PESI 10-K & 10-Q changes, risk factors and insider trading

Risks Relating to our Business and Operations:

On an annual basis, Congress is required to approve appropriations bills that govern spending by each of the federal government agencies and departments we support. When Congress is, or Congress and the Administration are, unable to agree on budget priorities or specifics, and thus unable to pass annual appropriations bills on a timely basis, Congress typically enacts a continuing resolution (“CR”). CRs generally allow federal government agencies and departments to operate at spending levels based on the previous fiscal year. When agencies and departments operate on the basis of a CR, funding we expect to receive from clients for work we are already performing and for new initiatives may be delayed or canceled. Congress and the Administration have from time to timetime, failed to agree on a CR, resulting in temporary shutdowns of non-essential federal government functions and our work on such functions. Failures by Congress and the Administration to enact appropriations bills in a timely manner can force federal government agencies and departments to shut down or to cancel, change, or delay the implementation of existing or new initiatives. Such events may result in the loss of revenue and profit, or the deferral of revenue and profit to later periods. There is also the possibility that Congress will fail to raise the U.S. debt ceiling when necessary which, in addition to resulting in federal government shutdowns, could significantly impact the U.S. and global economy, affecting the discretionary spending decisions of our non-governmental clients and affecting the capital markets and our access to sources of liquidity on terms that are acceptable to us. The delayed funding or shutdown of many parts of the federal government, including agencies, departments, programs, and projects we support, could have a substantial negative effect on our revenue, profit, and cash flows.

GovernmentChanges in government regulation, policy and program decisions under the new Administrationprograms could impact our business, affecting our profitability and future growth.

A material amount of our revenuesrevenue is derived from various federal government contracts or subcontracts. Considerable uncertainties exist regarding how future federal budget andContinuous program decisions under the new Administration will unfold. Program and policy decisionsdecision changes that havein beenthe implementedU.S. orfederal may be implementedgovernment could negatively impact our business. TheseRecent programsprogram and policiespolicy include,changes since the beginning of the new Administration have included, among other things, a scaled down government workforce. These programsworkforce and policiesfurther and the transition of employees from the government agencies with which we do business could create delayschanges in wastepolicies receiptsrelated fromto federaltariffs. Continued government clients, project, procurements, and contract awards. Additionally, trade tensions orand restrictions on trade,trade including the tariffs that have been imposed, have resulted and could further result in retaliation by imposing tariffs by other countries. The imposition of these tariffs bybetween the U.S. and other countries, including tariffs imposed by the U.S and other countries could resultnegatively inaffect our business. These program and policy change effects may include disruption in supply chains, increased costs on products that we utilize in our business operations, reduce profitability on waste that we treat for international clients and increased cybersecurity threats, among other things. Shift in decreased priorities in government funding for remediation projects by the new administrationAdministration may also negatively impact our results of operations and financial conditions.

Demand for our services has been, and we expect that demand will continue to be, subject to significant fluctuations due to a variety of factors beyond our control, including, without limitation, economic conditions, reductions in the budget for spending to remediate federal sites due to numerous reasons including, without limitation, the substantial deficits that the federal government has and is continuing to incur, domestic political environment, and competing demands for federal funds that can pressure various areas. During economic downturns, large budget deficits that the federal government and many states are experiencing, and other events beyond our control, including, but not limited to the impact from public health events (such as COVID-19 or other unforeseen public health event),event, the ability of private and government entities to spend on waste services, including nuclear services, may decline significantly. Our operations depend, in large part, upon governmental funding (for example, the annual budget of the DOE) or specifically mandated levels for different programs that are important to our business could have a material adverse impact on our business, financial position, results of operations and cash flow.

PublicNatural health threats and outbreaks such as COVID-19 and natural disasters such as hurricanes and severe weather conditions and public health threats and outbreaks such as the COVID pandemic have previously negatively impacted our results of operations. The direct impacts of these such events resulted in delayed waste shipments and temporary shut-down of projects by certain of our customers, and delays in procurement, contract awards and planning on behalf of our government clients which negatively impacted our revenue. Residual and lingering macroeconomic effects from these such events could again in the future impact supply chain, workforce availability, and/or increased costs which could have a downward effect on our business, financial condition and results of operations. Additionally, world conflicts occurring in various regions may lead to similar macroeconomic effects which could have a downward effect on our business, financial conditions and results of operations. We may attempt to increase our sales prices in order to maintain satisfactory margin; however, competitive pressures in our industry may have the effect of inhibiting our ability to reflect these increased costs in the prices of our services that we provide to our customers and therefore reduce our profitability.

We are engaged in highly competitive business in which most of our government contracts and some of our commercial contracts are awarded through competitive bidding processes. We compete with national, regional firms and some international firms with nuclear and/or hazardous waste services practices, as well as small or local contractors. Some of our competitors have greater financial and other resources than we do, which can give them a competitive advantage. In addition, even if we are qualified to work on a new government contract, we might not be awarded the contract because of existing government policies designed to protect certain types of businesses and under-represented minority contractors. Although we believe we have the ability to certify and bid government contract as a small business, there are a number of qualified small businesses in our market that will provide intense competition. For international business, which we continue to focus on, there are additional competitors, many from within the country the work is to be performed, making winning work in foreign countries more challenging. Competition places downward pressure on our contract prices and profit margins. From time to time, we have not been awarded a contract due to one or more of the above competitive conditions. If we are unable to meet these competitive challenges, resulting in our ability to be awarded contracts, we could lose market share and experience onan overall reduction in our profits.

Our revenues may be earned under contracts that are fixed-price or maximum price in nature. A number of contracts in our Services Segment are and have in past, been fixed-price or maximum price contracts. Fixed-price contracts expose us to a number of risks not inherent in cost-reimbursable contracts. Under fixed price and guaranteed maximum-price contracts, contract prices are established in part on cost and scheduling estimates which are based on a number of assumptions, including assumptions about future economic conditions, prices and availability of labor, equipment and materials, and other exigencies. If these estimates prove inaccurate, or if circumstances change such as unanticipated technical problems, difficulties in obtaining permits or approvals, changes in laws or labor conditions, supply chain interruptions, weather delays, cost of raw materials, our suppliers’ or subcontractors’ inability to perform, and/or other events beyond our control, such as the impact of public health events, cost overruns may occur and we could experience reduced profits or, in some cases, a loss for that project. Errors or ambiguities as to contract specifications can also lead to cost-overruns.

If we cannot maintain our governmental permits or cannot obtain required permits, we may not be able to continue or expand our operations.

We are a nuclear services and waste management company. Our business is subject to extensive, evolving, and increasingly stringent federal, state, and local environmental laws and regulations. Such federal, state, and local environmental laws and regulations govern our activities regarding the treatment, storage, recycling, disposal, and transportation of hazardous and non-hazardous waste and low-level radioactive waste. We must obtain and maintain permits or licenses to conduct these activities in compliance with such laws and regulations. Failure to obtain and maintain the required permits or licenses would have a material adverse effect on our operations and financial condition. If any of our facilities are unable to maintain currently-heldcurrently held permits or licenses or obtain any additional permits or licenses which may be required to conduct its operations, we may not be able to continue those operations at these facilities, which could have a material adverse effect on us.

Risks Related to Laws and Regulations:

Our governmental contracts or subcontracts relating to DOE and DODDOW sites are a significant part of our business. Allowable costs under U.S. government contracts are subject to audit by the U.S. government. Although we believe that we have complied with applicable environmental regulations, if these audits result in determinations that costs claimed as reimbursable are not allowed costs or were not allocated in accordance with applicable regulations, we could be required to reimburse the U.S. government for amounts previously received.

Our operations are highly regulated and we are subject to numerous laws and regulations regarding procedures for waste treatment, storage, recycling, transportation, and disposal activities, all of which may provide the basis for litigation against us. In recent years, the waste treatment industry has experienced a significant increase in so-called “toxic-tort” litigation as those injured by contamination seek to recover for personal injuries or property damage. We believe that, as our operations and activities expand, there will be a similar increase in the potential for litigation alleging that we have violated environmental laws or regulations or are responsible for contamination or pollution caused by our normal operations, negligence or other misconduct, or for accidents,accidents which occur in the course course of our business activities. Such litigation, if significant and not adequately insured against, could adversely affect our financial condition and our ability to fund our operations. Protracted litigation would likely cause us to spend significant amounts of our time, effort, and money. This could prevent our management from focusing on our operations and expansion.

We and our customers operate in a politically sensitive environment. Opposition by third parties to particular projects can limit the handling and disposal of radioactive materials. Adverse public reaction to developments in the disposal of radioactive materials, including any high-profile incident involving the discharge of radioactive materials, could directly affect our customers and indirectly affect our business. Adverse public reaction also could lead to increased regulation or outright prohibition, limitations on the activities of our customers, more onerous operating requirements or other conditions that could have a material adverse impact on our customers’ customers and our business.

The elimination or any modification of the Price-Anderson ActsAct’s indemnification authority could have adverse consequences for our business.

The Atomic Energy Act of 1954, as amended, or the AEA, comprehensively regulates the manufacture, use, and storage of radioactive materials. The Price-Anderson Act (“PAA”) supports the nuclear services industry by offering broad indemnification to DOE contractors for liabilities arising out of nuclear incidents at DOE nuclear facilities. That indemnification protects DOE prime contractors, but also similar companies that work under contract or subcontract for a DOE prime contract or transportingtransports radioactive material to or from a site. TheCongress extended the indemnification authority under the PAA, including DOE’s ability to indemnify DOE contractors, to December 31, 2065, as part of the DOEFurther underConsolidated theAppropriations PAAAct, was2024 extended(Public throughLaw 2025 by the Energy Policy Act of 2005.118-47).

Under certain conditions, the PAA’s indemnification provisions may not apply to our processing of radioactive waste at governmental facilities and may not apply to liabilities that we might incur while performing services as a contractor for the DOE and the nuclear energy industry. If an incident or evacuation is not covered under PAA indemnification, we could be held liable for damages, regardless of fault, which could have an adverse effect on our results of operations and financial condition. If such indemnification authority is not applicable available in the future, our business could be adversely affected if the owners and operators of new facilities fail to retain our services in the absence of adequate commercial adequate insurance and indemnification.

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

If any of our permits, other intangible assets, and tangible assets becomesbecome impaired, we may be required to record significant charges to earnings.

Our credit facility with our bank contains financial covenants.covenants, Aincluding breachrequirements ofto anymaintain ofminimum thesedaily covenantsLiquidity could(defined resultunder our inloan aagreement defaultas borrowing availability under our revolving credit plus cash in our money market deposit account (“MMDA”) facilitymaintained triggeringwith our lender) to immediately require the repayment of all outstanding debt under our credit facility and terminate all commitments to extend further credit.amounts. We were not required to perform testing of our fixed charge coverage ratio (“FCCR”) in each of the quarters in 2024 but otherwisehave met all of our other financial covenant requirements. In the past, we have failed to meet our minimum FCCR requirement in certain instances and in each case, our lender has either waived these instances of non-compliance or provided certain amendments to our FCCR requirements whichduring enabled us to meet our quarterly FCCR requirements. Also, our lender has in the past waived our FCCR testing requirement in certain quarters.2025. If we fail to meet any of our financial covenants going forward, including the minimum quarterly FCCR requirement,forward and our lender does not waive the non-compliance or revise our covenant requirement so that we are are in compliance, our lender could accelerate the payment of our borrowings under our credit facility and terminate our credit facility. In such event, we may not have sufficient liquidity to repay our debt under our credit facility and other indebtedness and/or operate our business.

Any of the foregoing could adversely impact our operating results, financial condition, and liquidity. Our ability to continue our operations depends on our ability to generate profitable operations or complete equity or debt financings to increase our capital.capital, Seewhen above risk factor for a discussion as to raising Liquidity in connection with our equity financing.needed.

WeThe haveCompany approximatelyhas $33,470,000 and $81,775,000 inestimated net operating loss carryforwards (“NOLs”) for federalfederal, state and stateforeign income tax purposes,purposes. respectivelyAll of our NOLs can be carried forward and expiresapplied against future taxable income, if any, and expire in various amounts starting in 20242026 ifwith the notexception used against future federal and state income tax liabilities, respectively. All of our federal netNOLs operating loss carryforwards were generated after December 31, 2017 and thuswhich do not expire. Our net loss carryforwards are subject to various limitations. Our ability to use the net loss carryforwards depends on whether we are able to generate sufficient income in the future years. GivenDue to our financial performances in recent financial performance,years, we fully reserved these loss carryforwards in 2024. Further, our net loss carryforwards have not been audited or approved by the Internal Revenue Service.

We sustained substantial losses in each of the years 2025 and 2024 and our inability to become profitable on an annualizeannual basis in the foreseeable future could have a material adverse effect on our operations, credit facility, liquidity and potential growth.

The Company sustained substantial losses in each of the years 2025 and 2024. We believe that our results of operations should substantially improve in 2025.2026. If, however, we fail to become profitable on an annualized basis in the foreseeable future, this could have a material adverse effect on our operations, credit facility, liquidity and potential growth. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a discussion of management’s current liquidity expectations and assumptions.

Risks Relating to our Common Stock:

Any sales of substantial amounts of our Common Stock in the public market could cause an adverse effect on the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities. The issuance of our Common Stock will result in the dilution in the percentage equity interest of our stockholders and the dilution in ownership value. During 2024, we raised capital through the sales of our Common Stock in May 2024 (2,051,282 shares) and December 2024 (2,530,000 shares). As of December 31, 2024, we had 18,377,237 shares of Common Stock outstanding. In addition, as of December 31, 2024, we had outstanding options to purchase 1,000,900 shares of our Common Stock at exercise prices ranging from $3.15 to $10.20 per share and warrants to purchase 188,038 shares of our Common Stock at exercise prices of $11.50 and $12.19 per share. Future sales of the shares issuable could also depress the market price of our Common Stock.

General Risk Factors:

We may not be successful in winning new business mandates from our government, commercial or international customers.

We must be successful in winning mandatesbusiness from our government, commercial and international customers to replace revenues from projects that we have completed or that are nearing completion and to increase our revenues. We bid on numerous projects, and a number of the projects we bid on, weand are not always successful in obtaining.being selected as the winning bid. Our business and operating results can be adversely affected by the size and timing of a single material contract.

There is also an increasing attention on the importance of cybersecurity relating to infrastructure. This creates the potential for future developments in regulations relating to cybersecurity that may adversely impact us, our customers and how we offer our services to our customers.

Maintaining effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important in helping helping to prevent financial fraud. If we are unable to maintain adequate internal controls, our business and operating results could be harmed. We are required to satisfy the requirements of Section 404 of Sarbanes Oxley and the related rules of the Commission, which require, among other things, management to assess annually the effectiveness of our internal control over financial reporting. If we are unable to maintain adequate internal control over financial reporting.reporting or remediate any material weakness identified, there is a reasonable possibility that a misstatement of our annual or interim financial statements will not be prevented or detected in a timely manner. If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our Common Stock could decline significantly, and our business, financial condition, and reputation could be harmed.

We are a Delaware corporation governed by the Delaware General Corporation Law. In general, Section 203 prohibits a Delaware public corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. As a result of Section 203, potential acquirers may be discouraged from attempting to effect acquisition transactions with us, thereby possibly depriving our security holders of certain opportunities to sell, or otherwise dispose of, such securities at above-market prices pursuant to such transactions. Further, certain of our option plans provide for the immediate acceleration of, and removal of restrictions from, options and other awards under such plans upon a “change of control” (as defined in the respective plans). Such provisions may also have the result of discouraging acquisition of us. All of our authorized preferred stock are available for issuance. Future sales of authorized and unissued shares could be used by our management to make it more difficult for, and thereby discourage, an attempt to acquire control of us.

OurFinally, our continuing initiatives include, among other things, positioning ourselves for further large and mid-size procurements within the DOE and DODU.S. Department of War (“DOW”) and waste treatment in support of DOE’s Hanford closure strategy, continuedcontinuing investments in our facilities and capabilities to allow for broader waste treatment (including PFAS) (see “Known Trends and Uncertainties - New Processing Technology” within this MD&A for a discussion of our PFAS technology), and continuedcontinuing expansion of our waste treatment offerings within the international and commercial markets (see “Part I, Item 1 – Business – Foreign Revenue and Initiatives” for a discussion of our foreign revenue and initiatives).market.

See “Known Trends and Uncertainties – Federal Funding” within this MD&A for a discussion of factors that could impactsimpact our results of operations in 2025.2026.

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

Consolidated revenues decreasedincreased $30,618,000$2,557,000 for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, as follows:

1) Includes wasteswaste generated by government clients of $2,898,000$2,269,000 and $2,943,000$2,898,000 for the twelve months ended December 31, 2024,2025, and 2024, 2023, respectively.

Treatment Segment revenue decreasedincreased by $8,524,000$10,144,000 or 19.6%29.0% for the twelve-months ended December 31, 2024,2025, over the same period in 2023.2024. The overall decreaseincrease in revenue in the Treatment Segment revenue was primarily due to lowerhigher waste volume attributedand from the factors as discussed in the “Overview” section above. Overall lowerhigher averaged price from waste mixmix. within the Our Treatment Segment revenue was also contributedpositively impacted by our international initiatives, which generated an increase in revenue of approximately $3,832,000 or 201.7%, to $5,732,000, as compared to $1,900,000, for the revenuesame decrease.period of last year. Services Segment revenue decreased by approximately $22,094,000$7,587,000 or 47.8%.31.4%. The decrease in revenue in the Services Segment was due to the reasons as discussed in the “Overview” above. section. Additionally, our Services Segment revenues are project based; as such, the scope, duration, and completion of each project vary.

Cost of goods sold for the Treatment Segment decreasedincreased by approximately $538,000$4,240,000 or 1.5%.11.8%. Treatment Segment’s overall variable costs increased decreased by approximately $1,467,000$1,675,000 primarily due to the following: overall material and supplies, lab, transportation, and outside services costs were higher by approximately $3,371,000; variable payroll costs (overtime) were higher by approximately $426,000 due to increased waste volume production; and disposal costs were lower transportation,by disposal,approximately lab$2,122,000. andWithin bonus/incentiveour costs.Treatment Segment, variable cost categories can fluctuate based on waste mix. Treatment Segment’s overall fixed costs increasedwere higher by approximately $929,000$2,565,000 resulting from the following: salaries and payroll related expenses were higher by $1,717,000$2,130,000 due to higher headcount and cost-of-living adjustments (“COLA”) effected during the third quarter of 2025; regulatorygeneral expenses were higher by $376,000, mostly due to higher utility costs; travel expenses were higher by approximately $123,000; maintenance expenses were higher by approximately $101,000$59,000 from overall general maintenance of equipment and updates to facility security; depreciation expenses were higher by $106,000 due to more finance leases and equipment purchases; and regulatory expenses were lower by approximately $626,000 due$229,000 tofrom fullyfewer depreciatedregulatory AROs that occurred in the third quarter of 2023 in connection with our EWOC facility; maintenance costs were lower by approximately $123,000; general expenses were lower by $111,000 in various categories; and travel expenses were lower by approximately $29,000.matters. Services Segment cost of goods sold decreased $13,713,000 $7,654,000 or 37.3%33.2% primarily due to lower revenue. The decrease in cost of goods sold was primarily due to overall lower salaries/payroll related, outside services, and travel costs totaling approximately $13,565,000 $7,180,000; lower depreciation expenses oftotaling approximately $220,000$44,000 as certain equipment became fully depreciated in 2025; lower general expenses of $49,000approximately $265,000 in various categories; and higheroverall lower disposal, material and supplies expensesand ofregulatory costs totaling approximately $121,000.$165,000. Included within cost of goods sold is depreciation and amortization expense of $1,637,000$1,700,000 and $2,484,000$1,637,000 for the twelve months ended December 31, 2024,2025, and 2023,2024, respectively.

Gross profit for the year ended December 31, 2024,2025, was $16,367,000$5,971,000 lowerhigher than 20232024 as follows:

Treatment Segment gross profit decreasedincreased by $7,986,000$5,904,000 or approximately 116.1%531.9% and gross margin decreasedincreased to 10.6% % from (3.2)% from 15.8% primarily due to to lowerhigher revenue from lowerhigher waste volume,volume overalland lowerhigher averaged price waste mix. The increase in fixed costs within the Treatment Segment partially offset these improvements, negatively impacting gross profit and gross margin. Services Segment gross profit increased by $67,000 or approximately 6.0% and gross margin improved to 7.1% from waste4.6%. mixThe increases were attributed primarily to overall improved margin on projects and lower fixed costs which were offset by the impact of our fixed cost structure. Services Segment gross profit decreased by $8,381,000 or 88.3% primarily due to decreased revenue as discussed in the “Overview” above. The decrease in gross margin from 20.5% to 4.6% was attributed to overall lower margin projects as the two large projects completed in late 2023 were higher margin projects.revenue. Our overall Services Segment gross margin is impacted by our current projects which are competitively bid on and will thereforetherefore, have varying margin structures.

SG&A expenses decreasedincreased $484,000$1,925,000 for the year ended December 31, 2024,2025, as compared to the corresponding period for 20232024 as follows:

R&D expenses increased by $611,000$119,000 for the twelve-monthstwelve months ended December 31, 2024,2025, as compared to the corresponding period of 20232024, primarily due to expenses incurred in connection with our new PFAS technology.

Interest expense increaseddecreased by approximately $150,000$243,000 for the twelve-monthstwelve months ended December 31, 2024,2025, as compared to the corresponding period of 2023.2024. The increasedecrease was attributed primarily tothe result of capitalization of approximately $231,000 in interest costs incurred on thedebt $2,500,000on termconstruction of loanprojects dated July 31, 2023, underfor our credituse, facility and the promissory note that we entered into on July 24, 2024, for the purchase ofparticularly our EWOCPFAS facility. The higher interest expense was also attributed to more finance leases.reactors.

We had income tax expenses of $4,435,000$0 and $17,000$4,435,000 for continuing operations for the twelve-months ended December 31, 20242025 and 2023,2024, respectively. Our effective tax rates were approximately 29.3%0% and 1.8%(29.3%) for the twelve-monthtwelve months ended December 31, 20242025 and 2023,2024, respectively. Our effective tax rate for the twelve-monthseach endedof Decemberthe 31,periods 2024,above was impacted primarily by theour income tax expense recorded in the amountrecognition of approximately $8,194,000 as we provided for a full valuation allowance against our U.S.U.S federal and state deferred tax assets.assets Our effective tax rate forin the twelve-monthsquarter ended DecemberSeptember 31,30, 2023, was impacted by non-deductible expenses and state taxes.2024.

Our Treatment Segment maintains a backlog of stored waste, which represents waste that has not been processed. The backlog is principally a result of the timing and complexity of the waste being brought into the facilities and the selling price per container. As of December 31, 2024,2025, our Treatment Segment had a backlog of approximately $7,859,000,$11,861,000, as compared to approximately $8,702,000$7,859,000 as of December 31, 2023.2024. Additionally, the time it takes to process waste from the time it arrives may increase due to the types and complexities of the waste we are currently receiving. We typically processuse our best efforts to increase treatment of our waste backlog during periods period of lowlower incoming waste receipts,receipts to optimize facility utilization, which historically has been occurred in the first orand fourth quarters.

Discontinued Operations and Environmental ContingenciesLiabilities

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

Our discontinued operations had no revenue for the twelve-monthstwelve months ended December 31, 20242025 and 2023.2024. We incurred net losses of $410,000$3,119,000 (net of tax benefitexpense of $149,000$0) and $433,000$410,000 (net of tax benefit of $117,000$149,000) for our discontinued operations for the twelve-monthstwelve months ended December December31, 31,2025, and 2024, and 2023, respectively. NetOur lossesnet loss for both2025 yearsincluded an increase to the environmental remediation reserve of approximately $2,721,000 for our Perma-Fix of South Geogia, Inc. (“PFSG”) subsidiary as discussed below. The remaining net loss for 2025 and net loss for 2024 were primarily due to costs incurred in connection with management of administrative and regulatory matters related to our remediation projects. We have three environmental remediation projects, all within our discontinued operations, which principally entail the removal/remediation of contaminated soil, and, in most cases, the remediation of surrounding ground water.

As of December 31, 2024,2025, we were in a positive cash position with no revolvingRevolving creditCredit balance. As of December 31, 2024,2025, we had cash on hand of approximately $28,975,000.$11,768,000, which included cash from our foreign subsidiaries of approximately $153,000. The decline in our cash from 2024 to 2025 of approximately $17,207,000 was primarily due to funding of our operating losses and capital investment.

Cash used in operating activities of our continuing operations during 2024 consisted mostly of the significant net loss that we incurred of approximately $19,569,000, adjusted for certain non-cash items, such as $656,000 of stock-based compensation expense, $1,763,000 of depreciation and amortization expense and the deferred income tax expense of $4,448,000. TheCash flow decrease of approximately $2,229,000 resulting from net change in assets and liabilities reflects an increase in accounts receivable of approximately $2,076,000 (net of provision for credit losses), a net decrease in cashaccounts usedpayables, accrued expenses, deferred revenue and other accruals totaling approximately $6,667,000, offset by a decreased in operatingunbilled activitiesreceivables of our continuingapproximately operations$3,442,000 fromand 2023 to 2024 was driven primarily from the significanta net loss that we incurred. Our cash useddecrease in operatinginventories, prepaids and other assets activitiestotaling approximately of our discontinued operations consisted primarily of expenses incurred in connection with management and administration of regulatory matters for the Company’s remediation projects.$3,072,000.

We had working capital of $28,283,000$13,803,000 (which included working capital of our discontinued operations) as of December 31, 2024,2025, as compared to working capital of $4,613,000$28,283,000 as of December 31, 2023.2024. The improvement in ourdecrease in our working capital was primarily due to the increase in our cash from the sales of our Common Stock in May 2024 and December 2024, which was offsetdriven by the significant losses incurred from from our results of operations attributedduring to the various factors2025 as previously discussed.discussed and increase in capital expenditures as discussed below.

Cash used in investing activities of our continuing operations during 20242025 consisted mostly of our purchases of property and equipment totaling approximately $3,811,000,$5,172,000, of which $406,000$464,000 was financed. Our capital expenditures for 2025 included expenditures made for our PFAS treatment systems, which include our second-generation unit. The remaining cash used in investing activities consisted of cash outlays of approximately $217,000 made in connection with our operating permits and certain intangible assets. The increase inTotal cash used in investing activities of our continuing operations in 2024 as compared to 2023 was primarily due to capital expenditures made in connection with our PFAS technology which included the installation of our first unit in treating PFAS. Cash used in investing activities of our discontinued operations was primarilypartially for roofoffset replacementby atapproximately $28,000 from our PFSGsale location.of idle equipment.

We anticipate making capital expenditures of approximately $2,000,000$3,000,000 to $5,500,000$5,000,000 in 20252026 to maintain operations and regulatory compliance requirements and support revenue growth.growth, We expect our capital expenditures to be higher in 2025 based on certain strategic project initiatives which includeincluding the installationcompletion of our second generationsecond-generation unit for our PFAS technology. We plan to fund our capital expenditures for 2025 2026 from cash from operations, Liquidity under our Credit Facility and/or financing. The initiation and timing of our capital expenditures are subject to a number of factors which include, among other things, cost/benefit analysis, the pace of our strategic project initiatives and improvement in our operations.

Our cash provided by financing during 2024 consisted mostly of net proceeds of $41,859,000 received from the sales of our Common Stock in May 2024 and December 2024 as discussed below and proceeds received from option and a warrant exercises totaling approximately $292,000, partially offset by principal payments of approximately $832,000 primarily for our TermsTerm Loans and Capital Loan under our Credit Facility (see below for a discussion of our Credit Facility) and $291,000 for our finance leases.

We entered into a Second Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated May 8, 2020, which has since been amended from time to time,amended, with PNC National Association (“PNC” and “lender”), acting as agent and lender (the “Loan Agreement”). The Loan Agreement provides us with the followinga credit facility with a maturity date of May 15, 2027 (the “Credit Facility”) which consists of the following as of December 31, 2025: (a) up to $12,500,000 revolving credit (“revolvingRevolving creditCredit”), which borrowing capacity is subject to eligible receivables (as defined) and reduced by outstanding standby letters of credit ($3,200,000$3,350,000 as of December 31, 20242025) and borrowing reductions that our lender may impose from time to time ($750,000 as of December 31, 20242025); (b) a term loan (“Term Loan 1”) of approximately $1,742,000, requiring monthly installments of $35,547 (Term Loan 1 was paid off by us in June 2024); (c) a term loan (“Term Loan 2”) of $2,500,000, requiring monthly installments of $41,667$41,667, with a balance due under the Term Loan of approximately $1,333,000 as of December 31, 2025; and (dc) a capital expenditure loan (“Capital Loan”) of approximately $524,000, requiring monthly installments of principal of approximately $8,700 plus interest, thatwith commenceda balance due under the Capital Loan of approximately $149,000 onas Juneof 1,December 2022.31, 2025.

Our CreditAs Facility underamended, our Loan Agreement with PNC contains certain financial covenants,covenant requirements, along with customary representations and warranties. A breach of any of these financial covenants,covenant requirements, unless waived by PNC, could result in a default under our CreditLoan FacilityAgreement allowing our our lender to immediately require the repayment of all outstanding debt under our CreditLoan FacilityAgreement and terminate all commitments to extend further credit. We were not required to perform testing of our FCCR requirement for the first, second and third quarters of 2024 pursuant to the amendments dated May 8, 2024, and November 12, 2024, to our Loan Agreement as discussed above. We were also not required to perform testing of our FCCR requirement for the fourth quarter of 2024 pursuant to the amendment dated March 11, 2025, to our Loan Agreement, as amended, as discussed above. Otherwise, we met all of our other financial covenant requirements in each of the quarters in 2024.2025. We expect to meet our quarterly financial covenant requirements under our Loan Agreement for the next twelve months.

There has been no other material change from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2025,2025 otherand Form than10-Q for the below.quarter ended March 31, 2026, except as follows:

We have incurred Our recurring losses and negative operating cash flows, whichflows have reduced our liquidity and raiseraised substantial doubt about our ability to continue as a going concern.concern, and our expected improvement depends substantially on government-directed waste shipments and project activity that are outside our control.

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

WeLooking believeahead, we arebelieve positionedour current initiatives position us for potential improvementsimprovement in our financial results forduring the remainder of 2026. These We anticipate that our continuing initiatives include positioningpursuing ourselves for furtheradditional large and mid-size procurementsprocurement opportunities within the DOE and DOWDOW, including opportunities under the Hanford waste program, as well as expanding our presence in commercial and wasteinternational treatment in support of DOE’s Hanford closure strategy. During the first quarter of 2026, our Services Segment was awarded a two-year master task agreement which we believe to be valued at approximately $24 million for demolition and disposal at Lawrence Livermore National Laboratory.markets.

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

Summary – Three and Six Months Ended MarchJune 31,30, 2026 and 2025

Consolidated revenues decreased $2,793,000$1,701,000, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, as follows:

Cost of goods sold increased $745,000$2,349,000 for the quarter ended MarchJune 31,30, 2026, compared towith the quartersame endedperiod March 31,in 2025, as follows:

Gross profit decreased $3,538,000 for the quarter ended MarchJune 31,30, 2026,2026 compareddecreased to$4,050,000 over the quartersame endedperiod Marchin 31, 2025,2025 as follows:

SG&A increasedexpenses $284,000decreased $379,000 for the three months ended MarchJune 31,30, 2026, as compared to the corresponding period for 2025, as follows:

Interest income decreased by approximately $155,000$98,000 and $252,000 for the three and six months ended June 30, 2026, respectively, compared with the same periods in the2025. firstThe quarterdecreases of 2026 over to the corresponding period of 2025were primarily due lessto interest income earned from reducing balances in the MMDA. Additionally, lesslower interest income wasearned on lower balances maintained in our MMDA. Interest income also declined due to lower interest earned fromon theour finite risk sinking fundsfunds, fromprimarily as a result of lower interest interest rates.

Interest expense decreased by approximately $53,000$51,000 and $103,000 for the firstthree quarterand ofsix 2026months ended June 30, 2026, respectively, compared to with the same periodperiods in 2025. The decreasedecreases waswere primarily due to the capitalization of approximately $34,000$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 theour Company’ssecond second PFAS reactor.

We had no income tax expense for continuing operations of $0 for both the three and six months ended MarchJune 31,30, 2026,2026 and 2025. TheOur effective tax rate was 0% infor botheach periods,period primarilyas duea toresult of the full valuation allowance recorded in 2024recognized against the Company’sits U.S. federal and state deferred tax assets.assets during the quarter ended September 30, 2024.