PERMA FIX ENVIRONMENTAL SERVICES INC

September 30, 2026

The condensed consolidated financial statements included herein have been prepared by the Company (which may be referred to as we, us or our), without an audit, pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures which are made are adequate to make the information presented not misleading. Further, the condensed consolidated financial statements reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the nine months ended September 30, 2026, are not necessarily indicative of results to be expected for the fiscal year ending December 31, 2026.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2025.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Financial Position and Liquidity

These condensed consolidated financial statements have been prepared in accordance with U.S. GAAP assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company 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. The Company’s 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, 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.

The Company’s expected cash requirements over the next twelve months include working capital needs, scheduled principal payments on debt, costs associated with the administration and monitoring of discontinued operations, R&D expenditures related to PFAS technology, and capital expenditures.

A significant portion of the projected revenues and cash flows underlying management’s forecast depends on the timing and volume of waste shipments and project activity directed by U.S. government customers. Because these customers do not provide binding assurances regarding the timing or volume of future work, and such activity is subject to appropriations, procurement processes, operational considerations, and other factors outside the Company’s control, management could not conclude that its plans are probable of effectively mitigating the conditions giving rise to substantial doubt. Accordingly, substantial doubt continues to exist about the Company’s ability to continue as a going concern for one year following the date the accompanying Condensed Consolidated Financial Statements are issued.

Management’s 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 May 2026, the Company completed a public equity offering that generated net proceeds of approximately $21,114,000, net of offering costs. In addition, on August 10, 2026, the Company extended the maturity of its PNC Credit Facility from May 2027 to May 2030, among other changes (see “Note 8 – Long Term Debt—Credit Facility”).

Although the May 2026 equity offering strengthened the Company’s 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 the Company’s liquidity position. Therefore, management concluded that substantial doubt has not been alleviated. The Company expects to fund its operations during the assessment period with its existing liquidity, anticipated operating cash flows and borrowing availability. However, the ability of management’s 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 the Company’s 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.

The Condensed Consolidated Financial Statements do not include any adjustments to the carrying amounts or classification of assets and liabilities that might result from the outcome of this uncertainty.

Reclassification

During the third quarter of 2026, the Company revised the presentation of the disaggregation of revenue in “Note 3 – Revenue” for the three and nine months ended September 30, 2025, to reclassify certain contracts previously presented as fixed-price revenue to time-and-materials revenue. Approximately $553,000 and $790,000 of revenue for the three- and nine-month periods ended September 30, 2025, respectively, was reclassified from fixed-price revenue to time-and-materials revenue. This reclassification had no effect on the Company’s previously reported consolidated statements of operations, balance sheets, stockholders’ equity, cash flows, or total revenue.

Correction of an Immaterial Error

During the preparation of the accompanying Condensed Consolidated Financial Statements, the Company determined that the cash flow effects of certain property and equipment additions included in accounts payable were incorrectly presented in its previously issued Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2025. Specifically, the change in “Accounts payable, accrued expenses, unearned revenue and other liabilities” within operating activities included amounts attributable to property and equipment additions, and “Purchases of property and equipment” within investing activities did not properly reflect the cash paid during the period for such additions.

Accordingly, the Company has revised the comparative prior-period Condensed Consolidated Statement of Cash Flows presented herein by reducing the decrease in “Accounts payable, accrued expenses, unearned revenue and other liabilities” within operating activities by $26,000, from $(745,000) to $(719,000), and increasing the cash outflow from “Purchases of property and equipment” within investing activities by $26,000, from $(2,608,000) to $(2,634,000). The Company also presented property and equipment additions of $411,000 that remained unpaid and were included in accounts payable as of September 30, 2025 as a supplemental non-cash investing activity. The correction decreased net cash used in operating activities by $26,000 and increased net cash used in investing activities by $26,000 and had no effect on the Company’s previously reported condensed consolidated statements of operations, balance sheets or stockholders’ equity.

Our accounting policies are as set forth in the notes to the December 31, 2025, consolidated financial statements referred to above.

Recently Issued Accounting Standards –Adopted

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets.” ASU 2025-05 provides the option to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets. The adoption of ASU 2025-05 by the Company in the first quarter of 2026 on a prospective basis did not have a material impact on its condensed consolidated financial statements.

Recently Issued Accounting Standards – Not Yet Adopted

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” ASU 2025-11 clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the update is to provide clarity about current interim requirements. The amendments in this Update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this ASU are required to be adopted for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement— Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses,” which enhances the disclosures required for certain expense captions in the Company’s annual and interim consolidated financial statements. ASU 2024-03 is effective prospectively or retrospectively for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, “Intangible - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” ASU 2025-06 removes all references to prescriptive and sequential software development stages. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed, and the software will be used for its intended purpose. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. The standard allows for prospective, modified, or retrospective transition. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” ASU 2026-02 improves the financial accounting for and disclosure of activities related to environmental credits and environmental credit obligations. This update provides recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. The amendments in ASU 2026-02 are effective for annual reporting periods beginning after December 15, 2027, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Disaggregation of Revenue

In general, the Company’s business segmentation is aligned according to the nature and economic characteristics of our services and provides meaningful disaggregation of each business segment’s results of operations. The nature of the Company’s performance obligations within our Treatment and Services Segments result in the recognition of our revenue primarily over time. The following tables present further disaggregation of our revenues by different categories for our Services and Treatment Segments:

Revenues generated from fixed unit rate contracts within the Services Segment are included within the “time and material” caption under the disaggregation table above due to similarity of the revenue recognition methodology.

Contract Balances

The timing of revenue recognition and billings can result in unbilled receivables (contract assets). The Company’s contract liabilities consist of deferred revenues which represent advance payment from customers in advance of the completion of the Company’s performance obligation. The following table represents changes in our contract asset and contract liabilities balances for the periods noted:

During the three and nine months ended September 30, 2026, the Company recognized revenue of $1,488,000 and $8,804,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of such respective period. During the three and nine months ended September 30, 2025, the Company recognized revenue of $752,000 and $4,640,000, respectively, related to untreated waste that was in the Company’s control as of the beginning of such respective period. Revenue recognized in each period related to performance obligations satisfied within the respective period.

Accounts Receivable

The following table represents changes in accounts receivable, net of credit losses, for the periods noted:

Remaining Performance Obligations

The Company applies the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

Within our Services Segment, there are service contracts which provide that the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date. For those contracts, the Company has utilized the practical expedient in ASC 606-10-55-18, which allows the Company to recognize revenue in the amount for which we have the right to invoice; accordingly, the Company does not disclose the value of remaining performance obligations for those contracts.

The Company’s contracts and subcontracts relating to activities at governmental sites generally allow for termination for convenience at any time at the government’s option without payment of a substantial penalty. The Company does not disclose remaining performance obligations on these contracts.

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on facts and circumstances present in that arrangement. Lease classifications, recognition, and measurement are then determined at the lease commencement date.

The Company’s operating lease ROU assets and operating lease liabilities primarily include leases for office and warehouse spaces used to conduct our business. Finance leases primarily consist of lab and processing equipment and motor vehicles used by the Company’s facilities’ operations.

The components of lease cost for the Company’s leases for the three and nine months ended September 30, 2026, and 2025 were as follows (in thousands):

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases as of September 30, 2026, were:

The weighted average remaining lease term and the weighted average discount rate for operating and finance leases as of September 30, 2025, were:

The following table reconciles the undiscounted cash flows for the operating and finance leases as of September 30, 2026, to the operating and finance lease liabilities recorded on the balance sheet (in thousands):

Supplemental cash flow and other information related to our leases were as follows for the three and nine months ended September 30, 2026, and 2025 (in thousands):

The following table summarizes information relating to the Company’s definite-lived intangible assets:

The intangible assets noted above are amortized on a straight-line basis over their useful lives.

The permits disclosed above reflect the capitalization of costs associated with the renewal of certain regulatory permits. These costs represent fees paid to secure the Company’s right to operate for a defined ten-year period and are therefore amortized on a straight-line basis over that period.

The following table summarizes the expected amortization over the next five years for our definite-lived intangible assets:

Amortization expenses relating to the definite-lived intangible assets as discussed above were $15,000 and $46,000 for the three and nine months ended September 30, 2026, respectively, and $13,000 and $41,000 for the three and nine months ended September 30, 2025, respectively.

The Company has certain stock option plans under which it may award ISO and/or NQSOs to employees, officers, outside directors, and outside consultants.

On July 22, 2026, the Company issued an NQSO to each of the Company’s seven reelected outside (non-management) directors for the purchase of up to 10,000 shares of the Company’s Common Stock under the Company’s 2003 Outside Directors Stock Plan. Dr. Louis Centofanti and Mark Duff, each an executive officer of the Company as well as a director, were not eligible to receive an option under the 2003 Outside Directors Stock Plan. Each NQSO granted has aten-year term and vests at 25% per year over a four-year period, commencing on the first anniversary of the grant date. The exercise price of each NQSO is $16.64 per share, which was equal to the fair market value of the Company’s Common Stock on the day preceding the grant date, in accordance with the 2003 Outside Director Stock Plan.

The following table summarizes stock-based compensation recognized for the three and nine months ended September 30, 2026, and 2025 for our employee and director stock options (in thousands).

As of September 30, 2026, the Company had approximately $1,953,000 of total unrecognized compensation costs related to unvested options for employees and directors. The weighted average period over which the unrecognized compensation costs are expected to be recognized is approximately 2.9 years.

The summary of the Company’s stock option plans as of September 30, 2026, and September 30, 2025, and changes during the periods then ended, are presented below. The Company’s plans consist of the 2017 Stock Option Plan and the 2003 Outside Directors Stock Plan:

During the nine months ended September 30, 2026, the Company issued a total of 28,955 shares of its Common Stock under the 2003 Outside Directors Stock Plan to its outside directors as compensation for serving on the Board. The Company recorded approximately $357,000 in compensation expenses (included in SG&A) in connection with the issuance of shares of its Common Stock to outside directors.

During the nine months ended September 30, 2026, the Company issued an aggregate 16,781 shares of its Common Stock from cashless exercises of options for the purchase of 30,100 shares of the Company’s Common Stock ranging from $3.95 per share to $10.05 per share. Additionally, the Company issued an aggregate 26,800 shares of its Common Stock from cash exercises of options for the purchase of 26,800 shares of the Company’s Common Stock ranging from $3.95 per share to $7.75 per share, resulting in proceeds of approximately $164,000.

In connection with the Company’s sales of its Common Stock in May 2024 and December 2024, the Company issued warrants to certain underwriters, placement agents, and their designees to purchase an aggregate of 188,038 shares of the Company’s Common Stock. The warrants consisted of (i) warrants to purchase 61,538 shares of Common Stock at an exercise price of $12.19 per share issued in connection with the May 2024 offering and (ii) warrants to purchase 126,500 shares of Common Stock at an exercise price of $11.50 per share issued in connection with the December 2024 offering. These warrants remained outstanding as of September 30, 2026.

Basic loss per share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted loss per share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. In periods where they are anti-dilutive, such amounts are excluded from the calculations of dilutive earnings per share. The following table reconciles the loss and average share amounts used to compute both basic and diluted loss per share:

For the three and nine months ended September 30, 2026,1,122,360 and 1,086,543 weighted average number of shares of common stock underlying options and warrants, respectively, were excluded from the computation of diluted loss per share because the effect would be anti-dilutive.

For the three and nine months ended September 30, 2025,1,185,738 and 1,146,901 weighted average number of shares of common stock underlying options and warrants, respectively, were excluded from the computation of diluted loss per share because the effect would be anti-dilutive.

Long-term debt consists of the following as of September 30, 2026, and December 31, 2025:

Credit Facility

The Company’s Credit Facility, established pursuant to its PNC Loan Agreement, consists of a Revolving Credit facility with a maximum borrowing capacity of $12,500,000. Availability under the Revolving Credit facility is subject to a borrowing base comprised of eligible receivables (as defined in the agreement) and is reduced by (i) outstanding standby letters of credit ($3,420,000 as of September 30, 2026) and (ii) discretionary reserves imposed by the lender ($750,000 as of September 30, 2026). The Credit Facility also includes the Term Loan and the Capital Loan.

On August 10, 2026, the Company entered into an amendment to its PNC Loan Agreement that extended the maturity date of the PNC Loan Agreement from May 15, 2027 to May 15, 2030. The amendment also eliminated the annual capital expenditure limitation of $6,000,000, provided that the Company maintains a minimum daily PNC Liquidity of $5,000,000. If PNC Liquidity falls below $5,000,000, the annual capital expenditure limitation of $6,000,000 becomes applicable.

Pursuant to the amendment, the Company may terminate the PNC Loan Agreement upon 90 days’ prior written notice upon payment in full of its obligations under the PNC Loan Agreement. The Company agreed to pay PNC 0.25% of the total financing in the event the Company pays off its obligations on or before May 15, 2027. No early termination fee shall apply if the Company pays off its obligations under the PNC Loan Agreement after May 15, 2027.

In connection with the amendment, the Company paid its lender a fee of $12,500 which is being amortized over the remaining term of the PNC Loan Agreement. All other terms of the PNC Loan Agreement remain unchanged.

Pursuant to the PNC Loan Agreement, payments of annual interest rates are as follows: (i) interest due on the Revolving Credit is at prime (7.0% as of September 30, 2026) plus 2% or SOFR (as defined in the PNC Loan Agreement) plus 3.00% plus a SOFR Adjustment applicable for an interest period selected by the Company; (ii) interest due on the Capital Loan is at prime plus 2.50% or SOFR plus 3.50% plus a SOFR Adjustment applicable for an interest period selected by the Company; and (iii) interest due on the Term Loan is at prime plus 3.00% or SOFR plus 4.00% plus a SOFR Adjustment applicable for an interest period selected by the Company. SOFR Adjustment rates of 0.10% and 0.15% are applicable for a one-month interest period and three-month period, respectively, that may be selected by the Company.

After giving effect to the borrowing base limitation, outstanding standby letters of credit, and discretionary reserves imposed by the lender, the Company’s borrowing availability under the PNC Credit Facility was approximately $5,533,000 as of September 30, 2026, compared to approximately $6,597,000 as of December 31, 2025. The Company’s PNC Liquidity, which consists of borrowing availability under the Revolving Credit plus cash held in the Company’s MMDA maintained with its lender, was approximately $19,864,000 and $18,126,000 as of September 30, 2026 and December 31, 2025, respectively. Pursuant to the PNC Loan Agreement, the Company is required to maintain a minimum of $5,000,000 in daily PNC Liquidity.

The 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 the lender, could result in a default under the PNC Loan Agreement allowing its lender to immediately require the repayment of all outstanding debt under the PNC Loan Agreement and terminate all commitments to extend further credit. The Company met all of its financial covenant requirements in the first, second and third quarters of 2026.

Promissory Note

In April 2026, the Company purchased a parcel of property adjacent to its PFNW facility that provides direct rail access pursuant to a Purchase and Sale Agreement dated November 17, 2025, for a purchase price of $350,000. The Company paid $87,500 in cash and financed the remaining $262,500 through a promissory note dated April 15, 2026, with a bank (the “Note”). The Note matures on April 15, 2036. Beginning May 15, 2026, the Company is required to make monthly payments of approximately $3,100 based on a fixed annual interest rate of 7.50% for the first five years of the Note. Thereafter, the interest rate will adjust every five years based on the weekly average five-year U.S. Treasury Securities Rate plus 3.0%. Under no circumstances will the variable interest rates on the Note be less than 4.0% per annum or more than (except in the case of default) the lesser of 20.5% per annum or the maximum rate allowed by applicable law. The Note also contains a declining prepayment penalty. If the Company prepays the Note during the first year, it must pay a prepayment fee equal to 3.0% of the outstanding principal balance. The prepayment fee decreases by 1.0% on each annual anniversary of the Note and is eliminated beginning on the fourth anniversary of the Note.

Hazardous Waste

In connection with our waste management services, the Company processes hazardous, non-hazardous, low-level radioactive and mixed (containing both hazardous and low-level radioactive) waste, which we transport to our own, or other, facilities for destruction or disposal. As a result of disposing of hazardous substances, in the event any cleanup is required at the disposal site, the Company could be a PRP for the costs of the cleanup notwithstanding any absence of fault on our part.

Notice of Non-Compliance

On April 30, 2026, the Company received a notice of non-compliance (the “Notice”) from the Washington State Department of Ecology (the “Department of Ecology”) following a June 24, 2025 inspection of the Company’s PFNW facility in Richland, Washington. The Notice is based on an inspection report identifying alleged non-compliance with certain Department of Ecology waste regulations and permit requirements and requires the Company to implement specified corrective actions and provide documentation of its compliance within prescribed timeframes.

No administrative order has been issued and no monetary penalties have been assessed as of the date of this report. The Company is actively responding to the Notice and implementing corrective measures. Based on information currently available and the Company’s ongoing response, the Company does not expect this matter to result in a material adverse effect on its financial condition, results of operations, or cash flows.

The outcome of this matter remains subject to regulatory review. While the Department of Ecology may pursue escalated enforcement action in accordance with Washington State Dangerous (Hazardous) Waste Regulations, the Company currently expects a favorable resolution of the Notice and does not believe that a loss is probable. Accordingly, the Company has not recorded an accrual for any potential loss related to this matter.

Legal Matters

In the normal course of conducting our business, the Company may be involved in various litigation. The Company is not a party to any litigation or governmental proceeding which our management believes could result in any judgments or fines against us that would have a material adverse effect on our financial position, liquidity or results of future operations.

Michael O’Neill

On November 25, 2024, purported shareholder Michael O’Neill (the “Plaintiff”) filed a complaint in the Court of Chancery of the State of Delaware against the Company and all current directors of the Company (the “Defendants”), asserting individual and class action claims for alleged breach of contract and breach of fiduciary duty. The case is styled Michael O’Neill v. Perma-Fix Environmental Services, Inc., et al., C.A. No. 2024-1211-PAF.

The plaintiff has filed an amended and supplemented complaint (the Amended Complaint”), alleging that certain provisions of the Amended Bylaws violated Delaware law (the “Challenged Bylaws).

The plaintiff is seeking a declaration of the Chancery Court that the Challenged Bylaws are invalid, illegal, and void, or, alternatively, an order of the Chancery Court rescinding or enjoining the Challenged Bylaws.

The Company and the other Defendants are vigorously defending against the Amended Complaint.

The Company’s insurance carrier is providing a defense in connection with this lawsuit, subject to a reservation of rights, a $500,000 self-insured retention and the terms and limitations contained in the insurance policy.

Edwin Monroy Wage and Hour Litigation

On June 26, 2026, Edwin Monroy filed a putative class action complaint in the Superior Court of the State of Washington for Benton County against Perma-Fix Northwest Richland, Inc., Perma-Fix Environmental Services, Inc., Perma-Fix Northwest, Inc., and other, unnamed, defendants. The complaint purports to assert claims on behalf of current and former hourly-paid or non-exempt employees who worked for the defendants in Washington during the three-year period preceding the filing of the complaint through the date of final judgment. The complaint alleges, among other things, failures to provide legally compliant meal and rest periods, pay for all hours worked, pay minimum and overtime wages, properly administer paid sick leave, timely pay wages, provide accurate wage statements, and maintain required payroll and employment records, and reimburse certain business expenses. The plaintiff seeks class certification, recovery of allegedly unpaid wages and other compensation, statutory or enhanced damages, penalties, restitution, injunctive relief, interest, and attorneys’ fees and costs.

The Company intends to vigorously defend this action. The litigation remains in its preliminary stages, and no class has been certified. Given the preliminary status of the proceedings and the uncertainties regarding potential liability and damages, if any, the Company is currently unable to reasonably estimate the amount or range of any potential loss. No loss has been accrued in connection with this matter, as the Company has not determined that a loss is both probable and reasonably estimable.

Insurance

The Company has a 25-year finite risk insurance policy entered into in June 2003 (“2003 Closure Policy”) with AIG, which provides financial assurance to the applicable states in which our permitted facilities are located, in the event of unforeseen closure. The 2003 Closure Policy, as amended, provides for a maximum allowable coverage of $28,177,000 which includes available capacity to allow for annual inflation and other performance and surety bond requirements. Total coverage under the 2003 Closure Policy, as amended, was $24,953,000 as of September 30, 2026. As of September 30, 2026, and December 31, 2025, finite risk sinking funds contributed by the Company related to the 2003 Closure Policy totaled $13,576,000 and $13,216,000, respectively. These amounts included interest earned of $4,105,000 and $3,745,000 as of September 30, 2026 and December 31, 2025, respectively. Interest income for the three and nine months ended September 30, 2026, was approximately $119,000 and $360,000, respectively. Interest income for the three and nine months ended September 30, 2025, was approximately $131,000 and $404,000, respectively. If the Company elects, AIG is obligated to pay the Company an amount equal to 100% of the finite risk sinking fund account balance in return for a complete release of liability from both the Company and any applicable regulatory agency using this policy as an instrument to comply with financial assurance requirements.

Letter of Credits and Bonding Requirements

From time to time, the Company is 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, 2026, the total amount of standby letters of credit outstanding was approximately $3,420,000 and the total amount of bonds outstanding was approximately $19,315,000.

The Company’s discontinued operations consist of all our subsidiaries included in our former Industrial Segment, which encompasses subsidiaries divested in 2011 and earlier, as well as three previously closed locations.

The Company’s discontinued operations had net losses of $54,000 and $73,000 (net of income taxes of $0 for each period) for the three months ended September 30, 2026, and 2025, respectively, and net losses of $103,000 (net of $0 tax expense) and $280,000 (net of income taxes of $0 for each period) for the nine months ended September 30, 2026, and 2025, respectively. The results of discontinued operations primarily reflect costs incurred in the administration and continued monitoring of the Company’s discontinued operations. The Company’s discontinued operations generated no revenues during any of the periods presented.

During the second quarter of 2026, the Company recorded a receivable and a corresponding reduction in expense of approximately $130,000 related to a member-approved reimbursement of contributions and expenses in connection with the Company’s participation in an association of PRP. The reimbursement was received by the Company in September 2026.

The following table presents the major class of assets of discontinued operations as of September 30, 2026, and December 31, 2025. No assets and liabilities were held for sale at each of the periods noted.

In accordance with ASC 280, “Segment Reporting”, the Company defines an operating segment as a business activity: (1) from which we may earn revenue and incur expenses; (2) whose operating results are regularly reviewed by the CODM to make decisions about resources to be allocated to the segment and assess its performance; and (3) for which discrete financial information is available.

The Company hastwo reporting segments, consisting of the Treatment and Services Segments, which are primarily based on a service offering approach and defined as follow:

TREATMENT SEGMENT includes:

SERVICES SEGMENT includes:

The Company’s CODM is represented by its CEO and COO (or “CODM group”). The CODM group evaluates the performance of the Treatment and Services segments and allocates resources to each reporting segment based on revenue and income (loss) from operations by comparing actual results for these measures to budgeted and forecasted amounts on a monthly, quarterly and year-to-date basis. The Company’s CODM group does not evaluate and allocate resources for the reportable segments using assets, including expenditures for additions to long-lived assets; therefore, the Company does not disclose asset information for its reporting segments.

The Company’s reportable segments exclude corporate headquarters, which support the Company’s two reportable segments through executive management, finance, treasury, human resources, accounting, legal, and other corporate functions. The financial results of corporate headquarters are not included in segment income (loss) from operations, the measure reviewed by the CODM, and are presented as unallocated corporate expenses in the reconciliation of segment income (loss) from operations to consolidated income (loss) from continuing operations before income taxes. The Company’s reportable segments also exclude discontinued operations (see Note 10 – Discontinued Operations), which do not generate revenues.

The table below summarizes segment income (loss) from operations, the measure reviewed by the CODM, and reconciles this measure to consolidated loss from continuing operations before income taxes for the three and nine months ended September 30, 2026 and 2025. Significant segment expense categories included in segment income (loss) from operations include payroll and benefits, materials and supplies, disposal, transportation, and subcontract expenses. These expense categories are presented separately, where applicable. R&D expenses, while not considered a significant segment expense category, are also presented separately because they are regularly provided to the CODM (in thousands).

Segment Reporting for the Three Months Ended September 30, 2026

Segment Reporting for the Three Months Ended September 30, 2025

Segment Reporting for the Nine Months Ended September 30, 2026

Segment Reporting for the Nine Months Ended September 30, 2025

The following table presents depreciation and amortization for the three and nine months ended September 30, (in thousand):

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

The Company hadno income tax expenses for continuing operations for the three and nine months ended September 30, 2026 and 2025. The Company’s 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.

On May 14, 2026, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group, LLC (the “Underwriter”), pursuant to which the Company sold and issued 2,285,714 shares of its Common Stock. The shares of Common stock were sold at a negotiated price to the public of $8.75 per share. The Underwriting Agreement also allowed the Underwriter a 30-day over-allotment option (the “Option”) to purchase up to an additional 342,857 shares of the Company’s Common Stock on the same terms and conditions, which Option was exercised in its entirety on May 15, 2026. The shares were offered and sold to the public pursuant to the Company’s “universal shelf” registration statement on Form S-3 filed with the SEC on December 2, 2024 and declared effective by the SEC on December 12, 2024, and a prospectus supplement relating to the May 2026 underwriting dated May 14, 2026. The aggregate gross proceeds received by the Company from the sale of the 2,628,571 shares sold totaled approximately $23,000,000, before deducting fees payable to the Underwriter and other estimated offering expenses payable by the Company (the “Offering”). The net proceeds from the Offering is anticipated to fund (i) costs relating to DFLAW and grouting upgrades at the Company’s PFNW facility, (ii) continued R&D and business development relating to the Company’s patent-pending Perma-FAS process for the destruction of PFAS, as well as the cost to complete the installation of the Company’s Perma-FAS Gen 2.0 commercial treatment unit; (iii) ongoing facility cap-ex and maintenance costs; and (iv) general corporate and working capital purposes.

The Company paid the Underwriter a total cash fee of 7.00% of the aggregate gross proceeds in the Offering, totaling approximately $1,610,000. The Company also reimbursed the Underwriter certain expenses in connection with the Offering in an aggregate amount of approximately $95,000.

After deducting costs incurred of approximately $1,886,000, which were recorded as a reduction to additional paid-in capital, net cash proceeds from the Offering totaled approximately $21,114,000. As of September 30, 2026, all offering costs had been paid.

The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that these condensed consolidated financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.