 as of December 31, 2025, primarily reflecting lower eligible receivables. As a result, our PNC Liquidity was approximately $19,864,000 as of September 30, 2026, compared to approximately $18,126,000 as of December 31, 2025. Our PNC Liquidity declined from approximately $25,584,000 as of June 30, 2026, reflecting continued operating losses and capital expenditures during the third quarter. Because availability under our Revolving Credit depends on the level of our eligible receivables, reductions in eligible receivables, or continued use of cash to fund operating losses and capital expenditures, could further reduce our PNC Liquidity.

Previous wording

We incurred losses from continuing operations before tax of $15,134,000 during 2024, $10,665,000 during 2025, and $13,637,000 during the first six months of 2026. We also experienced cash used in continuing operations of $14,146,000 during 2024, $10,311,000 during 2025, and $8,769,000 during the first six months of 2026. These results were due in part to delays in the enactment of federal appropriations and Congress’s continued use of CRs, as well as increased investments in PFAS technology (see “Known Trends and Uncertainties – New Processing Technology” within this MD&A for a discussion of our new technology), expansion of treatment capacity, workforce growth, and infrastructure enhancements intended to support anticipated waste treatment volumes, including anticipated Hanford-related waste volumes. In addition, for 2026 year to date, delays in the commencement of several new projects within our Services Segment, processing delays due to customer-directed changes in treatment protocols and the continued processing of previously stored waste inventories to prepare for anticipated increases in certain Hanford-related waste volumes negatively impacted our revenues during the quarter. Certain of these previously stored waste inventories carried lower margins, which adversely affected our results of operations. These lower-margin previously stored waste inventories have now been substantially processed and are not expected to have a material effect on operating results during the next twelve months.

Current wording

We incurred losses from continuing operations before tax of $15,134,000 during 2024, $10,665,000 during 2025, and $17,046,000 during the first nine months of 2026. We also experienced cash used in continuing operations of $14,146,000 during 2024, $10,311,000 during 2025, and $10,796,000 during the first nine months of 2026. Our operating results and liquidity were impacted in part by delays in the enactment of federal appropriations and Congress’s continued use of CRs, increased investments in PFAS destruction technology (see “Known Trends and Uncertainties – New Processing Technology” within this MD&A for a discussion of our new technology), expansion of treatment capacity, workforce growth, equipment upgrades, and infrastructure enhancements intended to support anticipated waste treatment volumes, including anticipated Hanford-related waste volumes. In addition, during the first nine months of 2026, delays in the mobilization of a recently awarded project within our Services Segment, temporary downtime of certain processing equipment due to scheduled maintenance and upgrades, processing delays resulting from customer-directed changes in treatment protocols, and the processing of previously stored waste inventories to prepare for anticipated increases in certain Hanford-related waste volumes negatively impacted our revenues and results of operations. Certain of these previously stored waste inventories carried lower margins, which adversely affected our results of operations in 2026. These lower-margin previously stored waste inventories were substantially processed by the end of the second quarter.

Previous wording

Our plans to address these conditions include utilizing existing cash and borrowing availability; pursuing operating improvements supported by the Company’s Treatment and Services Segment backlogs; continuing to pursue additional government, commercial and international project opportunities; managing capital expenditures and operating costs; and, if necessary, seeking additional liquidity through equity or other financing arrangements or potential asset dispositions. In addition, on August 10, 2026, we extended the maturity of our PNC Credit Facility from May 2027 to May 2030, among other things (see “Liquidity and Capital Resources—Financing Activities—Credit Facility” for a discussion of this extension).

Current wording

Our plans to address these conditions include utilizing existing cash and borrowing availability; pursuing operating improvements supported by the Company’s Treatment and Services Segment backlogs; continuing to pursue additional government, commercial, and international project opportunities; managing capital expenditures and operating costs; and, if necessary, seeking additional liquidity through equity or other financing arrangements or potential asset dispositions. There can be no assurance that these plans, or any component thereof, can be achieved. In addition, on August 10, 2026, we extended the maturity of our PNC Credit Facility from May 2027 to May 2030, among other things (see “Liquidity and Capital Resources—Financing Activities—Credit Facility” for a discussion of this extension).

Previous wording

Although the May 2026 equity offering discussed elsewhere in this Report strengthened our liquidity, we concluded that the substantial doubt was not alleviated. We expect our existing liquidity, anticipated operating cash flows and borrowing availability to be sufficient to fund our operations during the assessment period. However, the ability of our plans to mitigate the conditions giving rise to substantial doubt depends in part on the timing and volume of government-directed waste shipments and project activity, as well as other matters outside our control. In addition, the Company’s borrowing availability is subject to compliance with applicable financial covenants and other conditions. There can be no assurance that additional liquidity , if needed, will be available on acceptable terms or at all.

Current wording

Although the May 2026 equity offering discussed elsewhere in this Report strengthened our liquidity, continued operating losses since the offering and significant capital expenditures, including investments made to support anticipated waste treatment volumes and improve operational capabilities, have reduced our liquidity position. Therefore, we concluded that substantial doubt has not been alleviated. We expect to fund our operations during the assessment period with our existing liquidity, anticipated operating cash flows and borrowing availability. However, the ability of our plans to mitigate the conditions giving rise to substantial doubt depends in part on the timing and volume of government-directed waste shipments and project activity, as well as other matters outside our control. In addition, our borrowing availability is subject to compliance with applicable financial covenants and other conditions. There can be no assurance that additional liquidity, if needed, will be available on acceptable terms or at all.

Previous wording

The following table reflects the cash flow activities during the first six months of 2026 and 2025.

Current wording

The following table reflects the cash flow activities during the first nine months of 2026 and 2025.

Previous wording

As of June 30, 2026, we had cash on hand of approximately $20,497,000.

Current wording

As of September 30, 2026, we had cash on hand of approximately $14,743,000.

Previous wording

Cash used in operating activities from continuing operations during the first six months of 2026 primarily reflected our net loss of approximately $13,637,000, adjusted for non-cash items, including stock-based compensation expense of approximately $398,000 and depreciation and amortization expense of approximately $974,000. Changes in operating assets and liabilities provided approximately $3,508,000 of cash, primarily reflecting a decrease in accounts receivable (including the recovery of credit losses) of approximately $1,481,000 and a net increase in accounts payable, accrued expenses, deferred revenue, and other accrued liabilities of approximately $3,074,000. These favorable changes were partially offset by an increase in unbilled receivables of approximately $797,000 and a net increase in inventories, prepaid expenses, and other assets of approximately $250,000. Accounts receivable balances are affected by the timing of customer invoicing and collections, while the timing of cash receipts is influenced by the payment terms and conditions of our customer contracts.

Current wording

Cash used in operating activities from continuing operations during the first nine months of 2026 primarily reflected our net loss from continuing operations of approximately $17,046,000, adjusted for non-cash items, including stock-based compensation expense of approximately $631,000 and depreciation and amortization expense of approximately $1,469,000. Changes in operating assets and liabilities provided approximately $3,993,000 of cash, primarily reflecting a decrease in accounts receivable (net of provision for credit losses) of approximately $1,204,000, a net decrease in prepaid expenses, inventories and other assets of approximately $246,000, and a net increase in accounts payable, accrued expenses, deferred revenue, and other accrued liabilities of approximately $5,660,000. These favorable changes were partially offset by an increase in unbilled receivables of approximately $3,117,000. Accounts receivable balances are affected by the timing of customer invoicing and collections, while cash receipts are influenced by the payment terms and conditions of our customer contracts.

Previous wording

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

Current wording

Cash used in operating activities from discontinued operations during the first nine months of 2026 and 2025 consisted primarily of costs incurred in connection with the management of administrative and regulatory matters related to our remediation projects. For the first nine months of 2026, operating cash outlay for our discontinued operations was partially offset by approximately $130,000 received in the third quarter of 2026 related to a member-approved reimbursement of contributions and expenses in connection with our participation in an association of PRP (see “Note 10 – Discontinued Operations” to the accompanying Condensed Consolidated Financial Statements for further discussion of reimbursement).

Previous wording

We had working capital of $18,390,000 (which included working capital of our discontinued operations) as of June 30, 2026, compared to working capital of $13,803,000 as of December 31, 2025. The increase in our working capital was primarily due to net proceeds received from the equity raise that we completed in May of 2026.

Current wording

We had working capital of $11,394,000 (which included working capital of our discontinued operations) as of September 30, 2026, compared to $13,803,000 as of December 31, 2025. The decrease in working capital was primarily attributable to significant losses incurred during the nine months ended September 30, 2026, partially offset by net proceeds received from our equity offering completed in May 2026. In addition, working capital was negatively impacted by the reclassification of approximately $1,091,000 of remediation liabilities in the third quarter of 2026 associated with one of our discontinued operations from long-term liabilities to current liabilities.

Previous wording

Cash used in investing activities of our continuing operations in the first six months of 2025 consisted primarily of cash purchases of property and equipment of approximately $1,766,000. The remaining cash used in investing activities consisted of cash outlays made in connection with our operating permits and certain intangible assets. Total cash used in investing activities of our continuing operations was partially offset by approximately $33,000 from our sale of idle equipment.

Current wording

Cash used in investing activities from continuing operations during the first nine months of 2026 consisted primarily of approximately $5,184,000 in purchases of property and equipment, $481,000 in advance payments for capital equipment and $381,000 in expenditures for operating permits and certain intangible assets, partially offset by $5,000 in proceeds from the sale of idle equipment.

Previous wording

Cash used in investing activities from continuing operations during the first six months of 2026 consisted primarily of cash purchases of property and equipment of approximately $2,675,000. The remaining cash outflows related to expenditures for operating permits and certain intangible assets.

Current wording

Cash used in investing activities of our continuing operations in the first nine months of 2025 consisted primarily of approximately $2,634,000 in purchases of property and equipment and $103,000 in expenditures for operating permits and certain intangible assets, partially offset by $28,000 in proceeds from the sale of idle equipment.

Previous wording

Our anticipated capital expenditures for the remainder of 2026 include expenditures to complete our second-generation reactor for our PFAS technology and continuing facility upgrades and capacity enhancements to support anticipated increases in waste volumes associated with the Hanford waste program. We plan to fund our capital expenditures for the remainder of 2026 from cash from operations, available PNC Liquidity (which includes proceeds from the May 2026 equity raise) and/or financing. The initiation, timing, and amount of these capital expenditures are subject to a number of factors, including, among other things, cost/benefit analysis, the pace of our strategic project initiatives, operating performance, project timing, and management’s continuing evaluation of liquidity. Continuing losses may require us to seek additional liquidity through equity or other financing arrangements, potential asset dispositions, or other strategic alternatives. We may also be required to reduce certain operating expenditures, including, but not limited to, reduction in R&D activities.

Current wording

We anticipate making capital expenditures for the remainder of 2026 of approximately $4,600,000, which include expenditures for our second-generation reactor for our PFAS technology, continuing facility upgrades and capacity enhancements to support anticipated increases in waste volumes associated with the Hanford waste program, and equipment to improve operational capabilities. We plan to fund our capital expenditures for the remainder of 2026 from cash from operations, available PNC Liquidity (which includes proceeds from the May 2026 equity raise) and/or financing. The initiation, timing, and amount of these capital expenditures are subject to a number of factors, including, among other things, cost/benefit analysis, the pace of our strategic project initiatives, operating performance, project timing, and management’s continuing evaluation of liquidity. Continuing losses may require us to seek additional liquidity through equity or other financing arrangements, potential asset dispositions, or other strategic alternatives. We may also be required to reduce certain operating expenditures, including, but not limited to, reduction in R&D activities.