What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-31 compared with 2025-03-31 · 290 added, 650 removed, 678 unchanged (58% of the section changed)

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AND SUBSIDIARIES

(formerly Midwest Energy Emissions Corp.)

Index to Financial Information

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Birchtech Corp.

To the Board of Directors and

Stockholders of Birchtech Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Birchtech Corp (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Restatement of Prior Periods

As discussed in Note 2, the December 31, 2023 consolidated financial statements have been restated to correct a misstatement.

Emphasis of Matter Regarding Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 3 to the financial statements, the Company has identified conditions, including a net loss and net cash used in operations, that raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are described in Note 3.

The financial statements do not include any adjustments that might results from the outcome of this uncertainty.

We have audited the accompanying consolidated balance sheets of Birchtech Corp (the Company) as of December 31, 2025 and 2024, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provides a reasonable basis for our opinion.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

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As discussed in Note 7 to the financial statements, the Company entered into a profit participation preference (the “profit share liability”) with AC Midwest Energy LLC as part of its Unsecured Note Financing Agreement.

The Company calculates the fair value of the profit share liability on a quarterly basis utilizing management estimates.

The profit share liability shall only be paid from the receipt of litigation proceeds relating to certain claims the Company has made on its intellectual property.

The fair value of the profit share liability is calculated using a discounted cash flow model based on estimated future cash payments.

The fair value of the profit share liability is determined on a Level 3 measurement.

Inherent in the valuation of Level 3 financial instruments are certain significant judgments and estimates related to forecasted cash flows.

Changes in these assumptions can significantly impact the valuation of the profit share liability and the gain or loss on change in fair value that is recorded.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s forecasted cash flows.

How we Addressed the Critical Audit Matter in Our Audit

To test the profit share liability calculation as of December 31, 2024, we performed the following procedures among others, by which we:

Obtained and reviewed the Unsecured Note Agreement and evaluated management’s assessment of the terms of the agreement.

Evaluated the assumptions regarding the probabilities related to the timing and amount of cash flows by comparing historical information and current events.

To test the profit share liability as of December 31, 2025, we performed the following procedures among others:

Evaluated the assumption related to the estimated timing and amount of cash flows by comparing historical information and current events.

Utilized our internal valuation specialist to assist in the assessment of the appropriateness of the valuation methodology and the reasonableness of the discount rate applied, including consideration of conditions affecting market rates.

Tested the clerical accuracy of the profit share liability calculation.

Tested the clerical accuracy of the profit share liability calculations.

/s/ Rosenberg Rich Baker Berman, P.A.

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AND SUBSIDIARIES

(formerly Midwest Energy Emissions Corp.)

CONSOLIDATED BALANCE SHEETS

(as restated)

Current assets

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Security deposits

Deferred offering costs

Property and equipment, net

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Operating lease liability, net of current portion

Secured note payable, net of discount – related party

Unsecured note payable, net of discount and issuance costs – related party

Profit share liability – related party

Total liabilities

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Total stockholders’ equity (deficit)

( 1,714,908 )

Total liabilities and stockholders’ equity (deficit)

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AND SUBSIDIARIES

(formerly Midwest Energy Emissions Corp.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(as restated)

Product revenue

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Impairment loss

Research and development expenses

( 1,805,198 )

Selling, general and administrative expenses (related party of $450,000 and $1,116,064)

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Other income (expense)

Income from legal claims

Interest expense (related party of $245,724 and $1,360,623)

( 1,362,401 )

Interest expense (related party of $nil and $245,724)

Loss on change in fair value of profit share and unsecured note

( 3,959,065 )

( 11,209,677 )

Interest income

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( 3,932,999 )

(Loss) income before provision for income taxes

Loss before provision for income taxes

( 2,955,957 )

( 11,091,267 )

Income tax benefit (expense)

Net (loss) income

$ ( 3,026,007 )

Basic & Diluted (loss) income per share:

Basic net (loss) income per share

Diluted net (loss) income per share

$ ( 10,802,111 )

Basic & Diluted loss per share:

Basic and diluted net loss per share

Weighted average common shares outstanding:

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AND SUBSIDIARIES

(formerly Midwest Energy Emissions Corp.)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

Year Ended December 31, 2024

Balance - January 1, 2024 (as restated)

Balance - January 1, 2025

$ ( 72,753,236 )

Stock issued for delivery of RSUs

Stock issued for cashless exercise of options

Stock issued for exercise of warrants

Stock issued for cashless exercise of warrants

Gain on modification of related party debt

Share based payments

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$ ( 75,779,243 )

Year Ended December 31, 2023

Balance – January 1, 2023 (as previously reported)

$ ( 1,714,908 )

Year Ended December 31, 2024

Balance - January 1, 2024

$ ( 61,951,125 )

Restatement adjustment

Balance – January 1, 2023 (as restated)

Share based compensation expense

Stock issued for cashless exercise of options

Stock issued for cash exercise of options

Balance December 31, 2023 (as restated)

Stock issued for exercise of warrants

Stock issued for cashless exercise of warrants

Gain on modification of related party debt

Share based payments

( 10,802,111 )

Balance – December 31, 2024

$ ( 72,753,236 )

See accompanying notes to these consolidated financial statements.

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AND SUBSIDIARIES

(formerly Midwest Energy Emissions Corp.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the year Ended

(as restated)

Cash flows from operating activities

Net (loss) income

$ ( 3,026,007 )

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Stock-based compensation – amortization of prepaid services

$ ( 10,802,111 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Stock-based compensation

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Accounts payable and accrued liabilities

( 1,388,385 )

Income tax payable

Operating lease liability

Net cash (used in) provided by operating activities

Net cash used in operating activities

( 4,105,167 )

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Cash flows from financing activities

Deferred offering costs

Proceeds from exercise of stock options

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( 12,314,895 )

Net cash (used in) provided by financing activities

Net cash used in financing activities

( 12,569,081 )

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

( 1,210,656 )

( 17,483,680 )

Cash and cash equivalents - beginning of period

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AND SUBSIDIARIES

(formerly Midwest Energy Emissions Corp.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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is a wholly owned subsidiary of Birchtech Corp.

The Company is a provider of specialty activated carbon technologies and provides patented sorbent technologies for mercury emissions capture for the coal-fired utility sector and is developing water purification technologies with a specialization on forever chemicals such as PFAS and PFOS.

The Company is a provider of specialty activated carbon technologies and primarily provides patented sorbent technologies for mercury emissions capture for the coal-fired utility sector and is developing water purification technologies with a specialization on forever chemicals such as PFAS and PFOS.

ME2C Sponsor LLC and ME2C Acquisition Corp.

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A decision was made in January 2023 to liquidate these entities which are inactive.

Note 2 – Restatement of Previously Issued Financial Statements

Description of Restatement Adjustments

In connection with the preparation of the Company’s consolidated financial statements as of and for the period ended December 31, 2024, management identified an error in the previously reported financial statements related to the recognition of revenue during the year ended December 31, 2022.

The Company entered into a license agreement for which it should have recognized the entire proceeds receivable pursuant to the agreement as revenue during the year ended December 31, 2022.

The Company should also have recognized the financing component of the licensing agreement during the fiscal years ended December 31, 2023 and 2024.

As a result, the consolidated financial statements reflect the recognition of this additional revenue during the year ended December 31, 2022, removes the revenue recognized and records the financing component of the arrangement during annual and interim periods in the fiscal year ending December 31, 2023 and the interim periods in the fiscal year ending December 31, 2024.

The following tables reflect the impact of the restatement to the specific line items presented in the Company’s previously reported consolidated financial statements as of December 31, 2022 and for the year ended December 31, 2023.

The accompanying applicable notes to consolidated financial statements have been updated to reflect the effects of the restatement.

The impact of the restatement to the consolidated statements of stockholders’ equity (deficit) includes a decrease of $ 843,251 in accumulated deficit as of December 31, 2023 and a $ 1,078,950 decrease to the accumulated deficit as of January 1, 2023.

The amounts in the “As previously reported” columns are amounts derived from the Company's previously filed consolidated financial statements.

The amounts in the “Restatement adjustments” columns present the impact of the following adjustments:

The recognition of the licensing revenue during the year ended December 31, 2022.

The removal of the licensing revenue recorded during the year ended December 31, 2023.

The recording of the financing component during the year ended December 31, 2023.

The amounts in the “As restated” columns are the updated amounts including the impacts from the restatement.

Audited Financial Statements

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of December 31, 2023:

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2023

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 62,794,376 )

( 61,951,125 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Operations for the year ended December 31, 2023:

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2023

As previously reported

$ ( 315,000 )

Operating (loss) income

Interest income

Total other income

Income (loss) before provision for income taxes

Net income (loss)

$ ( 235,699 )

Net loss per common share - basic and diluted:

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statements of Changes in Stockholder’s Equity for the years ended December 31, 2023 and 2022:

Accumulated Deficit

Balance – January 1, 2022

$ ( 67,116,913 )

( 1,581,476 )

Balance December 31, 2022

( 68,698,389 )

( 67,619,439 )

Balance December 31, 2023

$ ( 62,794,376 )

$ ( 843,251 )

$ ( 61,951,125 )

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the year ended December 31, 2023:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2023

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 235,699 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

Note 3 – Going Concern and Financial Condition

Note 2 – Liquidity and Financial Condition

Under ASC 205‑40, Presentation of Financial Statements—Going Concern , the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.

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The Company’s working capital deficiency at December 31, 2025 was approximately $ 5.7 million.

The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the financial statements.

In addition to maintaining its revenue stream from its legacy mercury emissions control business, the Company’s plans and expectations over the next twelve months to mitigate such financial condition include receiving additional cash inflows from the judgment expected in connection with the $ 57.1 million jury verdict awarded to the Company in March 2024, additional licensing revenues and product sales from the other patent litigation recently commenced, and revenues from the Company’s entry into the water treatment business.

During 2024, the Company opened two new state of the art laboratories and have added personnel to support our entry into the water business which the Company believes will lead to a vibrant new revenue stream.

In addition, management is exploring additional financing opportunities.

While management believes these plans will alleviate substantial doubt, there is no assurance that they will be successfully realized or implemented.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern within one year after the date the financial statements are issued.

The aforementioned factors raised substantial doubt about the Company’s ability to continue as a going concern within one year from the issuance date of the financial statements.

In addition to maintaining its revenue stream from its legacy mercury emissions control business, the Company’s plans and expectations over the next twelve months to mitigate such financial condition included receiving additional cash inflows from the final judgment issued by the Court in favor of the Company on December 29, 2025 in the total amount of $ 78,397,157 in connection with the jury verdict awarded to the Company in March 2024.

If successful, the Company may generate additional licensing revenues and product sales from the other patent litigation recently commenced, as well as revenues from the Company’s entry into the water treatment business, and additional financing opportunities.

Subsequent to December 31, 2025, on February 27, 2026, the Company completed an underwritten public offering of its common stock and received gross proceeds of $ 16.4 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company.

See “Note 15 – Subsequent Events”.

Management believes that the proceeds from this offering, together with the Company’s existing cash, anticipated revenues and additional cash inflows from its current operations and future operating plans, will provide sufficient liquidity to fund the Company’s operations and meet its obligations for at least twelve months from the date these financial statements are issued.

Accordingly, management believes that the conditions that raised substantial doubt about the Company’s ability to continue as a going concern have been alleviated.

Note 3 - Basis of Presentation and Summary of Significant Accounting Policies

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Actual results could differ from those estimates.

On December 26, 2025, the Company effected a 1-for-5 reverse stock split of its issued and outstanding shares of common stock.

The stock split did not affect the number of authorized shares.

All share and per share information, including share-based compensation, throughout the financial statements has been retroactively adjusted to reflect the stock split.

The shares of common stock retain a par value of $0.001 per share.

Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from capital in excess of par value to common stock.

Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value.

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As of December 31, 2025 and 2024, the Company had no valuation allowance.

Deferred offering costs

The Company deferred direct incremental costs associated with the public offering described in Note 15.

The Company capitalized $ 481,250 and $Nil during the years ended December 31, 2025 and 2024, respectively.

Deferred offering costs consist of primarily legal, advisory, and consulting fees incurred in connection with the public offering.

After the completion of the public offering, total deferred offering costs will be recorded as a reduction to additional paid-in capital generated as a result of the offering.

Property and Equipment

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Expenditures for repairs and maintenance which do not materially extend the useful lives of property and equipment are charged to operations.

Management reviews the carrying value of our property and equipment for impairment on an annual basis.

Management reviews the carrying value of our property and equipment for impairment on when events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

Intellectual Property

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The Company has evaluated the recoverability of the carrying value of the Company’s property and equipment, right of use asset and intellectual property.

After completing the assessment of property and equipment for impairment as of December 31, 2024 and 2023, the Company recorded an impairment expense related to property and equipment of $ 43,000 (2023 - $ 219,707 ) which is included in Impairment loss in the Company’s consolidated statements of operations and comprehensive income (loss).

After completing the assessment of property and equipment for impairment as of December 31, 2025 and 2024, the Company recorded an impairment expense related to property and equipment of $ 50,000 (2024 - $ 43,000 ) which is included in Impairment loss in the Company’s consolidated statements of operations and comprehensive loss.

The expense was primarily related to the impairment of construction in process costs where management determined that the undiscounted future cash flows were not sufficient to recover the carrying value of these assets over the estimated useful life.

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We account for stock-based compensation awards in accordance with the provisions of ASC 718, Compensation-Stock Compensation, which requires equity-based compensation, be reflected in the consolidated financial statements over the period of service which is typically the vesting period based on the estimated fair value of the awards.

The Company accounts for stock option forfeitures as they occur.

Fair Value of Financial Instruments

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The profit share liability is considered to be Level 3 measurements.

Financial instruments include cash, accounts receivable, accounts payable, and short-term debt.

Financial instruments include cash, accounts receivable, accounts payable, income tax payable, and short-term debt.

The carrying amounts of these financial instruments approximated fair value at December 31, 2025 and December 31, 2024 due to their short-term maturities.

The fair value of the notes payable at December 31, 2023 approximated the carrying amount, as the notes were recently issued at interest rates prevailing in the market.

The fair value of the notes payable was determined on a Level 2 measurement.

Discounts on issued debt, as well as debt issuance costs, are amortized over the term of the individual notes.

At December 31, 2024, the fair value of the profit share liability is calculated using a discounted cash flow model based on estimated future cash payments.

The fair value of the profit share liability at December 31, 2023 was also calculated using a discounted cash flow model based on estimated future cash payments.

At December 31, 2024 and December 31, 2023, the fair value of the profit share liability was determined on a Level 3 measurement.

At December 31, 2025 and 2024, the fair value of the profit share liability is calculated using a discounted cash flow model based on estimated future cash payments.

These values are determined using pricing models for which the assumptions utilized management’s estimates.

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Property and equipment (Construction in progress)

The following table presents the changes in balances of assets for the years ended December 31, 2025 and 2024 classified as Level 3:

Years ended December 31,

Balance – beginning of period

Change in fair value

Balance – end of period

Revenue Recognition

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Accounts receivable are presented net of an allowance for credit losses.

The Company maintains allowances for credit losses.

The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.

In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, a customer’s payment history, its current credit-worthiness and current economic trends.

Accounts are written off after exhaustive efforts at collection.

This value incorporates an allowance for credit losses to reflect any loss anticipated on accounts receivable balances.

The Company applies the current expected credit loss (CECL) model, which requires immediate recognition of expected credit losses over the contractual life of receivables and records the appropriate allowance for credit losses as a charge to operating expenses.

The allowance for credit losses is based on a combination of the individual customer circumstances, credit conditions, and historical write-offs and collections.

The recovery of accounts receivable previously written off is recorded as a reduction to the allowance for credit losses charged to operating expense.

Management believed that the accounts receivable were fully collectable and no allowance for credit losses was deemed to be required on its accounts receivable at December 31, 2025.

The Company historically has not experienced significant uncollectible accounts receivable.

As of December 31, 2024 and December 31, 2023, the Company’s allowance for credit losses was $ 0 , and the Company recorded $ 0 of bad debt expense for both the years ended December 31, 2024 and 2023.

As of December 31, 2025 and December 31, 2024, the Company’s allowance for credit losses was $ 0 , and the Company recorded $ 3,520 of credit losses for the year ended December 31, 2025, and $ 0 of credit losses for the year ended December 31, 2024.

Research and Development Costs

Research and development costs are expensed as incurred.

Research and development costs consist of costs incurred to discover, research and develop products, and include personnel expenses, facility-related and depreciation expenses, and external costs of outside suppliers.

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, Income Taxes.

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Management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Basic and Diluted Income (Loss) Per Common Share

Income (loss) per share – basic is calculated by dividing net income (loss) by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration.

Effective January 1, 2025, the Company adopted ASU 2023-09, Improvements to Income Tax Disclosures, which expanded income tax disclosure requirements, including disaggregation of pretax income (loss) and income tax expense (benefit) by jurisdiction and disclosure of income taxes paid (net of refunds received).

The Company adopted the standard on January 1, 2025 on a retrospective basis.

Accordingly, the tax rate reconciliation and income taxes paid disclosures for the year ended December 31, 2024 has been recast to conform to the current year’s presentation.

The adoption affected disclosures only and did not impact the Company’s financial position, results of operations, or cash flows.

Basic and Diluted Loss Per Common Share

Loss per share – basic is calculated by dividing net income (loss) by the weighted average number of shares of stock outstanding during the year, including shares issuable without additional consideration.

Income per share – assuming dilution is calculated by dividing net income by the weighted average number of shares outstanding during the year adjusted for the effect of dilutive potential shares from options and warrants calculated using the treasury stock method and the if-converted method for preferred stock.

There were no dilutive potential common shares for year ended December 31, 2025, because the Company incurred a net loss and basic and diluted losses per common share are the same.

There are 3,280,702 dilutive stock options and no dilutive warrants for the year ended December 31, 2023 as the Company reported net income for the period.

We calculate basic earnings per share by dividing net income by the weighted-average number of common shares outstanding during the reporting period.

Diluted earnings per share reflects the effects of potentially dilutive securities.

The summary of the basic and diluted earnings per share calculations for the years ended December 31, 2024 and 2023:

Net Income (Loss)

$ ( 10,802,111 )

Weighted-average shares outstanding

Net Income (Loss)

$ ( 10,802,111 )

Weighted-average shares outstanding

Effect of diluted securities – stock options

Weighted-average shares used in the calculation of diluted earnings per share

Diluted earnings (loss) per share

Total common stock equivalents excluded from dilutive loss per share are as follows:

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For the year ended December 31, 2025, three customers represented 29 %, 11 %, and 9 % of the Company’s revenues, and for the year ended December 31, 2024, three customers represented 32 %, 13 %, and 10 % of the Company’s revenues.

At December 31, 2024, three customers represented 32 %, 26 % and 9 % of the Company’s accounts receivable, and at December 31, 2023, four customers represented 32 %, 27 %, 10 % and 8 % of the Company’s accounts receivable.

The loss of any one of these customers could have an adverse effect on the Company’s operations.

At December 31, 2025, two customers represented 51 %, and 14 % of the Company’s accounts receivable, and at December 31, 2024, three customers represented 32 %, 26 % and 9 % of the Company’s accounts receivable.

For the year ended December 31, 2025, two suppliers represented 55 % and 36 % of the Company’s purchases.

For the year ended December 31, 2023, 91 % of the Company’s purchases related to three suppliers.

For the year ended December 31, 2024, two suppliers represented 51 % and 35 % of the Company’s purchases.

At December 31, 2025 and 2024, 63 % and 68 % of the Company’s accounts payable and accrued expenses related to two vendors, respectively.

The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive.

The Company believes there are numerous other suppliers that could be substituted should a supplier become unavailable or non-competitive and the adverse effect of losing one of these suppliers would be short-term.

Contingencies

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Recently Issued Accounting Standards

Issued in June 2021, FASB Accounting Standards Update (ASU) No.

2016-13, Measurement of Credit Losses on Financial Instruments adds to U.S.

GAAP an impairment model known as the current expected credit loss (CECL) model, which is based on expected losses rather than incurred losses.

This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early application of the amendments is permitted.

Effective January 1, 2023, the Company adopted ASU No.

The adoption of ASU No.

2016-13 did not have a material effect on the accompanying consolidated financial statements.

In November 2023, the FASB issued ASU No.

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The standard is effective for years beginning after December 15, 2024 and early adoption is permitted.

The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

The Company adopted ASU 2023-09 effective for its Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent interim periods.

Since ASU 2023-09 addresses only disclosures, the adoption of ASU 2023-09 did not have a significant impact on its consolidated financial statements.

In November 2024, the FASB issued ASU No.

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2024‑03 is permitted.

The Company does not expect the application of this standard will have a material impact on its financial statements and related disclosures.

On July 30, 2025, the FASB issued ASU 2025‑05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025‑05”), which provides a practical expedient that assumes current conditions as of the balance sheet date remain unchanged when developing forecasts for estimating expected credit losses.

Under ASU 2025‑05, an entity is required to disclose that it has elected to use the practical expedient and the election should be applied prospectively.

ASU 2025‑05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2025, with early adoption permitted.

The Company does not expect the application of this standard will have a material impact on its financial statements and related disclosures.

Note 4 - Inventory

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During the year ended December 31, 2025 and 2024 depreciation expense was $ 137,541 and $ 11,702 , respectively.

At December 31, 2024, lab equipment included $ 725,626 of lab equipment not yet placed in service.

At December 31, 2025 and 2024, lab equipment included $ 0 and $ 725,626 of lab equipment not yet placed in service, respectively.

At December 31, 2025 and 2024, the Company concluded that Company’s plant construction in process asset had become impaired based on the existing and anticipated future economic outlook.

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Amortized discount recorded as interest expense for the years ended December 31, 2025 and 2024 was $ 0 and $ 32,220 , respectively.

As of December 31, 2024 and 2023, the unamortized balance of the discount was $Nil and $ 32,220 , respectively.

As of December 31, 2025 and 2024, the unamortized balance of the discount was $ 0 and $ 0 , respectively.

Unsecured Note Payable

The Company has the following unsecured note payable - related party outstanding as of December 31, 2024 and December 31, 2023:

The Company has the following unsecured note payable - related party outstanding as of December 31, 2025 and 2024:

Unsecured note payable

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Less fair value adjustment on extinguishment, net of amortized discount of $0 and $1,965,984, respectively

( 2,175,208 )

Plus fair value adjustment

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Amortized discount recorded as interest expense for the years ended December 31, 2025 and 2024 was $ 0 and $ 209,224 , respectively.

As of December 31, 2024 and 2023, the unamortized balance of the discount was $Nil and $ 2,175,208 , respectively.

As of December 31, 2025 and 2024, the unamortized balance of the discount was $ 0 and $ 0 , respectively.

Pursuant to the Unsecured Note Financing Agreement, AC Midwest was also entitled to a “non-recourse” profit participation preference equal to 1.0 times the original principal amount of the AC Midwest Unsecured Note which on October 28, 2022 was increased to $ 17,654,931 (the “Profit Share”).

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Profit Share as of January 1, 2024

(11,833,179 )

Loss on change in fair value of profit share

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Profit Share as of January 1, 2025

( 11,833,179 )

Loss on change in fair value of profit share

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For the years ended December 31, 2025 and 2024, Dakin incurred $ 0 and $ 112,500 license fees.

At December 31, 2024 and 2023, $Nil and $ 25,000 was owed to Dakin for license fees.

On May 28, 2024, the Company entered into an Administrative Services Agreement with Greenberg Enterprises, LLC (“Greenberg Enterprises”), pursuant to which Greenberg Enterprises will be paid for certain administrative support provided to the Company since January 1, 2024 and administrative support to be provided in the future to the Company including but not limited to general office and technical support, project management and support, and vendor relations support.

Such agreement was terminated effective in December 2024.

During the year ended December 31, 2024, Greenberg Enterprises provided $ 237,020 for administrative services and $ 335,100 for expense reimbursement.

At December 31, 2024, $Nil was owed to Greenberg Enterprises pursuant to the agreement.

Greenberg Enterprises is a company owned and controlled by Christopher Greenberg, Chairman of the Board of the Company.

At December 31, 2025 and 2024, $ 0 and $ 0 was owed to Dakin for license fees.

Note 8 - Operating Leases

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The lease contains an option to extend for a further three years that the Company is reasonably certain to exercise.

As a result, the additional three year extension is included as part of the least term.

As a result, the additional three year extension is included as part of the lease term.

Rent is $1,400 monthly until July 31, 2027, and then effectively $1,540 per month until July 31, 2030 .

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Operating lease costs

Note 9 – Accounts payable and accrued expenses

Current accounts payable and accrued expenses are as follows:

Accounts payable

Consulting fees

Cost of goods sold

Total accounts payable

Accrued expenses

Consulting fees

Total accounts payable and accrued expenses

Note 10 - Commitments and Contingencies

Fixed Price Contract

The Company’s multi-year contracts with its commercial customers contain fixed prices for product.

These contracts expire between 2023 and 2025 and expose the Company to the potential risks associated with rising material costs during that same period.

Fixed Price Arrangements

A substantial portion of the Company’s revenues is generated under contracts or blanket purchase orders with commercial customers that expire periodically or must be frequently renegotiated, extended, or replaced from time to time and that often contain fixed prices for product.

These arrangements expose the Company to potential risks associated with rising material costs during the term of the applicable contract or blanket purchase order.

Legal proceedings

On July 17, 2019, the Company initiated patent litigation against certain defendants in the U.S.

District Court for the District of Delaware for infringement of certain United States patents owned by the Company .

These patents relate to the Company’s two-part Sorbent Enhancement Additive (SEA ® ) process for mercury removal from coal-fired power plants.

Named as defendants in the lawsuit were (i) Vistra Energy Corp., AEP Generation Resources Inc., NRG Energy, Inc., Talen Energy Corporation, and certain of their respective affiliated entities, all of which are owners and/or operators of coal-fired power plants in the United States, and (ii) Arthur J.

Gallagher & Co., DTE REF Holdings, LLC, CERT Coal Holdings LLC, Chem-Mod LLC, and certain of their respective affiliated entities, and additional named and unnamed defendants, all of which operate or are involved in operations of coal facilities in the United States.

In the lawsuit, the Company alleges that each of the defendants has willfully infringed certain of the Company’s patents and seeks unspecified damages, attorneys’ fees, costs and injunctive relief.

During 2020, each of the four major utility defendants in the above action filed petitions for Inter Partes Review with the United States Patent and Trademark Office, seeking to invalidate certain claims to the patents which are subject to the litigation.

Between July 2020 and January 2021, we entered into agreements with each of the four major utility defendants in such action which included certain monetary arrangements and pursuant to which we have dismissed all claims brought against each of them and their affiliates, and such parties have withdrawn from petitions for Inter Partes Review with the United States Patent and Trademark Office.

Such agreements entered into with such parties provide each of them and their affiliates with a non-exclusive license to certain Company patents (related to the Company’s two-part Sorbent Enhancement Additive (SEA®) process) for use in connection with such parties’ coal-fired power plants.

Subsequently, and as a result of certain rulings by the Court, certain defendants were dismissed in the action, certain defendants were added and certain originally named defendants remained in the action.

A jury trial was scheduled for November 13, 2023.

On November 9, 2023, the Company entered into a confidential binding term sheet with Arthur J.

Gallagher & Co., and various of its affiliated entities (collectively “AJG”), and DTE Energy Resources LLC and various of its affiliated entities (collectively “DTE”), to resolve the patent litigation.

The Company has commenced multiple patent infringement lawsuits to enforce its proprietary two-part Sorbent Enhancement Additive (SEA ® ) process for mercury removal from coal-fired power plants.

These actions, filed between 2019 and 2025, target various operators of coal-fired power plants and refined coal producers whom the Company alleges have willfully infringed its patent rights.

The Company is seeking damages, injunctive relief, and other remedies in each of these proceedings.

Delaware District Court Action

In July 2019, the Company initiated patent litigation against various defendants in the U.S.

District Court for the District of Delaware which included (i) Vistra Energy Corp., AEP Generation Resources Inc.

, NRG Energy, Inc., Talen Energy Corporation, and certain of their respective affiliated entities, all of which are owners and/or operators of coal-fired power plants in the United States, and (ii) Arthur J.

Gallagher & Co., DTE REF Holdings, LLC, CERT Coal Holdings LLC, Chem-Mod LLC, and certain of their respective affiliated entities, and additional named and unnamed defendants, all of which operated or were involved in operations of coal facilities in the United States.

Between July 2020 and January 2021, the Company entered into agreements with each of the four major utility defendants which included certain monetary arrangements and pursuant to which the Company dismissed all claims brought against each of them and their affiliates.

In November 2023, the Company entered into a confidential binding term sheet with Arthur J.

Gallagher & Co., and various of its affiliated entities, and DTE Energy Resources LLC and various of its affiliated entities, to resolve the patent litigation.

Pursuant to the term sheet, all claims and counterclaims asserted by the parties in such patent litigation have been dismissed with prejudice, although such term sheet does not affect any other claim brought against the remaining CERT defendants.

The financial aspects of the term sheet remain confidential pursuant to its terms.

In addition, effective November 9, 2023, Alistar Enterprises, LLC (“Alistar”), one of the remaining CERT defendants, entered into a settlement agreement with the Company which provided that all claims and counterclaims asserted in the action between the Company and Alistar be dismissed with prejudice.

The financial terms of such settlement remain confidential.

Effective as of December 28, 2023, and in connection with the term sheet described above, the Company, along with its wholly-owned subsidiary, MES, Inc., and (a) Chem-Mod LLC (“Chem-Mod”), (b) Arthur J.

In November 2023, Alistar Enterprises, LLC, one of the remaining CERT defendants, entered into a settlement agreement with the Company.

In December 2023, and in connection with the term sheet described above, the Company, along with its wholly-owned subsidiary, MES, Inc., and (a) Chem-Mod LLC (“Chem-Mod”), (b) Arthur J.

Gallagher & Co.

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The parties to the license have mutually released all claims that any past use of the Chem-Mod Solution in connection with the production or use of refined coal with activated carbon by entities other than the CERT defendants and their customers infringes the asserted patents and related intellectual property, and all claims that could have been brought challenging the validity of such patents.

The remaining CERT defendants and their customers (for activities relating to the CERT defendants) are not included within the scope of the license.

The Court rescheduled the trial as to the claims against the remaining CERT defendants to begin on February 26, 2024.

Following a five-day trial, on March 1, 2024, a federal jury in the U.S.

District Court for the District of Delaware awarded a $ 57.1 million patent infringement verdict in favor of the Company against the remaining group of CERT defendants.

The remaining CERT defendants and their customers (for activities relating to the CERT defendants) were not included within the scope of the license.

The case proceeded to trial in February 2024 against the remaining CERT defendants.

On March 1, 2024, a federal jury returned a $ 57.1 million verdict in favor of the Company against the remaining CERT defendants, finding willful infringement of the Company’s patented technologies and holding the defendants liable for inducing and contributory infringement.

Such group of affiliated defendants included multiple limited liability companies with refined coal industry operations, including CERT Operations II LLC, CERT Operations IV LLC, CERT Operations V LLC, and CERT Operations RCB LLC.

The jury determined that these defendants infringed our patented technologies for mercury emissions and were liable for willful infringement, along with inducing and contributory infringement.

Following the trial, various post-trial motions and applications were made by the parties.

We are awaiting rulings from the Court.

In July 2024, the Company commenced three patent infringement lawsuits against multiple defendants, including coal-fired power utilities, in three separate U.S.

District Courts in Arizona, Iowa and Missouri.

Such lawsuits claim infringement of the Company’s patent rights related to the Company’s mercury emissions reduction technologies.

Following the trial, the Court entered non-final judgments on the verdict against the CERT defendants and the parties submitted post-trial motions relating to the jury trial.

The CERT defendants also asserted that the Company’s claims were barred due to their defense that they had an implied license to the asserted patents.

A bench trial was held on such issue.

On June 10, 2025, the Court ruled that the CERT defendants failed to prove that they had such an implied license and denied their motion to alter or amend the non-final judgment.

On September 25, 2025, the Court issued a Memorandum Opinion and Order denying the CERT defendants’ post-trial motion that they should not be held liable as a matter of law for induced infringement, contributory infringement or willful infringement, and on November 20, 2025, the Court issued a Memorandum Opinion and Order denying the CERT defendants’ post-trial motion for a new trial on the issues of induced infringement, contributory infringement, willful infringement and damages.

Thereafter, on December 17, 2025, the Court issued a memorandum order granting the Company’s request for pre- and post-judgment interest, and denying the Company’s request for enhanced damages.

Following resolution of all post-trial motions, the Court issued the final judgment in favor of the Company on December 29, 2025 in the total amount of $78,397,157, which amount includes pre-judgment interest.

The Company accounts for the judgement under ASC 450-30, Contingencies , which does not allow recognition until cash or claims to cash are realized or realizable.

We did not recognize the judgement as of December 31, 2025 because there were inherent uncertainties associated with the realizability of the judgement.

On January 28, 2026, the CERT defendants filed a notice of appeal of the judgment.

Under applicable rules, the CERT defendants may seek a stay of execution of the judgment pending appeal by posting a bond or other security in an amount and form approved by the Court.

As of the date the financial statements were issued, the CERT defendants have not obtained a bonded stay.

Although the automatic stay of execution applicable following entry of judgment has expired, the appeal remains pending.

Interest continues to accrue on the judgment amount during the pendency of the appeal.

2024‑2025 Patent Infringement Actions

In July 2024, the Company commenced three additional patent infringement lawsuits in U.S.

District Courts in Arizona, Iowa and Missouri against multiple utilities and related entities.

These actions allege willful infringement of the Company’s patents related to mercury emissions control.

Named as defendants in the action filed in the U.S.

District Court for the District of Arizona are Tucson Electric Power Co., San Carlos Resources, Inc., Salt River Project Agricultural Improvement and Power District, Tri-State Generation and Transmission Association, Inc., Springerville Unit 3 Holding LLC, and Springerville Unit 3 Partnership LP.

District Court for the District of Arizona were Tucson Electric Power Co., San Carlos Resources, Inc., Salt River Project Agricultural Improvement and Power District, Tri-State Generation and Transmission Association, Inc., Springerville Unit 3 Holding LLC, and Springerville Unit 3 Partnership LP.

Named as defendants in the action filed in the U.S.

District Court for the Southern District of Iowa are Berkshire Hathaway Energy Company, MidAmerican Energy Company, PacifiCorp, Alliant Energy Corporation, Interstate Power and Light Company, and Wisconsin Power and Light Company, and named as defendants in the action filed in the U.S.

District Court for the Eastern District of Missouri are Ameren Corp.

District Court for the Southern District of Iowa were Berkshire Hathaway Energy Company, MidAmerican Energy Company, PacifiCorp, Alliant Energy Corporation, Interstate Power and Light Company, and Wisconsin Power and Light Company, and named as defendants in the action filed in the U.S.

District Court for the Eastern District of Missouri were Ameren Corp.

and Union Electric Co.

In each lawsuit, the Company requests a trial by jury against the defendants and seeks damages, costs, and legal expenses, along with a finding of willful infringement by the defendants, and an injunction prohibiting the defendants from further acts of infringement.

Effective as of October 8, 2024, the Company entered into agreement with one of the utilities and an affiliated entity named as defendants in the patent infringement lawsuit commenced by the Company in July 2024 in the U.S.

District Court in Arizona (the “Arizona Action”).

Such agreement provides such parties and their affiliates with a non-exclusive license to certain Company patents related to the Company’s two-part Sorbent Enhancement Additive (SEA®) process for use in connection with a certain designated coal-fired power plant operated by such utility.

The agreement includes a one-time license fee which has been received by the Company, and provides the Company with a right of first refusal for certain of such utility’s product supply for mercury emissions capture at such designated power plant.

Such lawsuit will continue against the other non-affiliated defendants named in the Arizona Action.

On December 17, 2024, a United States Judicial Panel on Multidistrict Litigation ordered that the above three patent infringement lawsuits be consolidated and centralized in the Southern District of Iowa for coordinated or consolidated pretrial proceedings (the “Transfer Order”).

See “Note 16 – Subsequent Events” for information on an agreement entered into with another party named as a defendant in the Arizona Action, along with information of the commencement of additional patent litigation and filing of petitions for Inter Partes Review with the United States Patent and Trademark Office.

Except for the foregoing disclosures, the Company is not presently aware of any other material pending legal proceedings to which the Company is a party or of which any of its property is the subject.

In October 2024, the Company entered into an agreement with one of the utility defendants and an affiliated entity in the Arizona action, and in January 2025, the Company entered into an agreement with another utility named in the Arizona action.

Such agreements provide such parties and their affiliates with a non-exclusive license to certain Company patents related to the Company’s two-part Sorbent Enhancement Additive (SEA®) process for use in connection with a certain designated coal-fired power plant operated by them.

The agreements include one-time license fees which have been received by the Company.

One agreement provides the Company with a right of first refusal for certain of such utility’s product supply for mercury emissions capture at such designated power plant and the other agreement provides the Company with the right to be included in such party’s bidding process for certain product supply for mercury emissions capture at such party’s designated power plant.

On December 17, 2024, the U.S.

Judicial Panel on Multidistrict Litigation ordered the consolidation of the three lawsuits in the U.S.

District Court for the Southern District of Iowa for coordinated pretrial proceedings.

In January 2025, the Company initiated an additional infringement suit in the Western District of Missouri against several Evergy-affiliated entities.

Named as defendants in the action were Evergy, Inc., Evergy Metro Inc., Evergy Missouri West, Inc.

and Evergy Kansas Central, Inc.

One of such defendants was dismissed from the Western District of Missouri action and named as a defendant in a separate case commenced in the U.S.

District Court for the District of Kansas.

Such cases were transferred to the Iowa court pursuant to the existing transfer order.

Between January and July 2025, certain defendants in the consolidated Iowa actions filed inter partes review (“IPR”) petitions with the U.S.

Patent and Trademark Office seeking to invalidate various asserted claims.

Effective as of August 5, 2025, the Company entered into separate agreements with two utilities, which are affiliated with each other, and named as defendants in the Southern District of Iowa action.

In addition, as of September 9, 2025, the Company entered into an agreement with a utility and its affiliated entities, named as defendants in the Western District of Missouri and District of Kansas actions.

Such agreements provide such parties and their affiliates with a non-exclusive license to certain Company patents related to the Company’s two-part SEA® process for use in connection with certain designated coal-fired power plants operated by them.

Each agreement includes a one-time license fee.

The agreements effective as of August 5, 2025 entered into with the two utilities, provide the Company with the right to be included in each utility’s bidding process for certain product supply for mercury emissions capture at such party’s operated power plants.

Such two utilities have also agreed to withdraw from the IPR petitions.

Effective as of September 30, 2025, the Company entered into an agreement with another utility not named as a defendant in the Company’s patent litigations, but a party to the IPR petitions filed with the U.S.

Patent and Trademark Office.

Such agreement provides such utility and its affiliates with a with a non-exclusive license to certain Company patents related to the Company’s two-part SEA® process for use in connection with a certain designated coal-fired power plant operated by them.

Such agreement includes a one-time license fee and provides the Company with the right to be included in such party’s bidding process for certain product supply for mercury emissions capture at such party’s designated power plant.

Such party has agreed to withdraw from IPR petitions.

Effective as of October 15, 2025, the Company entered into an agreement with another utility named as a defendant in the Southern District of Iowa action.

While the terms of the agreement are confidential, it includes a resolution of the disputes between the Company and that utility and its affiliates and provides for their withdrawal from related proceedings.

As a result of the agreements described above, the Company and several defendants have resolved their respective claims, and those defendants have been dismissed from the applicable actions.

There remain two utilities in the consolidated Iowa actions.

As described above, between January and April 2025, certain defendants in the consolidated Iowa actions filed IPR petitions seeking to invalidate various asserted claims of the Company’s patents.

In September and October 2025, the U.S.

Patent Trial and Appeal Board (“PTAB”) granted the institution of review of certain of the Company’s asserted patents.

The Company sought review of those institutional decisions by the PTO Director.

The Director has since issued decisions granting reconsideration in part and denying it in part, and certain matters remain subject to further motions and proceedings before the PTAB.

In connection with these proceedings, the Court in the consolidated Iowa actions has stayed the litigation pending completion of the IPR process.

Between June and July 2025, certain other defendants in the consolidated Iowa actions filed IPR petitions seeking to invalidate various asserted claims of the Company’s patents.

These petitions were denied institution by the PTO Director, and requests for reconsideration of those denials have also been denied.

The Company cannot predict the ultimate outcome of the pending IPR proceedings or related matters.

Other than the foregoing, there are no material pending legal proceedings to which the Company is a party or of which any of its property is the subject.

Litigation, including patent litigation, is inherently subject to uncertainties.

As such, there can be no assurance that the Company will be successful in litigating and/or settling any of these claims.

As such, there can be no assurance that the Company will be successful in litigating and/or settling any of the remaining claims.

The Company expenses legal costs relating to patent litigation as incurred.

Contingent Liability

The Company is involved in a dispute with a third party related to invoices and other claimed charges in the amount of $ 184,079 pertaining to reimbursement for certain alleged costs and legal services.

The Company disputes these invoices and charges on the basis that the third party was not entitled to reimbursement.

As of December 31, 2025, the matter remains unresolved.

The Company has evaluated the claim in accordance with ASC 450, Contingencies , and has determined that a loss is possible, but not probable.

Accordingly, no liability has been recorded in the accompanying financial statements.

While the Company intends to vigorously defend its position, an unfavorable outcome could result in a loss of up to approximately $ 184,079 .

At this time, the Company is unable to determine the ultimate resolution of this matter.

Note 11 - Stock Based Compensation

Stock Based Compensation

The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which addresses the accounting for employee stock options which requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the unaudited condensed consolidated financial statements over the vesting period based on the estimated fair value of the awards.

The Company accounts for stock-based compensation awards in accordance with the provisions of ASC 718, which addresses the accounting for employee stock options which requires that the cost of all employee stock options, as well as other equity-based compensation arrangements, be reflected in the consolidated financial statements over the requisite service period based on the estimated fair value of the awards.

Stock based compensation consists of the amortization of common stock, stock options, restricted share units and warrants issued to employees, directors and consultants.

2 unchanged sentences

On July 3, 2023, the Board of Directors of the Company approved and adopted the Company’s Amended and Restated 2014 Equity Incentive Plan (the “2014 Plan”) and the Company’s Amended and Restated 2017 Equity Incentive Plan (the “2017 Plan”) which amended the Company’s previously adopted 2014 Equity Incentive Plan and 2017 Equity Incentive Plans.

Such amendments were made in accordance with the requirements of the TSX Venture Exchange.

The 2014 Equity Incentive Plan was first approved by the Board on January 10, 2014.

3 unchanged sentences

As amended by the Board on July 3, 2023, the maximum number of shares of common stock that may be issued under the 2017 Plan after July 3, 2023 is 2,815,692 , and to the extent any award (or portion thereof) outstanding under the 2014 Plan expires, terminates or is cancelled, surrendered or forfeited for any reason on or after July 3, 2023, the shares of common stock subject to such award (or portion thereof) shall be added to and increase the foregoing limit, to a maximum of 955,000 additional shares of common stock.

(On July 3, 2023, there were 4,775,000 options and no other types of awards outstanding under the 2014 Plan.) On October 29, 2024, the Board approved certain non-material amendments to the 2014 Plan and 2017 Plan which amendments were made in connection with the listing of the Company’s shares on the Toronto Stock Exchange (“TSX”) and graduation from the TSX Venture Exchange to the TSX.

As of December 31, 2024, there were 5,741,306 shares remaining available for issuance under the 2017 Plan.

(On July 3, 2023, there were 955,000 options and no other types of awards outstanding under the 2014 Plan.) On October 29, 2024, the Board approved certain non-material amendments to the 2014 Plan and 2017 Plan.

As of December 31, 2025, there were 1,518,261 shares remaining available for issuance under the 2017 Plan and no options available or outstanding under the 2014 Plan.

On November 8, 2022, the Company issued a total of 600,000 shares of common stock to the Chief Executive Officer.

3 unchanged sentences

The expense for the years ended December 31, 2025 and 2024 was $ 0 and $ 402,666 , respectively.

On March 19, 2025, the Company announced that its Board of Directors authorized a share repurchase program under which the Company may purchase up to $ 5.0 million of its common stock.

Purchases under the share repurchase program may be made from time to time, in such amounts as management deems appropriate, through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, purchases through 10b5‑1 trading plans, or by any combination of such methods.

The timing and amount of any repurchases pursuant to the share repurchase program will be determined based upon a variety of factors, including general market conditions, share price, corporate and regulatory requirements and limitations, corporate liquidity requirements and priorities, and other factors.

The share repurchase program does not have an expiration date, does not require the Company to repurchase any specific number of shares of its common stock, if any, and may be modified, suspended or terminated at any time without notice.

During the year ended December 31, 2025, there were no repurchases made under the program.

Stock Options

On February 1, 2023, the Company issued (i) 850,000 shares of common stock to the Company’s Chairman of the Board upon a cash exercise of options to purchase an aggregate of 850,000 shares of common stock at exercise prices ranging from $ 0.19 to $ 0.27 per share or $ 209,500 in the aggregate, (ii) 110,000 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 250,000 shares of common stock at an exercise price of $ 0.28 per share based upon a market price of $ 0.50 per share as determined under the terms of the option, and (iii) 155,000 shares of common stock to a director of the Company upon a cashless exercise of an option to purchase 250,000 shares of common stock at an exercise price of $ 0.19 per share based upon a market price of $ 0.50 per share as determined under the terms of the option.

On February 20, 2023, the Company issued 17,858 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 50,000 shares of common stock at an exercise price of $ 0.27 per share based upon a market price of $ 0.42 per share as determined under the terms of the option.

Between February 21, 2023 and February 23, 2023, the Company issued an aggregate of 29,022 shares of common stock to three employees and one former employee upon a cashless exercise of options to purchase an aggregate of 80,000 shares of common stock at an exercise price of $0.27 per share based upon market prices ranging from $ 0.42 to $ 0.43 per share as determined under the terms of the options.

On March 8, 2023, and pursuant to an advisor agreement dated March 1, 2023 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Equity Incentive Plan to such third party to acquire 125,000 shares of the Company’s common stock at an exercise price of $ 0.40 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Equity Incentive Plan.

Fifty percent of the option shall vest and become exercisable on September 1, 2023, and the remaining fifty percent shall vest and become exercisable on March 1, 2024.

The option will expire five years after the date of grant.

Based on a Black-Scholes valuation model, these options were valued at $ 30,933 , in accordance with FASB ASC Topic 718.

The fair value of the shares was being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months.

The valuation assumptions included an expected duration of 2.9 years, volatility of 98 %, discount rate of 4.71 % and dividends of $ 0 .

On September 30, 2023, the advisor agreement was terminated resulting in 50.0% of the option remaining unvested and unexercisable.

On April 4, 2023, and pursuant to a consulting agreement effective April 1, 2023 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Equity Incentive Plan to such third party to acquire 250,000 shares of the Company’s common stock at an exercise price of $ 0.39 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Equity Incentive Plan.

Fifty percent of the option shall vest and become exercisable on October 1, 2023 and the remaining fifty percent shall vest and become exercisable on April 1, 2024.

The option will expire five years after the date of grant .

Based on a Black-Scholes valuation model, these options were valued at $ 59,690 , in accordance with FASB ASC Topic 718.

The fair value of the shares was being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months.

The valuation assumptions included an expected duration of 2.9 years, volatility of 98 %, discount rate of 3.60 % and dividends of $ 0 .

On August 28, 2023, the consulting agreement was terminated resulting in the option remaining unvested and being deemed terminated.

On May 26, 2023, a new director was appointed to the Board of Directors and was granted a nonqualified stock option to acquire 125,000 shares of the Company’s common stock exercisable at $ 0.41 per share.

Fifty percent of the option shall vest and become exercisable on November 26, 2023, and the remaining fifty percent shall vest and become exercisable on May 26, 2024.

The option will expire five years after the date of grant.

Based on a Black-Scholes valuation model, these options were valued at $ 30,527 , in accordance with FASB ASC Topic 718.

The fair value of the shares is being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months.

During the years ended December 31, 2024 and 2023, the Company recognized $ 12,211 and $ 18,316 , respectively, of stock-based compensation.

The valuation assumptions included an expected duration of 2.88 years, volatility of 97 %, discount rate of 4.23 % and dividends of $ 0 .

On June 5, 2023, the Company issued 1,629 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 6,875 shares of common stock at an exercise price of $ 0.29 per share based upon a market price of $ 0.38 per share as determined under the terms of the options.

On June 6, 2023, the Company issued an aggregate of 3,426 shares of common stock to an employee upon a cashless exercise of options to purchase an aggregate of 7,655 shares of common stock at exercise prices ranging from $ 0.17 to $ 0.29 per share based upon a market price of $ 0.38 per share as determined under the terms of the options.

On June 7, 2023, the Company issued 1,352 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock at an exercise price of $ 0.29 per share based upon a market price of $ 0.37 per share as determined under the terms of the options.

On June 28, 2023, the Company issued (i) 5,213 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of options to purchase an aggregate of 24,687 shares of common stock at exercise prices ranging from $ 0.21 to $ 0.29 per share based upon a market price of $ 0.30 per shares as determined under the terms of the options, (ii) 4,125 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock at an exercise price of $ 0.21 per share based upon a market price of $ 0.30 per share as determined under the terms of the option, and (iii) 1,875 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock at an exercise price of $ 0.21 per share based upon a market price of $ 0.30 per share as determined under the terms of the options.

On July 28, 2023, the Company issued (i) 8,007 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 16,458 shares of common stock, (ii) 6,690 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, and (iii) 3,041 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock.

All of such options had an exercise price of $ 0.17 per share and such share issuances were based upon a volume weighted average price (“VWAP”) of $ 0.3311 per share as determined under the terms of the options.

On September 29, 2023, the Company issued (i) 5,555 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 16,458 shares of common stock, (ii) 4,641 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, (iii) 2,109 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock, and (iv) 1,033 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock.

All of such options had an exercise price of $ 0.26 per share and such share issuances were based upon a VWAP of $ 0.3925 per share as determined under the terms of the options.

On October 30, 2023, the Company issued 1,450 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock at any exercise price of $ 0.20 per share based upon a VWAP of $ 0.3799 per share as determined under the term of the options.

On October 31, 2023, the Company issued (i) 8,346 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 16,458 shares of common stock, (ii) 6,973 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, and (iii) 3,169 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock.

All of such options had an exercise price of $ 0.20 per share and such share issuances were based upon a VWAP of $ 0.4058 per share as determined under the terms of the options.

On November 29, 2023, the Company issued 2,001 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock at an exercise price of $ 0.33 per share based upon a VWAP of $ 0.9527 per share as determined under the term of the options.

On November 30, 2023, the Company issued (i) 9,104 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock at an exercise price of $ 0.33 per share, (ii) 4,138 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock at an exercise price of $ 0.33 per share, and (iii) 9,400 shares of common stock to a former employee upon a cashless exercise of options to purchase a total of 18,750 shares of common stock, with exercises prices of ranging from $ 0.25 to $ 0.33 per share.

All of such share issuances were based upon a VWAP of $ 0.9768 per share as determined under the terms of the options.

On December 11, 2023, the Company issued (i) 10,278 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 13,750 shares of common stock, and (ii) 4,672 shares of common stock to a director upon a cashless exercise of an option to purchase 6,250 shares of common stock.

All of such options had an exercise price of 0.25 per share and such share issuances were based upon a VWAP of $ 0.9902 per share as determined under the terms of the options.

On December 13, 2023, the Company issued 2,204 shares of common stock to an employee upon a cashless exercise of an option to purchase 3,062 shares of common stock at an exercise price of $ 0.25 per share based upon a VWAP of $ 0.8931 per share as determined under the term of the options.

On January 15, 2024, the Company granted nonqualified stock options to certain directors, executive officers and employees to acquire an aggregate of 200,000 shares of the Company’s common stock under the 2017 Plan.

11 unchanged sentences

Such share issuance was based upon a VWAP of $ 4.11 per share as determined under the terms of the option.

On January 2, 2025, and pursuant to an investor relations consulting agreement effective as of January 1, 2025 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Plan to such third party to acquire 50,000 shares of the Company’s common stock at an exercise price of $ 2.55 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.

Twenty-five percent of the option shall vest and become exercisable three months following the grant date and twenty-five percent shall vest every three months thereafter such that the option shall be fully vested one year following the grant date.

The option will expire three years after the grant date.

Based on a Black-Scholes valuation model, these options were valued at $ 77,926 , in accordance with FASB ASC Topic 718.

The fair value of the shares was being amortized to selling, general and administrative expenses within the Company’s consolidated statements of operations over twelve months and the Company recorded $77,499 of expenses during the year ended December 31, 2025.

The valuation assumptions included an expected duration of 3 years, volatility of 87 %, discount rate of 4.29 % and dividends of $ 0 .

On January 9, 2025, the Company granted a nonqualified stock option under the 2017 Plan to a new director, who was elected to the Board on December 30, 2024, to acquire 20,000 shares of the Company’s common stock at an exercise price of $ 2.80 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.

The option is fully vested and exercisable as of the grant date and will expire five years thereafter.

Based on a Black-Scholes valuation model, these options were valued at $ 40,071 , in accordance with FASB ASC Topic 718, which was expensed on the issuance date in selling, general and administrative expenses within the Company’s consolidated statements of operations.

The valuation assumptions included an expected duration of 5 years, volatility of 92 %, discount rate of 4.46 % and dividends of $ 0 .

On June 20, 2025, the Company issued (i) 63,796 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 100,000 shares of common stock at an exercise price of $ 0.95 per share, and (ii) 63,796 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 100,000 shares of common stock at an exercise price of $ 0.95 per share.

Such share issuances were based upon a VWAP of $ 2.624 per share as determined under the terms of the options.

On December 11, 2025, the Company issued 21,888 shares of common stock to the Company’s Senior Vice President and Chief Technology Officer upon a cashless exercise of an option to purchase 60,000 shares of common stock covered by an option to purchase a total of 100,000 shares of common stock at a then-existing exercise price of $ 2.90 per share.

Such share issuance was based on a VWAP of $ 4.5655 per share as determined under the terms of the option.

On December 12, 2025, the Company issued (i) 37,915 shares of common stock to the Company’s Chief Executive Officer upon a cashless exercise of an option to purchase 100,000 shares of common stock at a then-existing exercise price of $ 2.90 per share, (ii) 18,958 shares of common stock to a director upon a cashless exercise of an option to purchase 50,000 shares of common stock at a then-existing exercise price of $ 2.90 per share, and (iii) 3,792 shares of common stock to an employee upon a cashless exercise of an option to purchase 10,000 shares of common stock at a then-existing exercise price of $2.90 per share.

Such share issuances were based upon a VWAP of $ 4.6710 per share as determined under the terms of the options.

A summary of stock option activity is presented below:

December 31, 2023

( 5,155,719 )

( 3,581,781 )

January 1, 2025

December 31, 2025

2 unchanged sentences

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of $ 3.75 as of December 31, 2025 (the last trading day of the month of December 2025), which would have been received by the option holders had all option holders exercised their options as of that date.

Stock options exercised during the year ended December 31, 2024 include none that were exercised for cash and 3,581,781 which were a cashless exercise.

Stock options exercised during the years ended December 31, 2025 and 2024 include none that were exercised for cash and 420,000 and 716,356 which were a cashless exercise, respectively.

Restricted Share Units

5 unchanged sentences

The shares become fully vested on January 15, 2025.

The expense for the year ended December 31, 2024 was $ 41,832 .

The expense for the years ended December 31, 2025 and 2024 was $ 1,668 and $ 41,832 , respectively.

On January 15, 2025, the Company issued 10,000 shares of common stock to a director due to the vesting on such date of 10,000 RSUs which had previously been granted on January 15, 2024 pursuant to the 2017 Plan and had a one-year vesting period.

At December 31, 2025, the Company had no outstanding RSUs.

Note 12 - Warrants

8 unchanged sentences

On August 22, 2024, the Company issued 5,000 shares of common stock to a certain warrant holder upon a cash exercise of a warrant to purchase 5,000 shares of common stock at an exercise price of $ 3.50 per share or $ 17,500 in the aggregate.

The following is a summary of the Company’s warrant activity:

December 31, 2023

( 1,275,000 )

December 31, 2024

The following is a summary of the Company’s warrant activity for 2024:

January 1, 2024

December 31, 2024 and 2025

Warrants exercisable at:

December 31, 2024

The following table summarizes information about common stock warrants outstanding at December 31, 2024:

December 31, 2024 and 2025

The following table summarizes information about common stock warrants outstanding at December 31, 2025 and 2024:

Outstanding and Exercisable

Exercise Price

Number Outstanding

Weighted Average

Remaining Contractual

Weighted Average

Exercise Price

Number Outstanding

Weighted Average Exercise Price

Note 13 – Taxes

Below is breakdown of the income tax provisions for the years ended December 31:

State and local

Income tax provision

ASU 2023-09 requires disaggregation of pretax income (loss), income tax expense (benefit), and income taxes paid by jurisdiction.

The Company has no foreign operations;

accordingly, all pretax income (loss) is domestic (United States).

The following table shows the components of loss before income taxes and the related current tax expense / (benefit):

Loss before income taxes

$ ( 2,955,957 )

$ ( 11,091,267 )

Current income tax expense / (benefit)

Total current income tax expense / (benefit)

$ ( 289,156 )

Income taxes paid (net of refunds received) related to continuing operations are presented on a cash basis and reconcile to cash paid for income taxes in the consolidated statement of cash flows.

Income taxes paid (net of refunds received) were as follows:

state and local:

Total income taxes paid (net of refunds received)

The expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense (benefit) as follows:

federal statutory rate

Deferred tax asset adjustments

Non-deductible amortization of debt discount

Other non-deductible items

Non-taxable change in profit share liability

Change in valuation allowance

Income tax provision

Pretax (Loss)

( 2,955,957 )

( 11,091,267 )

federal statutory income tax

( 2,329,166 )

State and local income taxes, net of federal benefit (a)

Foreign tax effects

Effect of changes in tax laws or rates

Change in U.S.

federal valuation allowance

Nontaxable or nondeductible items:

Change in profit share liability

Meals and entertainment

Penalties and fines

Nondeductible officers’ compensation

Discount on note payable

Changes in unrecognized tax benefits

Other adjustments:

Deferred tax adjustments

Income tax expense / (benefit)

(a) Taxes in Texas, Illinois, Arkansas, and Louisiana make up the majority of the effect of the state and local tax category.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

3 unchanged sentences

Stock based compensation

Intangible assets

Total deferred tax assets

7 unchanged sentences

federal net operating loss carryovers (“NOLs”) of approximately $ 19,747,000 available to offset taxable net income in a given year of which $ 3,209,000 expires from 2035 through 2037 and $ 16,538,000 does not expire.

The Company also has state NOL carryforwards of approximately $ 2,306,000 which start to expire in 2025 .

The Company also has state NOL carryforwards of approximately $ 7,241,000 which begin to expire in 2026 .

If not used, these NOLs may be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations.

3 unchanged sentences

After consideration of all the information available, Management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance.

For the years ended December 31, 2024 and 2023, the valuation allowance (decreased) by ($ 33,000 ) and $( 3,973,000 ), respectively.

For the year ended December 31, 2025, the valuation allowance increased by $ 716,714 , related to the U.S.

federal and state jurisdictions in the amounts of $ 499,340 and $ 217,374 , respectively.

For the year ended December 31, 2024, the valuation allowance (decreased) by $( 33,000 ), related to the U.S.

federal and state jurisdictions in the amounts of $( 10,473 ) and $( 22,572 ), respectively.

The Company files income tax returns in the U.S.

federal and various state jurisdictions.

federal and certain state income tax purposes, the Company's 2021 through 2025 tax years remain open for examination by the tax authorities under the normal statute of limitations.

The Company evaluated the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

10 unchanged sentences

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer (the “CEO”).

The Company is a provider of specialty activated carbon technologies and, at December 31, 2024, had one operating segment, which entails the providing of patented sorbent technologies for mercury emissions capture for the coal-fired utility sector in the United States.

The Company is a provider of specialty activated carbon technologies and, at December 31, 2025 and 2024, had one operating segment, which entails the provision of specialty activated carbon technologies for air and water purification in the United States.

There are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level.

19 unchanged sentences

Consulting fees

( 1,362,900 )

Professional fees

6 unchanged sentences

( 3,959,065 )

( 11,209,677 )

Interest expense

( 1,362,401 )

Impairment loss

Income tax benefit (expense)

Income from legal claims

Tax benefit (expense)

Research & development

Bad debt expense

Interest income

1 unchanged sentence

( 3,026,007 )

( 10,802,111 )

Reconciliation of profit or loss

2 unchanged sentences

$ ( 3,026,007 )

$ ( 10,802,111 )

The segment assets are not reviewed by the CODM at a different asset level or category and is reviewed at the consolidated level.

Note 15 - Subsequent Events

On January 2, 2025, and pursuant to an investor relations consulting agreement effective as of January 1, 2025 with a nonaffiliated third party, the Company granted a nonqualified stock option under the 2017 Plan to such third party to acquire 250,000 shares of the Company’s common stock at an exercise price of $ 0.51 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.

The option will expire three years after the grant date.

Effective as of January 7, 2025, the Company entered into agreement with another one of the utilities named as a defendant in the Arizona Action (see “Note 10 – Commitments and Contingencies”).

Such agreement provides such party and its affiliates with a non-exclusive license to certain Company patents related to the Company’s two-part Sorbent Enhancement Additive (SEA®) process for use in connection with a certain designated coal-fired power plant operated by such utility.

The agreement includes a one-time license fee which has been received by the Company, and provides the Company with the right to be included in such party’s bidding process for certain product supply for mercury emissions capture at such party’s designated power plant.

On January 9, 2025, the Company granted a nonqualified stock option under the 2017 Plan to a new director, who was elected to the Board on December 30, 2024, to acquire 100,000 shares of the Company’s common stock at an exercise price of $ 0.56 per share, representing the fair market value of the common stock on the date of grant as determined under the 2017 Plan.

The option is fully vested and exercisable as of the grant date and will expire five years thereafter.

On January 15, 2025, the Company issued 50,000 shares of common stock to a director due to the vesting on such date of 50,000 restricted share units (“RSUs”) which had previously been granted on January 15, 2024 pursuant to the 2017 Plan and had a one-year vesting period.

In January 2025, the Company commenced another patent infringement lawsuit against four defendants in the U.S.

District Court for the Western District of Missouri.

Such lawsuit claims infringement of the Company’s patent rights related to the Company’s mercury emissions reduction technologies.

Named as defendants in the action are Evergy, Inc., Evergy Metro Inc., Evergy Missouri West, Inc.

and Evergy Kansas Central, Inc.

In the lawsuit, the Company requests a trial by jury against the defendants and seek damages, costs, and legal expenses, along with a finding of willful infringement by the defendants, and an injunction prohibiting the defendants from further acts of infringement.

In February 2025, such lawsuit was consolidated with and transferred to the Southern District of Iowa pursuant to the Transfer Order (see “Note 10 – Commitments and Contingencies”).

In January and February 2025, certain of the defendants in the patent infringement lawsuits which have been consolidated and centralized in the Southern District of Iowa filed petitions for Inter Partes Review with the United States Patent and Trademark Office, seeking to invalidate certain claims to the patents which are subject to the litigation.

On March 19, 2025, the Company announced that its Board of Directors authorized a share repurchase program under which the Company may purchase up to $ 5.0 million of its common stock.

Purchases under the share repurchase program may be made from time to time, in such amounts as management deems appropriate, through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, purchases through 10b5-1 trading plans, or by any combination of such methods.

The Company anticipates that any repurchases will not occur before the second half of 2025.

Note 16 – Restatement of Quarterly Financial Information (Unaudited)

As described in Note 2—Restatement of Previously Issued Financial Statements, for the period ended December 31, 2024, management identified an error in the previously reported financial statements related to the recognition of revenue during the year ended December 31, 2022.

The Company entered into a license agreement for which it should have recognized the entire proceeds receivable pursuant to the agreement as revenue during the year ended December 31, 2022.

The Company should also have recognized the financing component of the licensing agreement during the fiscal years ended December 31, 2023 and 2024.

The following tables present the effect of the restatement on the Company's previously reported:

unaudited condensed consolidated balance sheets as of March 31, 2023, June 30, 2023, and September 30, 2023;

unaudited condensed consolidated balance sheets as of March 31, 2024, June 30, 2024, and September 30, 2024;

unaudited condensed consolidated statements of operations for the three months ended March 31, 2023, the three months and six months ended June 30, 2023, and the three months and nine months ended September 30, 2023;

unaudited condensed consolidated statements of operations for the three months ended March 31, 2024, the three months and six months ended June 30, 2024, and the three months and nine months ended September 30, 2024;

unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2023, the six months ended June 30, 2023, and the nine months ended September 30, 2023;

unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2024, the six months ended June 30, 2024, and the nine months ended September 30, 2024.

The values as previously reported were derived from the previously filed Quarterly Reports on Form 10-Q for the periods ended March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024, and September 30, 2024.

These restatements do not result in a reclassification between cash flows from operating activities, cash flows from investing activities, or cash flows from financing activities in the unaudited condensed consolidated statements of cash flows for the periods presented.

The restatements only impact net loss in the unaudited condensed consolidated statements of changes in stockholders’ equity (deficit) in the periods presented.

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of March 31, 2023:

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2023

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 70,145,373 )

( 69,356,965 )

Total stockholders’ equity (deficit)

( 8,504,314 )

( 7,715,906 )

Total liabilities and stockholders’ equity (deficit)

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Operations for the three months ended March 31, 2023:

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2023

As previously reported

$ ( 315,000 )

Interest income

Total costs and expenses

Loss before provision for income taxes

( 1,427,196 )

( 1,717,738 )

$ ( 1,446,984 )

$ ( 290,542 )

$ ( 1,737,526 )

Net loss per common share - basic and diluted:

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the three months ended March 31, 2023:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2023

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 1,446,984 )

$ ( 290,542 )

$ ( 1,737,526 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of June 30, 2023:

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2023

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 70,909,843 )

( 70,103,562 )

Total stockholders’ equity (deficit)

( 9,131,190 )

( 8,324,909 )

Total liabilities and stockholders’ equity (deficit)

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Operations for the three and six months ended June 30, 2023:

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS

ENDED JUNE 30, 2023

FOR THE SIX MONTHS

ENDED JUNE 30, 2023

As previously reported

$ ( 315,000 )

Interest income

Total costs and expenses

Net loss before provision for income taxes

( 2,191,350 )

( 2,464,019 )

$ ( 764,470 )

$ ( 746,597 )

$ ( 2,211,454 )

$ ( 272,669 )

$ ( 2,484,123 )

Net loss per common share - basic and diluted:

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the six months ended June 30, 2023:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2023

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 2,211,454 )

$ ( 272,669 )

$ ( 2,484,123 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of September 30, 2023:

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2023

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 71,737,345 )

( 70,912,786 )

Total stockholders’ equity (deficit)

( 9,856,227 )

( 9,031,668 )

Total liabilities and stockholders’ equity (deficit)

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Operations for the three and nine months ended September 30, 2023:

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS

ENDED SEPTEMBER 30, 2023

FOR THE NINE MONTHS

ENDED SEPTEMBER 30, 2023

As previously reported

$ ( 315,000 )

Interest income

Total costs and expenses

Net loss before provision for income taxes

( 3,038,956 )

( 3,293,347 )

$ ( 827,502 )

$ ( 809,224 )

$ ( 3,038,956 )

$ ( 254,391 )

$ ( 3,293,347 )

Net loss per common share - basic and diluted:

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the nine months ended September 30, 2023:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 3,038,956 )

$ ( 254,391 )

$ ( 3,293,347 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of March 31, 2024:

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2024

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 65,353,367 )

( 64,806,000 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Operations for the three months ended March 31, 2024:

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

As previously reported

$ ( 315,000 )

Operating loss

( 2,083,492 )

( 2,398,492 )

Total other income (expense)

Loss before provision for income taxes

( 2,558,991 )

( 2,854,875 )

$ ( 2,558,991 )

$ ( 295,884 )

( 2,854,875 )

Net loss per common share - basic and diluted:

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the three months ended March 31, 2024:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 2,558,991 )

$ ( 295,884 )

$ ( 2,854,875 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

$ ( 439,220 )

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of June 30, 2024:

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2024

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 71,512,689 )

( 70,952,914 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS

ENDED JUNE 30, 2024

FOR THE SIX MONTHS

ENDED JUNE 30, 2024

As previously reported

$ ( 315,000 )

Operating loss

( 3,573,510 )

( 5,657,002 )

( 5,972,002 )

Interest income

Total other income (expense)

( 2,585,466 )

( 2,573,058 )

( 3,060,965 )

( 3,029,441 )

Net loss before provision for income taxes

( 6,158,976 )

( 6,146,568 )

( 8,717,967 )

( 9,001,443 )

$ ( 6,159,322 )

$ ( 6,146,914 )

$ ( 8,718,313 )

$ ( 283,476 )

$ ( 9,001,789 )

Net loss per common share - basic and diluted:

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Consolidated Statement of Cash Flows for the six months ended June 30, 2024:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 8,718,313 )

$ ( 283,476 )

$ ( 9,001,789 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

$ ( 3,122,619 )

The following table presents the impact of the financial statement adjustments on the Company’s previous reported consolidated Balance Sheet as of September 30, 2024:

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2024

As previously reported

ASSETS AND STOCKHOLDERS’ EQUITY (DEFICIT)

Accounts receivable

Total current assets

Stockholders’ equity (deficit)

Accumulated deficit

( 71,982,925 )

( 71,410,460 )

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS

ENDED SEPTEMBER 30, 2024

FOR THE NINE MONTHS

ENDED SEPTMEER 30, 2024

As previously reported

$ ( 315,000 )

Operating loss

( 1,107,431 )

( 6,764,433 )

( 7,079,433 )

Interest income

Total other income (expense)

( 2,717,973 )

( 2,673,759 )

Net loss before provision for income taxes

( 9,482,406 )

( 9,753,192 )

$ ( 470,236 )

$ ( 457,546 )

$ ( 9,188,549 )

$ ( 270,786 )

$ ( 9,459,335 )

Net loss per common share - basic and diluted:

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

As previously reported

Cash flows from operating activities

Net income (loss)

$ ( 9,188,549 )

$ ( 270,786 )

$ ( 9,459,335 )

Adjustments to reconcile net loss to net cash

Non-cash interest income

Changes in operating assets and liabilities

Accounts receivable

Net cash provided by operating activities

$ ( 3,274,785 )

On February 27, 2026, the Company completed a public offering of 6,250,000 shares of its common stock, at a price of $ 2.40 per share, generating gross proceeds of $ 15,000,000 .

In connection with the offering, the Company granted the underwriters a 30-day option to purchase up to an additional 937,500 shares of common stock at the offering price of $ 2.40 per share (the “Over-Allotment Option”).

On March 17, 2026, the Company sold to the underwriters pursuant to their partial exercise of their Over-Allotment Option an additional 600,000 shares of common stock resulting in additional gross proceeds of $ 1,440,000 .

After giving effect to the partial exercise of the Over-Allotment Option, gross proceeds from the offering were $ 16,440,000 , before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company.

At December 31, 2025, the Company had deferred $ 481,250 of offering costs incurred prior to December 31, 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data