What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-24 compared with 2025-03-13 · 465 added, 476 removed, 156 unchanged (86% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

statements contained within Item 1 – “Business” and this “Management’s Discussion and Analysis of Financial

7 unchanged sentences

in Item 8 of this report.

were disappointed with our 2024 financial results, which were negatively impacted by a number of unexpected events and factors.

events and factors included among other things,

Resolution (“CR”) impacts primarily in the first half of 2024 that directly resulted in delays in project starts for

existing services backlogs along with delays in procurement cycles for pipeline projects;

weather conditions, including two hurricanes, which resulted in delays in waste shipments and project mobilization activities by

certain customers and power outages and plant shutdowns at certain of our treatment facilities;

outages at certain of our facilities for equipment replacement and repairs, program enhancement and testing to support permit expansion

and broader market penetration which contributed to revenue production delays;

investments in R&D of our new technology to treat PFAS which required significant management and operation support, thereby also

limiting resources needed for revenue production;

of two large projects primarily in the fourth quarter of 2023 in the Services Segment that were not replaced by new projects of similar

These two projects generated an aggregate of approximately $35,273,000 in revenue in 2023.

a result of the aforementioned events and factors, overall revenue decreased by $30,618,000 or 34.1% to $59,117,000 for the twelve-months

ended December 31, 2024, from $89,735,000 for the corresponding period of 2023.

Treatment Segment revenue decreased by $8,524,000 to

$34,953,000 or 19.6% from $43,477,000, and Services Segment revenue decreased by $22,094,000 or 47.8% to $24,164,000 from $46,258,000.

Total gross profit for the twelve-months ended December 31, 2024, decreased $16,367,000 or 100.0% due to decreased revenue generated

in both segments.

Selling, general and administrative (“SG&A”) expenses decreased $484,000 or 3.2% for the twelve-months

ended December 31, 2024, as compared to the corresponding period of 2023.

2024, we provided a full valuation allowance against our deferred tax assets (see a discussion of this valuation allowance and the impact

to our financial statements in “Results of Operations – Income Taxes” below).

2024, we completed two public equity raises and sold an aggregate 4,581,282 shares of our Common Stock.

See “Liquidity and Capital

Resources - Financing Activities” within this MD&A for discussions of these equity raises that occurred in May 2024 and December

we are disappointed with our 2024 financial results, we believe our base business is positioned for improvement and that our results

of operations should improve in 2025.

We continue to advance a number of initiatives which are discussed within this report on Form 10-K.

Some of these initiatives have been realized, with additional initiatives that are expected to be more fully realized in 2025.

2024, BWXT Technologies, Inc (“BWXT”) announced that the DOE had awarded BWXT and its team, which we are a member of, the

contract for the cleanup operations at the West Valley Development Project in West Valley, NY.

As disclosed by BWXT, the contract has

a 10-year ordering period with a maximum value of up to $3 billion that can be performed for up to 15 years.

The scope attributable to

us has not yet been defined and is subject to certain approvals.

The West Valley Project is anticipated to begin transition in the first

quarter of 2025 and realize full operations in 120 days from initiation.

As previously disclosed, in December 2023, we and our partner,

Campoverde Srl, each owning 50% of the partnership, were awarded a multi-year contract for the treatment of radioactive waste from the

Joint Research Center in Ispra, Italy.

Revenue generated and to be generated by us from this contract has been and will be limited to

project management support through 2025.

The scope of work in the initial phases of this contract is being performed predominantly by

We expect to generate an increase in revenue under this contract starting in 2026 when the waste treatment phases begin.

continuing initiatives include, among other things, positioning ourselves for further large and mid-size procurements within the DOE

and DOD and waste treatment in support of DOE’s Hanford closure strategy, continued 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 continued 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).

“Known Trends and Uncertainties – Federal Funding” within this MD&A for a discussion of factors that could impacts

2025, we generated modest consolidated revenue growth year-over-year, while delivering improvements in gross profit and operating

performance compared to the prior year, driven primarily by a rebound in the Treatment Segment.

The Treatment Segment benefited from

higher waste volumes and higher averaged price waste mix, which included higher revenue generated from international and commercial

In contrast, the Services Segment experienced lower revenue, due in part to delays in project mobilization and delays in procurements

that resulted from changes to the current presidential administration that began in January 2025 (the “Administration”) and

supporting policies that occurred in the first half of 2025.

The partial government shutdown that occurred effective October 1, 2025,

also negatively impacted our revenue as procurement timing cycles were impacted.

revenue increased by $2,557,000 or 4.3% to $61,674,000 in 2025 as compared to $59,117,000 in 2024.

The increase was entirely from our

Treatment Segment where revenue increased by $10,144,000 or approximately 29.0% to $45,097,000 for the twelve months ended December 31,

2025, from $34,953,000 in the same period of 2024.

Services Segment revenue decreased $7,587,000 or 31.4% to $16,577,000 for the twelve

months ended December 31, 2025, from $24,164,000 for the same period of 2024.

Gross profit increased by $5,971,000 or approximately 298,550%

for the twelve months ended December 31, 2025, as compared to the corresponding period of 2024.

Selling, General, and Administrative

(“SG&A”) expenses increased by $1,925,000 or 13.3% for twelve months ended December 31, 2025, as compared to the corresponding

period of 2024.

In spite of the improvement in gross profit, we experienced a loss

from continuing operations of approximately $10,665,000 in 2025.

While the loss was disappointing, it reflected an improvement of approximately

45.5% from the 2024 loss from continuing operations of $19,569,000.

“Results of Operations” below for discussions of certain financial metrics pertaining to our operations, which includes our

two reportable segments.

believe we are positioned for potential improvements in our financial results in 2026.

These expectations

are based on management’s current assumptions regarding the timing and execution of anticipated waste treatment volumes, including

the commencement and ramp-up of activities associated with the Direct-Feed-Low-Activity Waste (“DFLAW”) program at Hanford,

Washington, as well as our ability to convert existing Treatment Segment backlog into revenue.

Treatment Segment backlog as of December

31, 2025, was approximately $11,861,000, representing an increase of approximately 50.9% from Treatment Segment backlog of $7,859,000

as of December 31, 2024.

However, Treatment Segment backlog does not guarantee immediate revenue, as the timing of backlog processing

may vary based on waste complexity, customer requirements, and operational considerations.

As noted above, however, we believe that our

Perma-Fix Northwest Richland, Inc.

(“PFNWR”) treatment facility, immediately adjacent to the Hanford Nuclear Site, is positioned

to support the U.S.

Department of Energy’s (“DOE”) DFLAW program at Hanford, which began hot commissioning of the Low-Activity

Waste Vitrification Facility in October 2025.

The subsequent operational phase of the DFLAW program is anticipated to begin in 2026, which

will include generation of several effluent waste streams expected to be treated by our PFNWR facility.

However, the commencement, scope,

and timing of DFLAW-related waste streams are controlled by the DOE and subject to appropriations, procurement processes, and operational

considerations beyond our control.

Delays in anticipated waste treatment volumes, including DFLAW-related waste streams, could impact

our results of operations as we continue to incur fixed operating costs and capital expenditures in anticipation of waste treatment volumes

and program activities.

We continue to focus on expansion into international markets which is reflected

in revenue generated from foreign entities of approximately $6,440,000 in 2025, as compared to $2,452,000 in the corresponding period

of 2024, an increase of $3,988,000 or 162.6%.

Additionally, we continue our aggressive research and development (“R&D”),

sales and marketing efforts and capital expenditures relating to our new patent-pending technology for the destruction of Per- and polyfluoroalkyl

substances (“PFAS”), which activities adversely impacted our results of operations in 2025 (See “Known Trends and Uncertainties

– New Processing Technology” for a discussion of our new PFAS-destruction technology).

our continuing initiatives include, among other things, positioning ourselves for further large and mid-size procurements within the DOE and U.S.

Department of War (“DOW”) and waste treatment in support of DOE’s

Hanford closure strategy, continuing investments in our facilities and capabilities to allow for broader waste treatment (including PFAS)

and continuing expansion of our waste treatment offerings within the commercial market.

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

“Known Trends and Uncertainties – Federal Funding” within this MD&A for a discussion of factors that could impact

our results of operations in 2026.

Treatment and Services Segments’ business continues to be heavily dependent on services that we provide to federal governmental

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.

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, the manner in which the applicable government authority will be required to spend

funding to remediate various sites and potential future federal budget issues.

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 at the government’s option.

Significant reductions in the level of governmental funding 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 flows.

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

In addition, our governmental contracts and subcontracts relating to activities at federal governmental sites are generally subject

to termination for convenience at any time, at the government’s option.

Significant reductions in the level of governmental funding,

government shutdown or specifically mandated levels for different programs that are important to our business could have a material adverse

impact on our business, financial position, results of operations, liquidity and cash flows.

of Operations

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Research and development

Loss on disposal of property and equipment

(Loss) income from operations

Loss on disposal of

property and equipment

Loss from operations

Interest income

1 unchanged sentence

Interest expense – financing fees

Other income (expense)

(Loss) income from continuing operations before taxes

Loss from continuing operations before taxes

Income tax expense

(Loss) income from continuing operations

revenues decreased $30,618,000 for the year ended December 31, 2024, compared to the year ended December 31, 2023, as follows:

Loss from continuing

revenues increased $2,557,000 for the year ended December 31, 2025, compared to the year ended December 31, 2024, as follows:

(In thousands)

Government waste

Hazardous/non-hazardous

Other nuclear waste

Includes wastes generated by government clients of $2,898,000 and $2,943,000 for the twelve months ended December 31, 2024, and

Includes waste generated by government clients of $2,269,000 and $2,898,000 for the twelve months ended December 31, 2025, and 2024,

respectively.

Segment revenue decreased by $8,524,000 or 19.6% for the twelve-months ended December 31, 2024, over the same period in 2023.

decrease in revenue was primarily due to lower waste volume attributed from the factors as discussed in the “Overview” section

Overall lower averaged price from waste mix within the Treatment Segment also contributed to the revenue decrease.

Services Segment

revenue decreased by approximately $22,094,000 or 47.8%.

The decrease in revenue in the Services Segment was due to the reasons as discussed

in the “Overview” above.

Segment revenue increased by $10,144,000 or 29.0% for the twelve-months ended December 31, 2025, over the same period in 2024.

increase in revenue in the Treatment Segment revenue was primarily due to higher waste volume and higher averaged price waste mix.

Treatment Segment revenue was also positively 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 same period of last year.

Services Segment revenue decreased

by approximately $7,587,000 or 31.4%.

The decrease in revenue in the Services Segment was due to reasons as discussed in the “Overview”

Additionally, our Services Segment revenues are project based;

as such, the scope, duration, and

completion of each project vary.

as such, the scope, duration, and completion of each project

of Goods Sold

1 unchanged sentence

(In thousands)

of goods sold for the Treatment Segment decreased by approximately $538,000 or 1.5%.

Treatment Segment’s variable costs decreased

by approximately $1,467,000 primarily due to overall lower transportation, disposal, lab and bonus/incentive costs.

Treatment Segment’s

overall fixed costs increased by approximately $929,000 resulting from the following:

salaries and payroll related expenses were higher

by $1,717,000 due to higher headcount;

regulatory costs were higher by approximately $101,000;

depreciation expenses were lower by approximately

$626,000 due to fully depreciated 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.

Services Segment cost of goods sold decreased $13,713,000 or 37.3% primarily due to lower revenue.

in cost of goods sold was primarily due to overall lower salaries/payroll related, outside services, and travel costs totaling approximately

lower depreciation expenses of approximately $220,000;

lower general expenses of $49,000 in various categories;

material and supplies expenses of approximately $121,000.

Included within cost of goods sold is depreciation and amortization expense

of $1,637,000 and $2,484,000 for the twelve months ended December 31, 2024, and 2023, respectively.

profit for the year ended December 31, 2024, was $16,367,000 lower than 2023 as follows:

of goods sold for the Treatment Segment increased by approximately $4,240,000 or 11.8%.

Treatment Segment’s overall variable costs

increased by approximately $1,675,000 primarily due to the following:

overall material and supplies, lab, transportation, and outside services costs were higher by approximately

variable payroll costs (overtime) were higher by approximately $426,000 due to increased waste volume production;

costs were lower by approximately $2,122,000.

Within our Treatment Segment, variable cost categories can fluctuate

based on waste mix.

Treatment Segment’s overall fixed costs were higher by approximately $2,565,000 resulting from the following:

salaries and payroll related expenses were higher by $2,130,000 due to higher headcount and cost-of-living adjustments (“COLA”)

effected during the third quarter of 2025;

general 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 $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 $229,000 from fewer regulatory matters.

Services Segment cost of goods sold decreased

$7,654,000 or 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 $7,180,000;

lower depreciation expenses totaling approximately $44,000

as certain equipment became fully depreciated in 2025;

lower general expenses of approximately $265,000 in various categories;

lower disposal, material and supplies and regulatory costs totaling approximately $165,000.

Included within cost of goods sold is depreciation

and amortization expense of $1,700,000 and $1,637,000 for the twelve months ended December 31, 2025, and 2024, respectively.

profit for the year ended December 31, 2025, was $5,971,000 higher than 2024 as follows:

(In thousands)

Segment gross profit decreased by $7,986,000 or approximately 116.1% and gross margin decreased to (3.2)% from 15.8% primarily due to

lower revenue from lower waste volume, overall lower averaged price from waste mix and the impact of our fixed cost structure.

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.

Our overall Services Segment gross margin is impacted by our current projects which are competitively

Segment gross profit increased by $5,904,000 or approximately 531.9% and gross margin increased to 10.6% % from (3.2)% primarily due

to higher revenue from higher waste volume and higher 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 4.6%.

The increases were attributed primarily to overall improved margin on projects and lower fixed costs

which were offset by the impact of lower revenue.

Our Services Segment gross margin is impacted by our current projects which are competitively

bid on and will therefore, have varying margin structures.

expenses decreased $484,000 for the year ended December 31, 2024, as compared to the corresponding period for 2023 as follows:

expenses increased $1,925,000 for the year ended December 31, 2025, as compared to the corresponding period for 2024 as follows:

(In thousands)

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Administrative

SG&A expenses were lower primarily due to lower incentive expenses of approximately $540,000, which was offset by overall higher

expenses of $206,000 in various categories.

Administrative SG&A expenses in 2023 included incentives earned in connection with the

Company’s management incentive plans (“MIPs”) and other employees’ bonus plans.

Such incentives were not earned

Treatment Segment SG&A expenses were higher primarily due to higher salaries and payroll related expenses of approximately

$420,000 which were offset by overall lower travel, outside services and general expenses totaling approximately $379,000.

in Services Segment SG&A was primarily due to lower outside services expenses of approximately $102,000 from fewer consulting and

legal matters and lower salaries and payroll related expenses of approximately $249,000.

The overall lower SG&A expenses were offset

by higher credit loss expenses of approximately $160,000 as a certain account receivable was determined to be uncertain as to collectability

as of December 31, 2024.

Included in SG&A expenses is depreciation and amortization expense of $126,000 and $84,000 for the twelve

months ended December 31, 2024 and 2023, respectively.

SG&A expenses were higher primarily due to higher salaries, payroll related expenses and stock option compensation expenses

totaling approximately $558,000.

The hiring of the Company’s COO in January 2025 and COLA increases to payroll effected during

the third quarter of 2025 contributed to this increase.

The remaining higher expenses in Administrative SG&A were primarily due

to higher outside services expenses of approximately $425,000 from more legal and business-related matters and higher travel

expenses of approximately $53,000 due to more travel by senior management.

Treatment Segment SG&A expenses were higher primarily

due to the following:

salaries and payroll related expenses were higher by approximately $713,000 as more employee hours were

allocated to marketing initiatives of our new PFAS technology and overall business development;

general expense were higher by

approximately $244,000 in various categories (which include higher tradeshow expenses of approximately $157,000);

travel expenses

were higher by $35,000;

and outside services expenses were lower by approximately $14,000 from fewer consulting matters.

Segment SG&A expenses were lower primarily due to the following:

salaries and payroll related expenses were lower by

approximately $57,000 as fewer employee hours were allocated in supporting administrative/marketing functions due to lower revenue;

general expenses were lower by approximately $62,000 in various categories;

outside services expenses were higher by approximately

$10,000 due to more consulting matters;

and travel expense were higher by approximately $20,000.

Included in SG&A expenses is

depreciation and amortization expense of $59,000 and $126,000 for the twelve months ended December 31, 2025 and 2024,

respectively.

expenses increased by $119,000 for the twelve months ended December 31, 2025, as compared to the corresponding period of 2024, primarily

1 unchanged sentence

income increased by approximately $202,000 for the twelve-months ended December 31, 2025, as compared to the corresponding period of

The increase was primarily due to higher interest income earned from our finite risk sinking fund from higher interest rates that

took effect starting in March 2023.

Additionally, the increase in interest income resulted from more funds that we maintained in our

money market deposit accounts from the two equity raises that were complete in May 2024 and December 2024.

The overall increase in interest

income from the above was reduced by interest income received in March of 2023 of approximately $60,000 in connection with the Employee

Retention Credit refund that we received.

expense increased by approximately $150,000 for the twelve-months ended December 31, 2024, as compared to the corresponding period of

The increase was attributed primarily to interest incurred on the $2,500,000 term loan dated July 31, 2023, under our credit facility

and the promissory note that we entered into on July 24, 2024, for the purchase of our EWOC facility.

The higher interest expense was

also attributed to more finance leases.

record a valuation allowance against our net deferred tax asset to the extent we determine it is more likely than not that such asset

will not be realized in the future.

We regularly evaluate the probability that our deferred tax assets will be realized and determines

whether valuation allowances or adjustments thereto are needed.

This determination involves judgement and the use of estimates and assumptions,

including expectations of future taxable income and tax planning strategies.

We apply judgment to consider the relative impact of negative

and positive evidence, and the weight given to negative and positive evidence is commensurate with the extent to which such evidence

can be objectively verified.

Based on our evaluation of all available positive and negative evidence, and with greater weight placed

on the objectively verifiable evidence which primarily included our three-year cumulative losses, we determined that it was more likely

than not that our net U.S.

deferred tax asset will not be realized.

As a result, in 2024, we provided a full valuation allowance against

federal and state deferred tax assets and recorded an income tax expense in the amount of approximately $8,194,000.

to maintain a valuation allowance against foreign tax attributes that may not be realized.

The increase in interest income in 2025 as compared to 2024 was primarily due to higher interest income earned from funds deposited

into our money market deposit account (“MMDA”) from the two equity raises that were completed in May 2024 and December 2024,

offset by lower interest income earned from our finite risk sinking fund from lower interest rate.

expense decreased by approximately $243,000 for the twelve months ended December 31, 2025, as compared to the corresponding period of

The decrease was primarily the result of capitalization of approximately $231,000 in interest costs incurred on debt on construction

of projects for our use, particularly our PFAS reactors.

had income tax expenses of $0 and $4,435,000 for continuing operations for the twelve-months ended December 31, 2025 and 2024, respectively.

Our effective tax rates were approximately 29.3% and 1.8% for the twelve-month ended December 31, 2024 and 2023, respectively.

Our effective tax rates were approximately 0% and (29.3%) for the twelve months ended December 31, 2025 and 2024, respectively.

Our effective

tax rate for the twelve-months ended December 31, 2024, was impacted primarily by the income tax expense recorded in the amount of approximately

$8,194,000 as we provided for a full valuation allowance against our U.S.

federal and state deferred tax assets.

Our effective tax rate

for the twelve-months ended December 31, 2023, was impacted by non-deductible expenses and state taxes.

tax rate for the each of the periods above was impacted by our recognition of a full valuation allowance against our U.S federal and

state deferred tax assets in the quarter ended September 30, 2024.

Treatment Segment maintains a backlog of stored waste, which represents waste that has not been processed.

5 unchanged sentences

waste we are currently receiving.

We typically process our backlog during periods of low waste receipts, which historically has been

in the first or fourth quarters.

Operations and Environmental Contingencies

discontinued operations consist of all our subsidiaries included in our Industrial Segment which encompasses subsidiaries divested in

2011 and earlier, as well as three previously closed locations.

We use our best efforts to increase treatment of our waste backlog during

period of lower incoming waste receipts to optimize facility utilization, which historically has occurred in the first and fourth quarters.

Operations and Environmental Liabilities

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.

discontinued operations had no revenue for the twelve months ended December 31, 2025 and 2024.

We incurred net losses of $3,119,000 (net

of tax benefit of $149,000) and $433,000 (net of tax benefit of $117,000) for our discontinued operations for the twelve-months ended

December 31, 2024, and 2023, respectively.

Net losses for both years 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.

of tax expense of $0) and $410,000 (net of tax benefit of $149,000) for our discontinued operations for the twelve months ended December

31, 2025, and 2024, respectively.

Our net loss for 2025 included 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.

have three remediation projects, which are currently in progress relating to our Perma-Fix of Dayton, Inc.

(“PFD”), Perma-Fix

of Memphis (“PFM”) and PFSG subsidiaries, all within our discontinued operations.

We divested PFD in 2008;

however, the environmental

liability of PFD was retained by us upon the divestiture of PFD.

These remediation projects principally entail the removal/remediation

of contaminated soil and, in most cases, the remediation of surrounding ground water.

The remediation activities are closely reviewed

and monitored by the applicable state regulators.

of December 31, 2025, we had total accrued environmental remediation liabilities of $3,485,000, an increase of $2,718,000 from the December 31, 2024, balance

The net increase of approximately $2,718,000 reflects an increase of approximately $2,721,000 made to the reserve at our

PFSG subsidiary following a reassessment of remediation cost estimates after clarification of the remediation plan from the state regulator,

offset by payments of approximately $3,000 for our PFSG remediation project.

As of December 31, 2025, approximately $76,000 of our total

environmental remediation liabilities were recorded as current.

and Capital Resources

cash flow requirements during the twelve-months ended December 31, 2024, were primarily financed by our Liquidity (defined as borrowing

availability under the revolving credit plus cash in our MMDA maintained with our lender).

Our Liquidity included net proceeds received

from the sales of an aggregate 4,581,282 shares of our Common Stock pursuant to certain Securities Purchase and Underwriting Agreements

executed in May 2024 and December 2024 (see “Financing Activities” below for a discussion of these offerings, including the

planned usage of the proceeds).

We believe our cash flow requirements for the next twelve months will consist primarily of general working

capital needs, scheduled principal payments on our debt obligations, remediation projects, R&D on our PFAS technology and capital

expenditures (which include our PFAS technology) (see “Known Trends and Uncertainties – New Processing Technology”

within this MD&A for a discussion of this technology).

We plan to fund these requirements from our operations and Liquidity under

our Credit Facility.

We are continually reviewing operating costs and reviewing the possibility of further reducing operating costs and

non-essential expenditures to bring them in line with revenue levels.

As of December 31, 2024, we had no outstanding borrowing under

our revolving credit and our Liquidity under our Credit Facility was approximately $33,905,000.

We believe that our cash flows from operations

and our Liquidity should be sufficient to fund our operations for the next twelve months.

Although we believe our operations should improve

in 2025, if we continue to incur losses such as in 2024, this could cause a reduction in our Liquidity.

on current operating conditions and the timing of anticipated waste receipts and program activities, we currently expect to incur a loss

from operations during the first quarter of 2026.

This expectation also reflects the timing of backlog processing, continued operating

fixed costs and capital expenditures incurred in anticipation of program activities, including ongoing investments in new technology

initiatives and with respect to the DFLAW program.

the anticipated near-term operating loss, we believe that our existing cash, cash equivalents, borrowing availability under our Revolving

Credit (see “Financing Activities – Credit Facility” below for a discussion of our Revolving Credit) and expected cash

flows from operations will be sufficient to fund our operations for at least the next twelve months, based on management’s current

assumptions regarding the timing and execution of anticipated waste treatment volumes.

cash flow requirements during the twelve months ended December 31, 2025, were financed by our Liquidity (defined under our Loan Agreement

as borrowing availability under our Revolving Credit of our Credit Facility plus cash in our MMDA maintained with our lender).

consists of cash received in connection with the sale of our Common Stock completed in 2024 as discussed below under “Financing

believe our cash flow requirements for the next twelve months will consist primarily of general working capital needs, scheduled principal

payments on our debt obligations, administration and monitoring of our discontinued operations, R&D related to our PFAS technology

and capital expenditures, including expenditures related to our PFAS technology (see “Known Trends and Uncertainties – New

Processing Technology” within this MD&A for a discussion of this technology).

We plan to fund these requirements from our operations

and our Liquidity.

continually review operating costs and evaluate opportunities to reduce operating costs and non-essential expenditures in order to align

spending levels with revenue levels.

As of December 31, 2025, we had no outstanding borrowing under our Revolving Credit and our Liquidity

was approximately $18,126,000, which included approximately $11,529,000 of cash held in our MMDA.

following table reflects the cash flow activity for the year ended December 31, 2025, and the corresponding period of 2024:

(In thousands)

Cash (used in) provided by operating activities of continuing operations

Cash used in operating activities of discontinued operations

Cash used in investing activities of continuing operations

Cash used in investing activities of discontinued operations

Cash provided by financing activities of continuing operations

Effect of exchange rate changes on cash

Increase in cash and finite risk sinking fund (restricted cash)

Cash used in operating activities

of continuing operations

Cash used in operating activities of discontinued

Cash used in investing activities of continuing

Cash used in investing activities of discontinued

Cash (used in) provided by financing activities

of continuing operations

Effect of exchange

rate changes on cash

(Decrease) increase

in cash and finite risk sinking fund (restricted cash)

of December 31, 2025, we were in a positive cash position with no Revolving Credit balance.

As of December 31, 2025, we had cash on hand

of approximately $28,975,000.

of approximately $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.

used in operating activities of our continuing operations during 2025 consisted mostly of the net loss that we incurred of approximately

$10,665,000, adjusted for certain non-cash items, such as $818,000 of stock-based compensation expenses and $1,759,000 of depreciation

and amortization expenses.

Cash flow decrease of approximately $2,921,000 resulting from net change in assets and liabilities reflects

an increase in unbilled receivables of approximately $3,791,000, a net decrease in accounts payables, accrued expenses, deferred revenue

and other accruals totaling approximately $1,660,000, offset by a decreased in accounts receivable (net of provision for credit losses)

of approximately $216,000 and a net decrease in inventories, prepaids and other assets totaling approximately of $2,314,000.

receivables are impacted by timing of invoicing and collections.

Our contracts with our customers are subject to various payment terms

and conditions.

Our unbilled receivables are impacted by differences between invoicing timing and our revenue recognition methodology.

used in operating activities of our continuing operations during 2024 consisted mostly of the significant net loss that we incurred of

1 unchanged sentence

and amortization expense and the deferred income tax expense of $4,448,000.

The decrease in cash used in operating activities of our

continuing operations from 2023 to 2024 was driven primarily from the significant net loss that we incurred.

Our cash used in operating

activities of our discontinued operations consisted primarily of expenses incurred in connection with management and administration of

regulatory matters for the Company’s remediation projects.

Cash 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 accounts payables, accrued expenses, deferred revenue and other accruals totaling approximately $6,667,000,

offset by a decreased in unbilled receivables of approximately $3,442,000 and a net decrease in inventories, prepaids and other assets

totaling approximately of $3,072,000.

used in operating activities of our discontinued operations during 2025 and 2024 consisted primarily of expenses incurred in connection

with management of administrative and regulatory matters related to our remediation projects.

had working capital of $13,803,000 (which included working capital of our discontinued operations) as of December 31, 2025, as compared

to working capital of $28,283,000 as of December 31, 2024.

The improvement in our 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 offset by the significant losses incurred from

our results of operations attributed to the various factors as previously discussed.

(“PF Canada”)

cash used in operating activities in 2024 included receipt of certain outstanding receivables from Canadian Nuclear Laboratories, LTD

(“CNL”) as follows:

During the fourth quarter of 2021, PF Canada received a Notice of Termination (“NOT”) from

CNL on a Task Order Agreement (“TOA”) that PF Canada entered into with CNL in May 2019 for remediation work within Ontario,

Canada (“Agreement”).

The NOT was received after work under the TOA was substantially completed and work under the TOA has

since been completed.

CNL may terminate the TOA at any time for convenience.

At year-end 2023, PF Canada had approximately $2,389,000

in outstanding receivables due from CNL as a result of work performed under the TOA.

A settlement agreement was reached between PF Canada

and CNL on the payment of the aforementioned amount by CNL, subject to certain conditions/terms precedents being met.

PF Canada received

a partial payment from CNL of the outstanding receivables during the first quarter of 2024.

In May 2024, PF Canada received the remaining

approximately $1,612,000 in outstanding receivables from CNL.

As a result of the aforementioned payments received from CNL, no outstanding

receivables remain under the TOA from CNL.

The decrease in our working capital was primarily driven by the losses incurred

from our operations during 2025 as previously discussed and increase in capital expenditures as discussed below.

used in investing activities of our continuing operations during 2025 consisted mostly of our purchases of property and equipment totaling

approximately $5,172,000, of which $464,000 was financed.

The remaining cash used in investing activities consisted of cash outlays made

in connection with our operating permits and certain intangible assets.

The increase in 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 primarily for

roof replacement at our PFSG location.

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.

Total cash used in investing activities of our

continuing operations was partially offset by approximately $28,000 from our sale of idle equipment.

used in investing activities of our continuing operations during 2024 consisted mostly of our purchases of property and equipment totaling

approximately $3,811,000, of which $406,000 was financed.

Our capital expenditures for 2024 included expenditures made for our prototype

PFAS treatment unit.

The remaining cash used in investing activities consisted of cash outlays made in connection with our operating

permits and certain intangible assets.

used in investing activities of our discontinued operations during 2025 consisted of payments made in connection with a certain regulatory

permit at our Perma-Fix South Georgia, Inc.

(“PFSG”) subsidiary and improvements made to the existing building.

in investing activities of our discontinued operations in 2024 was primarily for roof replacement at our PFSG location.

anticipate making capital expenditures of approximately $3,000,000 to $5,000,000 in 2026 to maintain operations and regulatory compliance

requirements and support revenue growth.

We expect our capital expenditures to be higher in 2025 based on certain strategic project initiatives

which include the installation of our second generation unit for our PFAS technology.

We plan to fund our capital expenditures for 2025

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.

requirements and support revenue growth, including the completion of our second-generation unit for our PFAS technology.

We plan to fund

our capital expenditures for 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.

cash used in financing during 2025 consisted mostly of principal payments of approximately $631,000 primarily for our Term and Capital

Loans under our Credit Facility, principal payments of $308,000 for our finance leases and payments of $195,000 of offering costs from

the equity raise that we completed in December 2024, partially offset by proceeds received from option exercises of approximately $172,000.

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 Terms Loans and Capital Loan under our Credit Facility

(see below for a discussion of our Credit Facility) and $291,000 for our finance leases.

May 2024 and December 2024 and proceeds received from option and warrant exercises totaling approximately $292,000, partially offset

by principal payments of approximately $832,000 primarily for our Term Loans and Capital Loan under our Credit Facility and $291,000

for our finance leases.

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, with PNC National Association (“PNC” and “lender”), acting as agent and lender (the

“Loan Agreement”).

The Loan Agreement provides us with the following credit facility with a maturity date of May 15, 2027

(the “Credit Facility):

(a) up to $12,500,000 revolving credit (“revolving credit”), which borrowing capacity is subject

to eligible receivables (as defined) and reduced by outstanding standby letters of credit ($3,200,000 as of December 31, 2024) and borrowing

reductions that our lender may impose from time to time ($750,000 as of December 31, 2024);

(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);

(“Term Loan 2”) of $2,500,000, requiring monthly installments of $41,667;

and (d) a capital expenditure loan (“Capital

Loan”) of approximately $524,000, requiring monthly installments of principal of approximately $8,700 plus interest, that commenced

on June 1, 2022.

May 8, 2024 and November 12, 2024, we entered into amendments to our Loan Agreement with our lender which provided the following, among

other things:

the quarterly fixed charge coverage ratio (“FCCR”) testing requirement for the first, second and third quarters of 2024;

the quarterly FCCR testing requirement starting in the fourth quarter of 2024 and revises the methodology to be used in calculating

the FCCR as follows (with no change to the minimum 1.15:1 ratio requirement):

FCCR for the fourth quarter is to be determined based

on financial results for the three-months period ending December 31, 2024;

FCCR for the first quarter of 2025 is to be determined

based on financial results for the six-months period ending March 31, 2025;

FCCR for the second quarter of 2025 is to be determined

based on financial results for the nine-months period ending June 30, 2025;

and FCCR for the third quarter of 2025 and each fiscal

quarter thereafter is to be determined based on financial results for a trailing twelve-months period ending basis;

maintenance of a minimum of $3,000,000 in daily Liquidity starting June 30, 2024, through September 29, 2025 (which we have met to

the event that we are able to achieve our minimum quarterly FCCR requirement utilizing our financial results based on a trailing

twelve-months period starting with the quarter ended September 30, 2024 (which we did not achieve as of December 31, 2024), the maintenance

of a minimum of $3,000,000 in daily Liquidity requirement as discussed above will be removed.

Any subsequent fiscal quarter testing

of the FCCR will revert back to a trailing twelve-months period method.

connection with the amendments, we paid our lender fees totaling $37,500 which is being amortized over the remaining term of the Loan

Agreement as interest expense-financing fees.

amended, with PNC National Association (“PNC” and “lender”), acting as agent and lender (the “Loan Agreement”).

The Loan Agreement provides us with a 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 (“Revolving Credit”), which borrowing

capacity is subject to eligible receivables (as defined) and reduced by outstanding standby letters of credit ($3,350,000 as of December

31, 2025) and borrowing reductions that our lender may impose from time to time ($750,000 as of December 31, 2025);

(b) a term loan (“Term

Loan”) of $2,500,000, requiring monthly installments of $41,667, with a balance due under the Term Loan of approximately $1,333,000

as of December 31, 2025;

and (c) a capital expenditure loan (“Capital Loan”) of approximately $524,000, requiring monthly

installments of principal of approximately $8,700 plus interest, with a balance due under the Capital Loan of approximately $149,000

as of December 31, 2025.

March 11, 2025, we entered into an amendment to our Loan Agreement with our lender which provided the following, among other things:

the quarterly FCCR testing requirement for the fourth quarter of 2024;

the requirement that we maintain a minimum of $3,000,000 in daily Liquidity through September 29, 2025, which was removable earlier

subject to meeting certain conditions;

the quarterly FCCR covenant testing requirement utilizing a twelve-month trailing basis;

however, such FCCR testing requirement will

be triggered on the day we fail to meet a minimum of $5,000,000 in daily Liquidity.

If triggered, we will be required to show compliance

of a FCCR ratio of not less than 1.15 to 1.00 utilizing a trailing twelve-month-period ended starting with the most recently reported

fiscal quarter and each fiscal quarter thereafter.

The FCCR testing requirement can be removed again once we are able to achieve

a minimum of $5,000,000 in daily Liquidity for a thirty-consecutive-day period from the trigger date;

the quarterly fixed charge coverage ratio (“FCCR”) covenant testing requirement

utilizing a twelve-month trailing basis;

however, such FCCR testing requirement will be triggered

on the day we fail to meet a minimum of $5,000,000 in daily Liquidity.

If triggered, we will

be required to show compliance with an FCCR ratio of not less than 1.15 to 1.00 utilizing

a trailing twelve-month period ended starting with the most recently reported fiscal quarter

and each fiscal quarter thereafter.

The FCCR testing requirement can be removed again once

we are able to achieve a minimum of $5,000,000 in daily Liquidity for a thirty-consecutive-day

period from the trigger date;

the Facility Fee (as defined) from 0.375% to 0.500%.

Such fee percentage will revert back to .375% at such time that we are able to

achieve a minimum 1.15 to 1.00 ratio in FCCR on a twelve-month trailing basis.

connection with the amendment, the Company paid its lender a fee of $12,500.

Credit Facility under our Loan Agreement with PNC contains certain financial covenants, along with customary representations and warranties.

A breach of any of these financial covenants, unless waived by PNC, could result in a default under our Credit Facility allowing our

lender to immediately require the repayment of all outstanding debt under our Credit Facility and terminate all commitments to extend

Such fee percentage will revert back

to 0.375% at such time that we are able to achieve a minimum 1.15 to 1.00 ratio in FCCR on

a twelve-month trailing basis;

payment by the Company of an amendment fee of $12,500,

which is being amortized over the remaining term of the Loan Agreement as interest expense-financing fees.

As amended, our Loan Agreement with PNC contains certain financial covenant requirements, along with customary representations and warranties.

A breach of any of these financial covenant requirements, unless waived by PNC, could result in a default under our Loan Agreement allowing

our lender to immediately require the repayment of all outstanding debt under our Loan Agreement and terminate all commitments to extend

further credit.

We 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.

expect to meet our quarterly financial covenant requirements for the next twelve months.

financing activities for 2024 included monthly principal payments on a note that we entered into on July 24, 2024, to finance the balance

of the purchase price of the property where our EWOC facility operates.

Pursuant to a Purchase and Sales Agreement dated April 30, 2024,

we acquired the property for a purchase price of $425,000, paying $63,750 in cash and financing the balance with a bank loan of $361,250

(the “Note”).

The Note, which matures on July 24, 2044 (the “Note”), provides for monthly payments of $3,100

for the first five years commencing August 24, 2024, which payments includes interest at an annual fixed interest rate of 8.10%.

payments under the Note will then be adjusted at the end of years five, ten and fifteen, with interest calculated based on the weekly

average five-year US Treasury Securities Rate plus 3.0%.

Under no circumstances will the variable interest rate 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.

We agreed to pay the lender 3.0% of the total outstanding principal balance under the Note in the event we pay off our obligations during

the first year of the Note.

The prepayment penalty rate will be reduced by 1.0% at each subsequent annual anniversary of the Note.

prepayment penalty will apply in the event we pay off the Note on the fourth anniversary of the Note or thereafter.

The property was

previously accounted for under our operating leases.

of Common Stock (May 2024)

May 21, 2024, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain institutional

and retail investors (the “Purchasers”), pursuant to which we sold and issued, in a registered direct public offering, an

aggregate of 2,051,282 shares of the Company’s Common Stock, at a negotiated purchase price per share of $9.75 (the “Shares”),

for aggregate gross proceeds to us of approximately $20,000,000, before deducting fees payable to the placement agents and other estimated

offering expenses payable by the Company (the “Offering”).

The net proceeds from the Offering was utilized to fund (i) continued

R&D and business development relating to our patent-pending process for the destruction of PFAS, as well as the cost of installing

at least one commercial treatment unit;

(ii) ongoing facility capital expenditures and maintenance costs;

and (iii) general corporate

and working capital purposes.

The Shares were offered and sold by the Company pursuant to the Company’s “shelf” registration

statement on Form S-3 and prospectus supplement relating thereto.

Capital Group LLC (“Craig-Hallum”) and Wellington Shields & Co.

LLC (“Wellington Shields”) (Wellington Shields

and Craig-Hallum together are known as the “Placement Agents”) served as the exclusive placement agents in connection with

the Offering.

We paid the Placement Agents an aggregate cash fee of $1,200,000, which represented 6.00% of the gross proceeds of the

We also reimbursed the Placement Agents certain expenses in connection with the Offering in an aggregate amount of approximately

As additional compensation to the Placement Agents in connection with the Offering, we also issued to the Placement Agents and

two (2) of their designees, warrants (the “Placement Agents’ Warrants”) to purchase an aggregate of 61,538 shares of

Common Stock (the “Warrant Shares”), an amount equal to 3.0% of the number of Shares sold in the registered direct offering.

The Placement Agents’ Warrants have an exercise price per share equal to $12.19, which is equal to approximately 125% of the price

per share of the Shares sold in the Offering.

Neither the Placement Agents’ Warrants nor the Warrant Shares have been registered

under the Registration Statement or otherwise.

The Placement Agents’ Warrants have a term of five years, are exercisable at any

time and from time to time, in whole or in part, during the four and one-half (4 ½) year period commencing 180 days from the last

date of closing of the Offering, which was May 24, 2024, and are exercisable via “cashless exercise” in certain circumstances.

The aggregate fair value of the “Placement Agents’ Warrants” was determined to be approximately $331,000 using the

Black-Scholes pricing model with the following assumptions:

58.78% volatility, risk free interest rate of 4.53%, an expected life of

five years and no dividend.

The aggregate fair market value of the Placement Agent’s Warrants was recorded as an offset to gross

proceeds of the Offering and an increase to additional paid-in capital.

deducting costs incurred (which have all been paid) of approximately $1,544,000 (exclusive of the aggregate fair market value of the

Placement Agents’ Warrants as discussed above) which were recorded as a deduction to equity in connection with the Offering, net

cash proceeds to us totaled approximately $18,456,000.

of Common Stock (December 2024)

December 18, 2024, we entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group,

LLC (the “Underwriter”) to which we sold and issued pursuant to the terms and conditions of the Underwriting Agreement, 2,200,000

shares of the Company’s Common Stock.

The shares of Common stock were sold at a negotiated price to the public of $10.00 per share.

The Underwriting Agreement also allowed the Underwriter a 30-day over-allotment option (the “Over-Allotment Option”) to purchase

up to an additional 330,000 shares of our Common Stock on the same terms and conditions, which option was exercised in its entirely on

December 18, 2024.

The shares were offered and sold to the public pursuant to our “universal shelf” registration statement

on Form S-3 filed with the Commission on December 2, 2024, and declared effective by the Commission on December 12, 2024, and prospectus

supplement relating thereto.

The aggregate gross proceeds received by us from the sale of the 2,530,000 shares sold totaled $25,300,000,

before deducting fees payable to the Underwriter and other estimated offering expenses payable by us (the “Offering”).

net proceeds from the Offering is anticipated to fund (i) continued R&D and business development relating to our patent-pending process

for the destruction of PFAS, as well as the cost of installing at least one second-generation Perma-FAS commercial treatment unit;

ongoing facility capital expenditures and maintenance costs;

and (iii) general corporate and working capital purposes.

paid the Underwriter a total cash fee of 7.00% of the aggregate gross proceeds in the Offering, which totaled approximately $1,771,000.

We also reimbursed the Underwriter certain expenses in connection with the Offering in an aggregate amount of approximately $95,000.

As additional compensation to the Underwriter in connection with the Offering, we also issued to the Underwriter and three (3) of their

designees, warrants (the “Underwriters’ Warrant’s”) to purchase an aggregate of 126,500 shares of Common Stock

(the “Warrant Shares”), equal to 5.0% of the number of Shares sold in the offering, at an exercise price per share equal

to $11.50, which exercise price is equal to approximately 115% of the price per share of the shares sold in the Offering.

The Underwriter’s

Warrants have a term of five years, are exercisable at any time and from time to time, in whole or in part, during the five (5) year

period commencing on December 19, 2024, the closing date of the Offering, and are exercisable via “cashless exercise” in

certain circumstances.

The aggregate fair value of the “Underwriter’s Warrants” was determined to be approximately

$695,000 using the Black-Scholes pricing model with the following assumptions:

58.51% volatility, risk free interest rate of 4.43%, an

expected life of five years and no dividend.

The aggregate fair market value of the Underwriter’s Warrants was recorded as an offset

to gross proceeds of the Offering and an increase to additional-paid-in capital.

deducting costs incurred of approximately $2,092,000 (exclusive of the aggregate fair market value of the Underwriter’s Warrants

as discussed above) which were recorded as a deduction to equity in connection with the Offering, net cash proceeds to us totaled approximately

We have paid approximately $1,897,000 of the $2,092,000 costs incurred in connection with the Offering.

We met all of our financial covenant requirements in 2025.

We expect to meet our covenant requirements under our Loan

Agreement for the next twelve months.

Balance Sheet Arrangements

16 unchanged sentences

Our revenues are generated from our two reportable segments, Treatment and Services.

Certain contracts within our Services Segment are

generated from long-term fixed price contracts.

Under fixed price contracts, the objective of the project is not attained unless all

scope items within the contract are completed and all of the services promised within fixed fee contracts constitute a single performance

Certain contracts within our Services Segment

are generated from long-term fixed price contracts.

Under fixed price contracts, the objective of the project is not attained unless

all scope items within the contract are completed and all of the services promised within fixed fee contracts constitute a single performance

Transaction price is determined based on fixed price outline within the contract.

9 unchanged sentences

Transaction price

for Treatment Segment contracts are determined by the stated fixed rate per unit price as stipulated in the contract.

for Treatment Segment contracts is determined by the stated fixed rate per unit price as stipulated in the contract.

of our contracts have multiple performance obligations, most commonly when we provide additional services to the customer under a waste

treatment contract.

For contract with multiple performance obligations, the contract’s transaction price is allocated to each performance

obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

Generally, we use

the observable selling prices from an observable price list, but when a price list is not available, the standalone selling price is

determined by the cost plus margin approach.

For a contract with multiple performance obligations, the contract’s transaction price is allocated to each

performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

we use the observable selling prices from an observable price list, but when a price list is not available, the standalone selling price

is determined by the cost plus margin approach.

our Treatment Segment, we periodically enter into arrangements with customers for transportation of wastes to either our facility or

1 unchanged sentence

Revenue from this arrangement is recognized at a point in time, upon the transfer of control.

transfers when the wastes are picked up by us.

transfers when the waste is picked up by us.

contracts generally do not give rise to variable consideration.

31 unchanged sentences

utilized for the reporting periods are appropriate based on the information available to management.

Accrued Closure Costs and

Asset Retirement Obligations (“ARO”) .

Accrued closure costs represent our estimated environmental liability to clean

up our facilities as required by our permits, in the event of closure.

ASC 410, “Asset Retirement and Environmental Obligations”

requires that the discounted fair value of a liability for an ARO be recognized in the period in which it is incurred with the associated

ARO capitalized as part of the carrying cost of the asset.

The recognition of an ARO requires that management make numerous estimates,

assumptions and judgments regarding such factors as estimated probabilities, timing of settlements, material and service costs, current

technology, laws and regulations, and credit adjusted risk-free rate to be used.

We develop estimates for the cost of these activities

based on our evaluation of site-specific facts and circumstances, such as the existence of structures and other improvements that would

need to be dismantled and the length of the post-closure period as determined by the applicable regulatory agency, among other things.

Included in our cost estimates are our interpretation of current regulatory requirements and any proposed regulatory changes.

estimates may change in the future due to various circumstances including, but not limited to, permit modifications, changes in legislation

or regulations, technological changes and results of environmental studies.

Our cost estimates are calculated using internal sources

as well as input from third-party experts.

This estimate is inflated, using an inflation rate, to the expected time at which the closure

will occur, and then discounted back, using a credit adjusted risk free rate, to the present value.

ARO’s are included within buildings

as part of property and equipment and are depreciated over the estimated useful life of the property.

In periods subsequent to initial

measurement of the ARO, we must recognize period-to-period changes in the liability resulting from the passage of time and revisions

to either the timing or the amount of the original estimate of undiscounted cash flow.

Increases in the ARO liability due to passage

of time impact net income as accretion expense and are included in cost of goods sold in the Consolidated Statements of Operations.

in the estimated future cash flows costs underlying the obligations (resulting from changes or expansion at the facilities) require adjustment

to the ARO liability calculated and are capitalized and charged as depreciation expense, in accordance with our depreciation policy.

Closure Costs and Asset Retirement Obligations (“ARO”).

Accrued closure costs represent our estimated environmental liability

to clean up our facilities as required by our permits, in the event of closure.

Accounting Standards Codification (“ASC”)

410, “Asset Retirement and Environmental Obligations” requires that the discounted fair value of a liability for an ARO be

recognized in the period in which it is incurred with the associated ARO capitalized as part of the carrying cost of the asset.

The recognition

of an ARO requires that management make numerous estimates, assumptions and judgments regarding such factors as estimated probabilities,

timing of settlements, material and service costs, current technology, laws and regulations, and credit adjusted risk-free rate to be

We develop estimates for the cost of these activities based on our evaluation of site-specific facts and circumstances, such as

the existence of structures and other improvements that would need to be dismantled and the length of the post-closure period as determined

by the applicable regulatory agency, among other things.

Included in our cost estimates are our interpretation of current regulatory

requirements and any proposed regulatory changes.

These cost estimates may change in the future due to various circumstances including,

but not limited to, permit modifications, changes in legislation or regulations, technological changes and results of environmental studies.

Our cost estimates are calculated using internal sources as well as input from third-party experts.

This estimate is inflated, using

an inflation rate, to the expected time at which the closure will occur, and then discounted back, using a credit adjusted risk free

rate, to the present value.

AROs are included within buildings as part of property and equipment and are depreciated over the estimated

useful life of the property.

In periods subsequent to initial measurement of the ARO, we must recognize period-to-period changes in the

liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted

Increases in the ARO liability due to passage of time impact net income as accretion expense and are included in cost of goods

sold in our Consolidated Statements of Operations.

Changes in the estimated future cash flows costs underlying the obligations (resulting

from changes or expansion at the facilities) require adjustment to the ARO liability calculated and are capitalized and charged as depreciation

expense, in accordance with our depreciation policy.

Environmental

Liabilities .

We have three remediation projects in progress (all within discontinued operations).

These remediation projects principally

entail the removal/remediation of contaminated soil and, in most cases, the remediation of surrounding ground water.

These remediation

activities are closely reviewed and monitored by the applicable state regulators and often span multiple years.

Remediation liabilities include

costs for investigation, assessment, remediation, post-remediation monitoring, and related legal and consulting services.

Estimates are

developed using internal and third-party environmental studies, engineering cost analyses, remediation plans, and discussions with regulatory

The current and long-term accrual amounts for our remediation projects are our best estimates based on proposed or approved

processes for clean-up and are site-specific.

Environmental remediation liabilities are estimated using the undiscounted method when the

timing and/or pattern of expected cash outflows cannot be reliably determined.

Under this approach, we record a liability equal to our

best estimate of the total probable and reasonably estimable costs to remediate contaminated sites without reducing such amounts for the

time value of money.

In developing these estimates, we consider current site conditions, existing technology, present laws and regulations,

prior experience in remediation of similar sites, and incorporates an estimated inflation factor to reflect anticipated increases in labor,

material, and other project-related costs over the expected remediation period.

These environmental remediation estimates are subject

to revision as additional information becomes available or as conditions change.

The circumstances that could affect the outcome range

from new technologies that are being developed to reduce our overall costs, to increased contamination levels that could arise as we complete

remediation which could increase our costs.

In addition, significant changes in regulations could adversely or favorably affect our costs

to remediate our sites.

Our environmental remediation liabilities are reviewed and adjusted quarterly to reflect changes in projected

expenditures and reductions as a result of actual expenditures incurred during each quarter.

While we believe our accruals are reasonable

based on information currently available, due to the significant uncertainties inherent in environmental remediation matters, future adjustments

to these estimates could materially impact on our results of operations, financial position, and cash flows in the period in which such

adjustments are recorded.

The provision for income tax is determined in accordance with ASC 740, “Income Taxes.” As part of the process

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We record this amount as a provision or benefit for taxes .

This process involves estimating our actual current tax exposure,

including assessing the risks associated with tax audits, and assessing temporary differences resulting from different treatment of items

for tax and accounting purposes.

This process involves estimating our actual current tax

exposure, including assessing the risks associated with tax audits, and assessing temporary differences resulting from different treatment

of items for tax and accounting purposes.

These differences result in deferred tax assets and liabilities.

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“Item 8 – Financial Statements and Supplementary Data” – Notes to Consolidated Financial Statements – Note

2 – Summary of Significant Accounting Policies” for the recent accounting pronouncement that was adopted in 2024 and recent

accounting pronouncements that will be adopted in future periods.

2 – Summary of Significant Accounting Policies” for accounting pronouncement that was adopted in 2025 and accounting pronouncements

that will be adopted in future periods.

Trends and Uncertainties

Our Treatment and Services Segments have significant relationships with federal governmental authorities through contracts

entered into indirectly as subcontractors for others who are contractors or directly as the prime contractor to federal government authorities.

Our inability to continue under existing contracts that we have with the federal government (directly or indirectly as a subcontractor)

or significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations

and financial condition.

contracts that we are a party to with others as subcontractors to the federal government or directly with the federal government generally

provide that the government may terminate the contract at any time for convenience at the government’s option.

Our inability to

continue under existing contracts that we have with the federal government authorities (directly or indirectly as a subcontractor) or

significant reductions in the level of governmental funding in any given year could have a material adverse impact on our operations

and financial condition.

We performed services relating to waste generated by federal government clients, either directly as a prime

contractor or indirectly for others as a subcontractor to federal government entities, representing approximately $40,551,000, or 68.6%,

of our total revenue during 2024, as compared to $68,595,000 or 76.4%, of our total revenue during 2023.

Our Treatment and Services Segments have significant relationships with federal government authorities.

A significant

amount of our revenues from our Treatment and Services Segments are generated indirectly as subcontractors for others who are contractors

to federal government authorities, or directly as the prime contractor to federal government authorities.

The contracts that we are a

party to with others as subcontractors to federal government or directly with the federal government generally provide that the government

may terminate the contract at any time for convenience at the government’s option.

Our inability to continue under existing contracts

that we have with federal government authorities (directly or indirectly as a subcontractor) or significant reductions in the level of

federal governmental funding in any given year could have a material adverse impact on our operations and financial condition.

derived from federal government entities, either directly as a prime contractor or indirectly for others as subcontractor to federal

government entities, totaled $39,243,000, or 63.6% of total revenue in 2025, compared to $40,550,000, or 68.6% of total revenue in 2024.

As discussed above, a significant portion of our revenue is generated through contracts entered into indirectly as subcontractors

for others who are prime contractors or directly as the prime contractor to federal government authorities.

Uncertainties exist regarding

how future federal government budget and program and policy decisions will unfold, which include, the spending priorities of the new

Administration and Congress, passage of the 2025 fiscal year U.S.

government budget and potential for enactment of additional continuing

resolutions to keep government departments and agencies in operations.

The full impact of these uncertainties could negatively impact

our financial results by impairing our ability to perform work on existing contracts, delaying or cancelling procurement actions by government

entities, and/or cause other disruptions or delays, including payment delays.

The timeliness of annual

appropriations for U.S.

government departments and agencies remains a recurrent risk for us.

Uncertainties exist regarding how future

federal government budgets and program and policy decisions will unfold, which include, the spending priorities of Congress, passage

of federal government fiscal year annual budgets and potential for enactment of continuing resolutions to keep government departments

and agencies in operations.

The full impact of these uncertainties could negatively impact our financial results by impairing our ability

to perform work on existing contracts, delaying or cancelling procurement actions by government entities, and/or cause other disruptions

or delays, including payment delays.

Trends and Uncertainties.

Macroeconomic conditions which include recent government and policy changes implemented in the United

States, government budget issues, tariff actions and uncertainties related to trade wars, ambiguity around interest rates, softening

labor markets and geopolitical instability, including ongoing conflicts and unrest in the Middle East, have created significant uncertainty in the global economy, volatility in the capital markets and recessionary

We continue to monitor potential effects from these conditions that could impact our revenue and profitability which

include supply chain challenges, cost volatility in goods that we utilize in our revenue production, and economic pressures on our

customers that may result in reduced and/or delayed spending.

We continue to monitor, evaluate and implement a range of strategic

options which we believe will assist us to manage potential impacts from these factors, including supply chain optimization, pricing

strategies, sourcing adjustments and cost reduction measures in order to minimize impacts to our financial results.

Processing Technology.

We have completed the fabrication, installation, commissioning and startup of our first full scale commercial

Perma-FAS system (“System”) for PFAS (commonly known as “forever chemicals”) destruction at our Perma-Fix Florida,

Our System and patent-pending technology successfully processed commercial PFAS-containing waste materials.

limited current treatment options for these materials, and we expect that our process will exceed any of these methods.

Some of the sizable

markets for PFAS include AFFF (aqueous film-forming foam) firefighting foams, both expired concentrate and flushing liquids, contaminated

liquids from PFAS systems, and other water-based separation products from a variety of industrial systems.

We have already secured and

are treating approximately 6,000 gallons of AFFF liquids to support ongoing operations, demonstration, and further testing of our System.

We believe that we will receive an additional 20,000 gallons in the coming months.

strategy for our System includes continued treatment of PFAS liquids over the coming months and targeting engineering refinements to

support larger-scale Systems.

With significant upgrades to our prototype currently in the design phase, we anticipate deployment of the

second-generation unit in the third quarter of 2025 at one of our other existing treatment facilities to support revenue generation in

the fourth quarter of 2025.

By the third quarter of 2025, we expect to advance this technology into pilot-scale applications for soil,

biosolids, and filter media, broadening the reach of our System’s destruction capabilities for PFAS.

With significant upgrades to our prototype Perma-FAS system (“System”) for PFAS destruction substantially

completed in the latter part of 2025, our System has achieved commercial operational status at our PFF facility.

PFAS, commonly known

as “forever chemicals,” is the acronym for Perfluoroalkyl and Polyfluoroalkyl Substances, a diverse group of thousands of

human-made chemical pollutants that have the potential to persist in both the environment and the human body.

An increasing number of

studies have documented adverse health risks that are associated with PFAS exposure, including increased risks of some cancers, reduced

immune function, and developmental delays in children.

and state actions addressing PFAS have accelerated in recent years, including restrictions and bans on the use of Aqueous Film-Foaming

Foam (“AFFF”), an effective fire suppressant for petroleum-based fires but which contains high levels of PFAS, as well as

requirements governing the collection, handling, and disposal of existing AFFF inventories.

These measures have contributed to an increasing

volume of PFAS-containing materials requiring treatment or destruction rather than reuse or conventional disposal.

believe these regulatory developments may support increased demand over time for technologies capable of permanently destroying PFAS

compounds, including technologies designed to address concentrated PFAS waste streams generated from AFFF phase-outs, remediation activities,

and downstream treatment processes.

we believe that commercial destruction of PFAS offers a promising new source of revenue for us, as it complements our core waste remediation

technologies.

However, our PFAS technology remains in an early stage of commercialization, and we continue to incur operating, R&D

and capital costs associated with scaling, market development, and regulatory acceptance.

While we have filed patent applications relating

to our System technology for PFAS destruction and are processing commercial quantities of PFAS-containing waste materials with our System,

there can be no assurance that demand, pricing, or throughput levels will be sufficient in the near term to offset these costs.

we believe that there are limited treatment options currently available that are intended to permanently destroy these materials, as

opposed to managing them through storage or containment, which may be important to waste generators seeking to address potential long-term

environmental liability.

We believe that our System technology exceeds the performance of other current destruction-based methods;

adoption and acceptance of any such technology remain subject to regulatory and market factors.

commercial operation of our System, we anticipate deployment of our second-generation unit in the second half of 2026 at our Environmental

Waste Operations Center (“EWOC”) facility in Oak Ridge, Tennessee, which we believe will allow us to triple our production

We continue to market our System technology through various channels.

In December 2025, we entered into a joint distribution

agreement with a U.S.-based company that manufactures fluorine-free firefighting agents and compressed air foam system which will promote

our PFAS destruction technology as a preferred treatment options for customers requiring, compliant, long-term destruction of legacy

PFAS stockpiles.

In the next several calendar quarters, we expect to further advance our Perma-FAS technology from demonstrated successful

bench-scale testing to pilot-scale applications for soil, biosolids, and filter media, broadening the reach of our System’s PFAS

destruction capabilities.

continue to monitor evolving federal and state regulatory initiatives addressing PFAS-containing materials, including restrictions on

the use of AFFF and requirements governing the disposition of legacy AFFF inventories.

These developments may result in the generation

of PFAS-impacted waste streams for which destruction-based treatment options are evaluated by customers.

we believe our existing treatment capabilities may be applicable to certain PFAS-containing materials, the timing and magnitude of any

related demand are uncertain and will depend on factors such as regulatory implementation and enforcement, customer selection among available

treatment alternatives, contract awards, and our ability to obtain necessary permits, approvals, and operational capacity.

any potential increase in PFAS-related service activity may not be immediate and may not have a material impact on results of operations

in any particular period.

Party Transactions

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What changed 10-K

Item 7. Management’s Discussion and Analysis