Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

Certain statements contained within this report may be deemed "forward-looking statements" within the meaning of the "Private Securities Litigation Reform Act of 1995". All statements in this report other than a statement of historical fact are forward-looking statements that are subject to known and unknown risks, uncertainties and other factors, which could cause actual results and performance of the Company to differ materially from such statements. The words "believe," "expect," "anticipate," "intend," "will," and similar expressions identify forward-looking statements. Forward-looking statements contained herein relate to, among other things,

	●	demand for our services;
	●	reductions in the level of government funding in future years;
	●	spending priorities of Congress;
	●	passage of U.S. fiscal year government budgets or enactment of CRs to keep government departments and agencies in operations;
	●	timing of receipts of anticipated Hanford-related waste at our PFNW facility;
	●	investments made to support Hanford-related activity;
	●	the issuance, number, size and timing of task orders to be issued to the Company under the Company's Master Subcontract award;
	●	improvement in operating results;
	●	demand, pricing, or throughput levels for PFAS waste volumes are sufficient to offset costs incurred from PFAS initiatives;
	●	increase in Hanford waste receipts;
	●	facility upgrades to achieve expanded capacity anticipated in late 2027;
	●	regulatory approvals required for implementation of facility upgrades to achieve expanded capacity;
	●	effect of pricing increases;
	●	delays in anticipated treatment waste volumes and project activity;
	●	ability to meet our quarterly financial covenant requirements under our PNC Loan Agreement;
	●	expansion into international and commercial markets;
	●	cash flow requirements;
	●	sufficient cash flow and liquidity to fund operations for the next twelve months;
	●	projected cash flows from operations subject to timing and uncertainty, including those resulting from ongoing federal spending constraints;
	●	amount and funding of capital expenditures;
	●	funding of operating and capital expenditures from existing cash from operations, PNC Liquidity under our Credit Facility, and/or financing;
	●	ability to continue to operate as a going concern;

	●	obtain additional liquidity on acceptable terms, or at all;
	●	adoption and acceptance of our PFAS technology are subject to regulatory and market factors;
	●	limited current treatment destruction options for these materials to eliminate generator liabilities;
	●	commissioning of our second generation PFAS destruction unit in the fourth quarter of 2026, with operations during the first half of 2027;
	●	expectation that the second generation PFAS destruction unit will triple our production capacity;
	●	funding of remediation expenditures for sites from funds generated internally;
	●	compliance with environmental regulations;
	●	remediation of material weakness identified;
	●	potential effect of being a PRP;
	●	material adverse effect on financial condition, results of operations, or cash flow from notice of non-compliance at the PFNW facility;
	●	favorable resolution of the notice of non-compliance at the PFNW facility; and
	●	potential violations of environmental laws and attendant remediation at our facilities.

While the Company believes the expectations reflected in such forward-looking statements are reasonable, it can give no assurance such expectations will prove to be correct. There are a variety of factors which could cause future outcomes to differ materially from those described in this report, including, but not limited to:

	●	general economic conditions and uncertainties;
	●	inability to process waste at our facilities;
	●	inability to properly bid contracts;
	●	reduction in or inability to obtain new contracts with federal, state and local governments, agencies and departments, resulting in a reduction in revenue;
	●	changes in federal government budgeting and spending priorities;
	●	failure by Congress or other governmental bodies to approve budgets and debt ceiling increases in a timely fashion and related reductions in government spending;
	●	tariff actions and uncertainties related to trade wars;
	●	inability to meet PNC covenant requirements;
	●	inability to collect in a timely manner a material amount of receivables;
	●	increased competitive pressures;
	●	inability to maintain and obtain required permits and approvals to conduct operations;
	●	inability to develop new and existing technologies in the conduct of operations;
	●	inability to maintain and obtain closure and operating insurance requirements;
	●	discovery of additional contamination or expanded contamination at any of the sites or facilities leased or owned by us or our subsidiaries which would result in a material increase in remediation expenditures;
	●	refusal of third-party disposal sites to accept our waste;
	●	changes in federal, state and local laws and regulations, especially environmental laws and regulations, or in interpretation of such;
	●	material adjustments to environmental remediation reserves;
	●	new or additional requirements to handle low-level radioactive and hazardous waste materials;
	●	management retention and development;
	●	financial valuation of intangible assets is substantially more/less than expected;
	●	the need to use internally generated funds for purposes not presently anticipated;
	●	inability of the Company to maintain the listing of its Common Stock on the Nasdaq;
	●	terminations of contracts with government agencies or subcontracts involving government agencies or reduction in amount of waste delivered to the Company under the contracts or subcontracts;
	●	changes in the scope of work relating to existing contracts;
	●	occurrence of a health pandemic having adverse effects on the U.S. and world economics;
	●	renegotiation or termination of contracts involving government agencies;
	●	disposal expense accrual could prove to be inadequate in the event the waste requires re-treatment;

	●	inability to raise capital on commercially reasonable terms;
	●	inability to increase profitable revenue;
	●	risks resulting from expanding our service offerings and client base;
	●	non-acceptance of our new technology;
	●	adjustments to our valuation allowance;
	●	supply chain difficulties;
	●	pricing adjustments;
	●	cost reduction measures;
	●	new governmental regulations; and
	●	risk factors and other factors set forth in "Special Note Regarding Forward-Looking Statements" contained in the Company's 2025 Form 10-K and the "Forward-Looking Statements" contained in the MD&A of the first and second quarters 2026 Form 10-Qs and this third quarter 2026 Form 10-Q.

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 the forward-looking statements as noted above, which apply only to as of the date of this Form 10-Q. We undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

Overview

Our overall revenue increased in the third quarter of 2026 compared to the same period of 2025; however, our operating results continued to be impacted by certain customer-related and operational factors. These included customer-directed delays in waste processing activities within our Treatment Segment and the timing of project mobilizations within our Services Segment. The most significant factor affecting our third-quarter results was customer-directed changes in treatment protocols that delayed the processing of shipments of a certain Hanford-related waste stream received beginning in the second quarter of 2026 from the DOE Hanford site until September 2026. In addition, the timing of shipments of certain liquid and solid wastes under the DFLAW program resulted in lower-than-expected waste receipts during the quarter, and temporary downtime of certain processing equipment due to scheduled maintenance and upgrades further impacted Treatment Segment results. The affected processing equipment has since returned to operation.

Despite these challenges, continued waste receipts, combined with delays in processing of certain waste streams, contributed to an increase in our Treatment Segment backlog to approximately $19,608,000 at September 30, 2026, representing an increase of approximately 24.6% from $15,733,000 at June 30, 2026. We believe this growing backlog supports future treatment activities; however, the timing of revenue recognized from our backlog may vary depending on waste complexity, customer requirements, and operational considerations.

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

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

Our PFNW facility continues to work with Washington State regulators to expand its existing grouting permit capacity of 1.2 million gallons annually to levels that would support DOE's objectives for both the East and West tank farms at Hanford. We are advancing the final design and procurement of facility upgrades necessary to achieve the expanded capacity, which we currently anticipate completing in late 2027. Implementation of these upgrades remains subject to continued coordination with Washington State regulators and applicable regulatory approvals. Separately, we have further invested in more advanced processing equipment to enhance our capabilities to process current and anticipated Hanford-related waste streams.

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

Looking ahead, we expect improved financial performance in the coming year driven in part by increased project activity within our Services Segment, continued processing of our Treatment Segment backlog, and anticipated waste receipts from Hanford's cleanup programs including increasing effluent from DFLAW to include both solid and liquid waste streams. We also continue to pursue additional procurement opportunities within DOE and DOW, while expanding our presence in commercial and international markets. In addition, we have negotiated rate increases for certain government and commercial waste streams, including a significant rate increase for a particular government waste stream that will become effective during the fourth quarter of 2026. The commercial rate increases became effective late in the third quarter of 2026. We expect these increases to favorably impact Treatment Segment revenue and margins. While the timing and volume of waste receipts and processing activities remain subject to customer requirements and operational considerations, we believe these developments and ongoing activities position us for improved operating results in the coming year.

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

Financial Results Overview

As a result of the factors discussed above, revenue increased by $494,000, or 2.8%, to $17,948,000 for the three months ended September 30, 2026, compared with $17,454,000 for the same period in 2025. The increase was attributable entirely to the Services Segment, in which revenue increased by $2,007,000, or 46.2%, to $6,347,000 from $4,340,000 in the prior-year period. Treatment Segment revenue declined by $1,513,000, or 11.5%, to $11,601,000 from $13,114,000 in the prior-year period. Cost of goods sold increased by $2,499,000, or 16.8%, to $17,396,000 for the three months ended September 30, 2026, compared with $14,897,000 for the same period in 2025. As a result, gross profit decreased by $2,005,000 to $552,000 for the three months ended September 30, 2026, compared with $2,557,000 in the prior-year period. SG&A expenses decreased by $85,000 to $3,998,000 for the three months ended September 30, 2026, from $4,083,000 in the same period in 2025.

For the nine months ended September 30, 2026, revenue decreased by $4,000,000, or 8.7%, to $41,959,000 from $45,959,000 for the same period in 2025. The decrease was attributable entirely to our Treatment Segment, in which revenue declined by $5,928,000, or 17.6%. Services Segment revenue increased by $1,928,000, or 15.7%, to $14,191,000 for the nine months ended September 30, 2026, from $12,263,000 for the same period in 2025. Cost of goods sold increased by $5,594,000, or 13.6%, to $46,792,000 for the nine months ended September 30, 2026, from $41,198,000 in the same period in 2025. As a result, gross profit decreased by $9,594,000, resulting in a gross loss of $4,833,000 for the nine months ended September 30, 2026, compared with a gross profit of $4,761,000 in the prior-year period. SG&A expenses decreased by $181,000, or 1.5%, to $12,047,000 from $12,228,000 for the same period in 2025.

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

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

Business Environment

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. 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.

Results of Operations

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

Summary - Three and Nine Months Ended September 30, 2026, and 2025

		Three Months Ended																Nine Months Ended
		September 30,																September 30,
Consolidated (amounts in thousands)		2026				%				2025				%				2026				%				2025				%
Net revenues		$	17,948				100.0			$	17,454				100.0			$	41,959				100.0			$	45,959				100.0
Cost of goods sold			17,396				96.9				14,897				85.4				46,792				111.5				41,198				89.6
Gross profit (loss)			552				3.1				2,557				14.6				(4,833	)			(11.5	)			4,761				10.4
Selling, general and administrative			3,998				22.3				4,083				23.4				12,047				28.7				12,228				26.6
Research and development			225				1.3				342				2.0				781				1.9				1,037				2.3
(Gain) loss on disposal of property and equipment			(5	)			(.1	)			4				-				(5	)			-				(2	)			-
Loss from operations			(3,666	)			(20.4	)			(1,872	)			(10.8	)			(17,656	)			(42.1	)			(8,502	)			(18.5	)
Interest income			240				1.3				266				1.5				624				1.5				901				1.9
Interest expense			(80	)			(.4	)			(116	)			(.6	)			(213	)			(.5	)			(351	)			(.8	)
Interest expense-financing fees			(16	)			(.1	)			(22	)			(.1	)			(59	)			(.1	)			(63	)			(.1	)
Other			114				.6				(18	)			(.1	)			258				.6				171				.4
Loss from continuing operations before taxes			(3,408	)			(19.0	)			(1,762	)			(10.1	)			(17,046	)			(40.6	)			(7,844	)			(17.1	)
Income tax expense			-				-				-				-				-				-				-				-
Loss from continuing operations, net of taxes		$	(3,408	)			(19.0	)		$	(1,762	)			(10.1	)		$	(17,046	)			(40.6	)		$	(7,844	)			(17.1	)

Revenues

Consolidated revenues increased $494,000 for the three months ended September 30, 2026, compared to the three months ended September 30, 2025, as follows:

(In thousands)		2026				% Revenue				2025				% Revenue				Change				% Change
Treatment
Government waste		$	7,335				40.8			$	9,503				54.4			$	(2,168	)			(22.8	)
Hazardous/non-hazardous (1)			1,680				9.4				1,375				7.9				305				22.2
Other nuclear waste			2,586				14.4				2,236				12.8				350				15.7
Total			11,601				64.6				13,114				75.1				(1,513	)			(11.5	)
Services
Nuclear services			4,009				22.4				2,422				13.9				1,587				65.5
Technical services			2,338				13.0				1,918				11.0				420				21.9
Total			6,347				35.4				4,340				24.9				2,007				46.2
Total		$	17,948				100.0			$	17,454				100.0			$	494				2.8

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

Treatment Segment revenue decreased by $1,513,000, or 11.5%, for the three months ended September 30, 2026, compared with the same period in 2025. The decline was primarily due to lower waste volume as discussed in the "Overview" section.

The increase in revenue in our Services Segment was primarily attributable to a higher volume of project work during the period compared with the same period in 2025. Revenue in our Services Segment is project-based and is influenced by the scope, duration, timing, and completion of individual projects. As a result, revenue may fluctuate significantly between reporting periods based on the timing, scope, and mix of projects performed.

Consolidated revenues decreased $4,000,000 for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, as follows:

(In thousands)		2026				% Revenue				2025				% Revenue				Change				% Change
Treatment
Government waste		$	17,262				41.1			$	23,715				51.6			$	(6,453	)			(27.2	)
Hazardous/non-hazardous (1)			4,735				11.3				3,848				8.4				887				23.1
Other nuclear waste			5,771				13.8				6,133				13.3				(362	)			(5.9	)
Total			27,768				66.2				33,696				73.3				(5,928	)			(17.6	)
Services
Nuclear services			8,387				20.0				7,478				16.3				909				12.2
Technical services			5,804				13.8				4,785				10.4				1,019				21.3
Total			14,191				33.8				12,263				26.7				1,928				15.7
Total		$	41,959				100.0			$	45,959				100.0			$	(4,000	)			(8.7	)

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

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

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

Cost of Goods Sold

Cost of goods sold increased $2,499,000 for the quarter ended September 30, 2026, as compared to the quarter ended September 30, 2025, as follows:

						%								%
(In thousands)		2026				Revenue				2025				Revenue				Change
Treatment		$	11,826				101.9			$	10,848				82.7			$	978
Services			5,570				87.8				4,049				93.3				1,521
Total		$	17,396				96.9			$	14,897				85.4			$	2,499

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

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

Cost of goods sold increased $5,594,000 for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, as follows:

						%								%
(In thousands)		2026				Revenue				2025				Revenue				Change
Treatment		$	33,479				120.6			$	29,614				87.9			$	3,865
Services			13,313				93.8				11,584				94.5				1,729
Total		$	46,792				111.5			$	41,198				89.6			$	5,594

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

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

Gross Profit (Loss)

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

						%								%
(In thousands)		2026				Revenue				2025				Revenue				Change
Treatment		$	(225	)			(1.9	)		$	2,266				17.3			$	(2,491	)
Services			777				12.2				291				6.7				486
Total		$	552				3.1			$	2,557				14.6			$	(2,005	)

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

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

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

						%								%
(In thousands)		2026				Revenue				2025				Revenue				Change
Treatment		$	(5,711	)			(20.6	)		$	4,082				12.1			$	(9,793	)
Services			878				6.2				679				5.5				199
Total		$	(4,833	)			(11.5	)		$	4,761				10.4			$	(9,594	)

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

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

SG&A

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

(In thousands)		2026				% Revenue				2025				% Revenue				Change
Administrative		$	2,088				-			$	2,004				-			$	84
Treatment			1,332				11.5				1,333				10.2				(1	)
Services			578				9.1				746				17.2				(168	)
Total		$	3,998				22.3			$	4,083				23.4			$	(85	)

Administrative SG&A expenses increased primarily due to higher outside services costs of approximately $56,000 associated with increased legal and business activities, higher travel expenses of approximately $14,000 resulting from increased executive travel, and higher general expenses of approximately $14,000 across various categories.

Treatment Segment SG&A expenses decreased slightly, primarily due to lower salaries and payroll-related expenses of approximately $31,000, reflecting fewer employee hours required to support administrative and marketing functions. This decrease was substantially offset by higher general expenses of approximately $30,000 across various categories.

Services Segment SG&A expenses decreased primarily due to lower salaries and payroll-related expenses of approximately $148,000, reflecting fewer employee hours required to support marketing functions, partially offset by higher outside services costs associated with business-related activities.

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

(In thousands)		2026				% Revenue				2025				% Revenue				Change
Administrative		$	6,188				-			$	5,884				-			$	304
Treatment			4,056				14.6				4,039				12.0				17
Services			1,803				12.7				2,305				18.8				(502	)
Total		$	12,047				28.7			$	12,228				26.6			$	(181	)

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

Treatment Segment SG&A expenses increased primarily due to higher outside services costs of approximately $62,000 associated with increased consulting and business activities and higher travel expenses of approximately $36,000 incurred by information technology personnel. These increases were partially offset by lower salaries and payroll-related expenses, reflecting fewer employee hours required to support administrative and marketing functions.

Services Segment SG&A expenses decreased primarily due to a decrease in provision for credit losses of approximately $283,000 resulting from the settlement of a receivable previously determined to be uncollectible. The remaining decrease was primarily attributable to lower travel expenses of approximately $30,000 and reduced salaries and payroll-related expenses due to fewer employee hours devoted to marketing activities.

Interest Income

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

Interest Expense

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

Income Taxes

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

		Nine Months Ended
		September 30,
(In thousands)		2026				2025
Cash used in operating activities of continuing operations		$	(10,796	)		$	(8,286	)
Cash used in operating activities of discontinued operations			(215	)			(317	)
Cash used in investing activities of continuing operations			(6,041	)			(2,709	)
Cash used in investing activities of discontinued operations			(45	)			(36	)
Cash provided by (used in) financing activities of continuing operations			20,442				(832	)
Effect of exchange rate changes in cash			(10	)			21
Increase (decrease) in cash and finite risk sinking fund (restricted cash)		$	3,335			$	(12,159	)

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

Operating Activities

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

Cash used in operating activities of our continuing operations during the first nine months of 2025 consisted mostly of the net loss from continuing operations of approximately $7,844,000, adjusted for certain non-cash items, such as $597,000 of stock-based compensation expenses and $1,299,000 of depreciation and amortization expenses. Cash flow decrease of approximately $2,812,000 resulting from net change in assets and liabilities reflects increases in unbilled and accounts receivable (net of provision for credit losses) totaling approximately $3,771,000, a net decrease in accounts payables, accrued expenses, deferred revenue and other accruals totaling approximately $719,000, offset by a net decrease in prepaids, inventories and other assets totaling approximately of $1,678,000.

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

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

Investing Activities

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

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

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

Under the August 2026 amendment to our PNC Loan Agreement, the annual $6,000,000 capital expenditure limitation (as defined under the PNC Loan Agreement) does not apply as long as we maintain minimum daily PNC Liquidity of at least $5,000,000. If our PNC Liquidity falls below $5,000,000, the annual capital expenditure limitation will be reinstated. As of September 30, 2026, our capital expenditures for 2026 had exceeded $6,000,000. Accordingly, a decline in PNC Liquidity below the required threshold would result in noncompliance with the capital expenditure covenant under our PNC Loan Agreement, unless a waiver or other relief is obtained from PNC. Our ability to make additional planned capital expenditures will depend, in part, on maintaining sufficient PNC Liquidity and compliance with the terms of our PNC Loan Agreement.

Cash used in investing activities of our discontinued operations in the first nine months of 2026 and 2025 consisted of payments made in connection with a certain regulatory permit at our PFSG subsidiary.

Financing Activities

Cash provided by financing activities during the first nine months of 2026 consisted primarily of net proceeds of approximately $21,114,000 received from the sale of 2,628,571 shares of our Common Stock in May 2026 to fund certain capital investments and general working capital needs (see "Note 13 - Sale of Common Stock" to the accompanying Condensed Consolidated Financial Statements for further discussion of this equity offering). The net proceeds reflect gross proceeds of approximately $23,000,000, less $1,886,000 of offering costs incurred in connection with the offering, all of which were paid as of September 30, 2026. Cash provided by financing activities also included approximately $164,000 in proceeds from stock option exercises. These cash inflows were partially offset by principal payments of approximately $820,000 on our Term Loan, Capital Loan, and finance lease obligations.

Our cash used in financing during the first nine months of 2025 consisted mostly of principal payments of approximately $470,000 primarily for our Term and Capital Loans under our Credit Facility, principal payments of $228,000 for our finance leases, payments of $194,000 of offering costs from the equity raise that we completed in December 2024, partially offset by proceeds received from option exercises of approximately $79,000.

Credit Facility

Our Credit Facility, established pursuant to our PNC Loan Agreement, consists of a Revolving Credit facility with a maximum borrowing capacity of $12,500,000. Availability under the Revolving Credit facility is subject to a borrowing base comprised of eligible receivables (as defined in the agreement) and is reduced by (i) outstanding standby letters of credit ($3,420,000 as of September 30, 2026) and (ii) discretionary reserves imposed by the lender ($750,000 as of September 30, 2026). After giving effect to the borrowing base limitation and these reductions, our borrowing availability under the Revolving Credit was approximately $5,533,000 as of September 30, 2026 (see the discussion of our sources of liquidity at the beginning of this "Liquidity and Capital Resources" section). The Credit Facility also includes a Term Loan and a Capital Loan with outstanding balances of approximately $958,000 and $70,000, respectively, as of September 30, 2026.

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

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

In connection with the amendment, we paid our lender a fee of $12,500. All other terms of the PNC Loan Agreement remain unchanged.

Our PNC Loan Agreement contains certain financial covenant requirements, along with customary representations and warranties. A breach of any of these financial covenant requirements, unless waived by our lender, could result in a default under our PNC Loan Agreement allowing our lender to immediately require the repayment of all outstanding debt under our PNC Loan Agreement and terminate all commitments to extend further credit. We met all of our financial covenant requirements in the first, second and third quarters of 2026, including maintenance of a minimum of $5,000,000 in daily PNC Liquidity. As of September 30, 2026, our PNC Liquidity of approximately $19,864,000 exceeded the $5,000,000 minimum requirement by approximately $14,864,000. We expect to meet our financial covenant requirements for the next twelve months.

Off Balance Sheet Arrangements

From time to time, we are required to post standby letters of credit and various bonds to support contractual obligations to customers and other obligations, including facility closures. As of September 30, 2026, the total amount of standby letters of credit outstanding totaled approximately $3,420,000 and the total amount of bonds outstanding totaled approximately $19,315,000. We also provide closure and post-closure requirements through a financial assurance policy for certain of our Treatment Segment facilities through AIG. As of September 30, 2026, the closure and post-closure requirements for these facilities were approximately $24,953,000.

Critical Accounting Policies and Estimates

There were no significant changes in our accounting policies or critical accounting estimates that are discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements

See "Note 2 - Summary of Significant Accounting Policies" in the "Notes to Condensed Consolidated Financial Statements" for the recent accounting pronouncement that was adopted in the first nine months of 2026 and recent accounting pronouncements that will be adopted in future periods.

Known Trends and Uncertainties

Significant Customers. The 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 $11,975,000 or 66.7% and $27,621,000 or 65.8% of our total revenues generated during the three and nine months ended September 30, 2026, respectively, as compared to $11,666,000 or 66.8% and $29,275,000 or 63.7% of our total revenues generated during the three and nine months ended September 30, 2025, respectively.

Federal Funding. 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. 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 CRs 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.

Market Trends and Uncertainties. Macroeconomic conditions, including government and policy changes, government budget issues, tariff actions and uncertainties related to trade wars, ambiguity surrounding interest rates, inflationary pressures, softening labor markets, and geopolitical instability, including ongoing conflicts and unrest in the Middle East, have created significant uncertainty in the global economy and volatility in the capital markets. Inflationary pressures, including volatility in oil and fuel prices, have increased certain production-related variable costs, adversely impacting our gross margins. We continue to monitor the potential effects of these conditions on our revenue and profitability, including supply chain challenges, volatility in the cost of the goods and services we utilize in generating revenue, and economic pressures on our customers that may result in reduced and/or delayed spending. We continue to evaluate and implement strategic initiatives that we believe will assist us in managing the potential impacts of these factors, including supply chain optimization, pricing strategies, sourcing adjustments, and cost reduction measures designed to minimize the impact on our financial results.

New Processing Technology. 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 Perma-Fix of Florida, Inc. facility. PFAS, commonly known as "forever chemicals," is 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.

Commercial destruction of PFAS offers a promising new source of revenue for us, as it complements our core waste remediation technologies. However, as we work to expand commercialization of our PFAS technology, we continue to incur operating, R&D and capital costs associated with scaling, market development, regulatory acceptance, and further development of our technology. While we have filed patent applications relating to our technology for PFAS destruction and have processed limited 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. Still, 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 patent-pending technology exceeds the performance of other current destruction-based methods; however, adoption and acceptance of any such technology remain subject to regulatory and market factors.

Some of the sizable markets for PFAS include Aqueous Film-Foaming Foam ("AFFF") 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.

With our System commercially operational, we expect to begin commissioning our second-generation unit in the fourth quarter of 2026, with operations anticipated to commence during the first half of 2027 at our EWOC facility in Oak Ridge, Tennessee. We believe our second-generation will allow us to triple our production capacity. We continue to market our System technology through various channels.

Environmental Contingencies

We are engaged in the waste management services segment of the pollution control industry. As a participant in the on-site treatment, storage and disposal market and the off-site treatment and services market, we are subject to rigorous federal, state and local regulations. These regulations mandate strict compliance and therefore are a cost and concern to us. Because of their integral role in providing quality environmental services, we make every reasonable attempt to maintain complete compliance with these regulations; however, even with a diligent commitment, we, along with many of our competitors, may be required to pay fines for violations or investigate and potentially remediate our waste management facilities.

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

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

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

We routinely use third party disposal companies, who ultimately destroy, or secure landfill residual materials generated at our facilities or at a client's site. In the past, numerous third-party disposal sites have improperly managed waste and consequently require remedial action; consequently, any party utilizing these sites may be liable for some or all of the remedial costs. Despite our aggressive compliance and auditing procedures for disposal of wastes, we could further be notified, in the future, that we are a PRP at a remedial action site, which could have a material adverse effect.

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. We expect to fund the expenses to remediate these sites from funds generated from operations. As of September 30, 2026, we had total environmental remediation liabilities of $3,413,000, a decrease of approximately $72,000 from the December 31, 2025, balance of $3,485,000. The decrease reflects payments for our PFSG remediation project. As of September 30, 2026, approximately $1,138,000 of the total environmental remediation liabilities were recorded as current.