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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 63 added, 87 removed, 76 unchanged (66% of the section changed)

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Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, the risks described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

We design and develop technologies for the purpose of decarbonization and improving key performance characteristics of combustion systems, including emission and operational performance, energy efficiency and overall

cost-effectiveness.

Our ClearSign Core™ technology has been proven in full scale industrial test furnaces and boilers and first customer installations are currently operating in normal commercial applications.

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We have historically financed our operations primarily through issuances of equity securities.

As of June 30, 2025, we have raised approximately $105.3 million in gross proceeds through the sale of our equity securities.

As of September 30, 2025, we have raised approximately $105.3 million in gross proceeds through the sale of our equity securities.

We may need to raise additional capital in the future, however, the significant volatility in the capital markets may negatively affect our ability to raise this additional capital.

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Although we undertake development and commercialization efforts with reasonable diligence, there can be no assurance that the net proceeds from our securities offerings will be sufficient to enable us to develop our technology to the extent needed to create sufficient future sales to sustain operations.

If the net proceeds from these offerings are insufficient for this purpose, we will consider other options to continue our path to commercialization, including, but not limited to, additional financing through follow-on equity offerings, debt financing, co-development agreements, sale or licensing of developed intellectual or other property, or other alternatives.

If the net proceeds from these offerings are insufficient for this purpose, we will consider other options to continue our path to commercialization,

including, but not limited to, additional financing through follow-on equity offerings, debt financing, co-development agreements, sale or licensing of developed intellectual or other property, or other alternatives.

We cannot assure that our technologies will be accepted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable.

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Recent Developments

Special Committee of the Board of Directors

On February 10, 2025, the Company’s board of directors (the “Board”) formed a special committee of all of its then serving independent directors (the “Special Committee”) to review and analyze purported director nominations by

certain of our stockholders, and non-stockholders, in connection with the Company’s 2025 annual meeting of stockholders (the “2025 Annual Meeting”), and to manage communications and to negotiate and agree settlements with such purported nominating individuals.

The Special Committee entered into that certain Cooperation Agreement, dated May 22, 2025, between us and Anthony DiGiandomenico (the “DiGiandomenico Cooperation Agreement”), and that certain Cooperation Agreement, dated May 22, 2025, between us and Richard Clarkson (the “Clarkson Cooperation Agreement,” and together with the DiGiandomenico Cooperation Agreement, the “Cooperation Agreements”), which agreements required, among other things, the appointment of Mr.

Special Committee and Cooperation Agreements

On February 10, 2025, the Company’s board of directors (the “Board”) formed a special committee of all of its then-serving independent directors (the “Special Committee”) to review and analyze purported director nominations by certain of our stockholders, and non-stockholders, in connection with the Company’s 2025 annual meeting of stockholders (the “2025 Annual Meeting”), and to manage communications and to negotiate and agree settlements with such purported nominating individuals.

As a result of such review and analysis, the Special Committee entered into that certain Cooperation Agreement, dated May 22, 2025 (the “DiGiandomenico Cooperation Agreement”), between us and Anthony DiGiandomenico (collectively with his affiliates and associates, the “DiGiandomenico Parties”), and that certain Cooperation Agreement, dated May 22, 2025 (the “Clarkson Cooperation Agreement,” and together with the DiGiandomenico Cooperation Agreement, the “Cooperation Agreements”), between us and Richard Clarkson (collectively with his affiliates and associates, the “Clarkson Parties”), which agreements required, among other things, the appointment of Mr.

DiGiandomenico and Louis J.

Basenese to the Board.

Accordingly, the Board increased its size from five to seven directors, appointed Messrs.

DiGiandomenico and Basenese to the Board, and nominated each such director as a candidate for election to the Board at the 2025 Annual Meeting.

Following the 2025 Annual Meeting, the Special Committee was dissolved.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard

On April 1, 2025, we received a letter (the “Notice”) from Nasdaq’s Listing Qualifications Staff (the “Staff”) indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days beginning on February 18, 2025, and ending on March 31, 2025, we no longer meet the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until September 29, 2025, in which to regain compliance.

In order to regain compliance with the minimum bid price requirement, the closing bid price of our common stock must be at least $1 per share for a minimum of ten consecutive business days during this 180 day period.

In the event that we do not regain compliance within this 180 day period, we may be eligible to seek an additional compliance period of 180 calendar days if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, with the exception of the bid price requirement, and provides written notice to Nasdaq of its intent to cure the deficiency during this second compliance period, by effecting a reverse stock split, if necessary.

However, if it appears to the Staff that we will not be able to cure the deficiency, or if we are not otherwise eligible, Nasdaq will provide notice to us that our common stock will be subject to delisting.

The Notice does not result in the immediate delisting of our common stock from Nasdaq.

We intend to monitor the closing bid price of our common stock and consider its available options in the event that the closing bid price of our common stock remains below $1 per share.

Stockholder Cooperation Agreements

On May 22, 2025, we entered into the Clarkson Cooperation Agreement with Mr.

Clarkson (collectively with his affiliates and associates, the “Clarkson Parties”) and the DiGiandomenico Cooperation Agreement with Mr.

DiGiandomenico (collectively with his affiliates and associates, the “DiGiandomenico Parties”).

Pursuant to the Cooperation Agreements, the Clarkson Parties, in connection with the Clarkson Cooperation Agreement, and the DiGiandomenico Parties, in connection with the DiGiandomenico Cooperation Agreement, each, among other things, (a) acknowledged the irrevocable withdrawal of letters they previously delivered to the Company purporting to notify the Company of intent to nominate a director for election to the Board at the 2025 Annual Meeting, and (b) agreed to irrevocably withdraw all outstanding materials and purported notices submitted to the Company, and cease all solicitation efforts and other activities, in connection with or related thereto.

Pursuant to the Cooperation Agreements, the Board increased its size from five to seven directors, appointed Messrs.

Basenese and DiGiandomenico (each, a “New Director” and together, the “New Directors”) to the Board, and nominated each New Director as a candidate for election to the Board at the 2025 Annual Meeting.

From the Effective Date until the earlier of (x) the date immediately following the conclusion of the Company’s 2026 annual meeting of stockholders and (y) the occurrence of a Change of Control transaction (as defined in the Cooperation Agreements) (together, such term lengths of the Cooperation Agreements, the “Term”), the Clarkson Parties and the DiGiandomenico Parties have agreed to vote all Voting Securities (as defined in the Cooperation Agreements) beneficially owned by them at all meetings of the Company’s stockholders, or to execute a consent with respect to such

Voting Securities, in accordance with the Board’s recommendations on all proposals submitted to stockholders, except that the Clarkson Parties and the DiGiandomenico Parties may vote in their discretion on any proposal of the Company in respect of any Extraordinary Transaction (as defined in the Cooperation Agreements).

The Clarkson Parties and the DiGiandomenico Parties have also agreed to certain customary standstill provisions during the Term, prohibiting them from, among other things, (i) soliciting proxies, (ii) communicating with stockholders of the Company pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act, (iii) taking public actions to change or influence the Board, management or the direction of certain Company matters, and (iv) acquiring an aggregate beneficial ownership of more than 3.5% of the outstanding shares of the Company’s common stock or Voting Securities.

During the Term, the Company and the Clarkson Parties and the DiGiandomenico Parties, as applicable, have agreed that they will not disparage each other and that they will not threaten, initiate, encourage or pursue, alone or in concert with others, or knowingly assist any other person to threaten, initiate, encourage or pursue, any lawsuit, claim, or proceeding with respect to any claims against the Company or a Clarkson Party or DiGiandomenico Party, as applicable, except for any legal proceeding initiated solely to remedy a breach of or to enforce the Cooperation Agreements.

The Clarkson Parties and the DiGiandomenico Parties have also granted the Company a general release from any claims arising on or prior to the date of the applicable Cooperation Agreement, subject to limited exceptions.

Termination of At The Market Agreement with Virtu

Effective as of July 12, 2025, we terminated its At-the-Market Sales Agreement (the “Virtu ATM Agreement”), dated as of December 23, 2020, that we entered into with Virtu Americas LLC (“Virtu”).

Pursuant to the Virtu ATM Agreement, we could offer and sell, from time to time, through or to Virtu, shares of our common stock having an aggregate offering price of up to $8,700,000.

At The Market Agreement with H.C.

On July 17, 2025, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC (“ Wainwright ”).

On July 17, 2025, we entered into an ATM Offering Agreement (the “ATM Agreement”) with Wainwright.

In accordance with the terms of the ATM Agreement, we may offer and sell from time to time through Wainwright, acting as sales agent, shares of our common stock having an aggregate offering price of up to $10,390,000 (the “Placement Shares”).

The Placement Shares will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No.

333-288736) filed with the Securities and Exchange Commission on July 17, 2025 (the “Registration Statement”) and the prospectus relating to the offer and sale of the Placement Shares that forms a part of the Registration Statement, which was declared effective on July 28, 2025.

The Placement Shares will be issued pursuant to our “shelf” registration statement on Form S-3 (File No.

333-288736) filed with the SEC on July 17, 2025 (the “Registration Statement”) and the prospectus relating to the offer and sale of the Placement Shares that forms a part of the Registration Statement, which was declared effective on July 28, 2025.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard

On August 8, 2025, we received a notice (the “Second Notice”) from Nasdaq’s Listing Qualifications Department stating that we are not in compliance with the board of directors independence requirement set forth in Nasdaq Listing Rule 5605(b)(1) and the audit committee composition requirement set forth in Nasdaq Listing Rule 5605(c)(2)(A) (collectively, the “Nasdaq Composition Requirements”) due to the resignations of Catharine M.

de Lacy and Judith S.

Schrecker from the Board on August 4, 2026.

Specifically, when the Second Notice was issued, the Board did not have a majority of directors that would be considered “independent directors,” as that term is defined in Nasdaq Listing Rule 5605(a)(2), and the Audit and Risk Committee of the Board (the “Audit Committee”) consisted of only two independent directors, rather than the minimum three independent directors as required by Nasdaq Listing Rule 5605(c)(2)(A).

We intend to regain compliance with the Nasdaq Composition Requirements by appointing a new director to the Board and Audit Committee who meets the independence requirements under Nasdaq rules and Rule 10A-3(b)(1) under the Exchange Act.

Consistent with Nasdaq Listing Rules 5605(b)(1)(A) and 5605(c)(4), Nasdaq has provided us a cure period in order to regain compliance with the Nasdaq Composition Requirements (i) until the earlier of our next annual

meeting of stockholders or one year from the resignation of Mss.

de Lacy and Schrecker, or August 4, 2026, or (ii) if our next annual meeting of stockholders is held before February 2, 2026, then no later than February 2, 2026.

The Second Notice has no immediate effect on the listing of our common stock on Nasdaq.

On September 30, 2025, we received a second letter from Nasdaq granting our request for a 180-day extension to regain compliance with the Bid Price Rule.

We now have until March 30, 2026, to meet the requirement.

As part of our request for the 180-day extension, we notified Nasdaq that we intend to regain compliance with the Bid Price Rule by effecting a reverse stock split, if necessary.

If at any time prior to March 30, 2026, the bid price of our common stock closes at $1 per share or more for a minimum of 10 consecutive business days, we will regain compliance with the Bid Price Rule.

If the Company does not regain compliance with the Bid Price Rule during the additional 180-day extension, Nasdaq will provide written notification to us that our common stock will be delisted.

At that time, we may appeal the relevant delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules.

However, there can be no assurance that, if we appeal the delisting determination by Nasdaq to the hearings panel, that such appeal would be successful.

We will continue to monitor the closing bid price of our common stock and evaluate its available options to regain compliance with the Bid Price Rule.

Nasdaq’s extension notice has no immediate effect on the listing or trading of our common stock, which continues to trade on Nasdaq under the ticker symbol “CLIR.”

Critical Accounting Policies

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Highlights of our quarter financial performance are as follows:

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(in thousands, except per share data)

September 30,

Cost of goods sold

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Basic and diluted net loss per common share

NM = Not meaningful

For the Six Months Ended

For the Nine Months Ended

(in thousands, except per share data)

September 30,

Cost of goods sold

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Revenues and Gross Profit

Consolidated revenues for the three months ended June 30, 2025 were $133 thousand compared to $45 thousand for the same period in 2024, and were predominantly generated by delivering spare parts orders to multiple customers and a boiler burner order to a repeat customer.

Revenues for the three months ended June 30, 2024 were predominantly related to engineering services provided to customers as part of our contractual performance obligations.

Consolidated revenues for the six months ended June 30, 2025 were $534 thousand compared to $1,147 thousand for the same period in 2024, and were predominantly generated by delivering spare parts orders to multiple customers, delivering a boiler burner to a repeat customer, and successfully completing multiple CFD analyses.

Revenues for the six months ended June 30, 2024 were predominantly generated from our process burner line.

Specifically, we shipped multiple process burners, executed consulting services, and delivered spare parts related to

orders from our California refinery customer.

For a different customer, an engineering study and CFD analysis was successfully accepted by the customer, which analysis satisfied a contractual performance obligation for this customer.

Gross profit increased by $13 thousand, or 31.0%, and decreased by $228 thousand, or 47.6%, for the three and six months ended June 30, 2025, respectively, as compared to the same time periods in 2024.

The favorable increase in gross profit for the three months ended June 30, 2025 was predominantly due to higher revenues during the three months ended June 30, 2025.

This increase was partially offset by a $69 thousand decrease in profit margin, which was predominantly due to the lower profit margin of delivering spare parts in the three months ended June 30, 2025, compared to the profit margin of engineering services that we provided in the same period in 2024.

During the six months ended June 30, 2025, our unfavorable decrease in gross profit was predominantly due to lower revenues.

Consolidated revenues for the three months ended September 30, 2025 were $1,029 thousand compared to $1,859 thousand for the same period in 2024, which were predominantly generated by delivering spare parts to multiple customers, delivering a flare order, delivering a mid-stream order, completing a customer witness test, finalizing a CFD analysis, and providing engineering services.

Revenues for the three months ended September 30, 2024 were predominantly generated by shipping multiple burners to a California refinery customer.

Consolidated revenues for the nine months ended September 30, 2025 were $1,563 thousand compared to $3,006 thousand for the same period in 2024, which were predominantly generated by delivering spare parts orders to multiple customers, delivering a flare order, delivering mid-stream orders, and completing engineering services and a CFD analysis.

Revenues for the nine months ended September 30, 2024 were predominantly generated from by delivering multiple burners, performing engineering feasibility studies, and delivering multiple spare parts orders.

Gross profit decreased by $183 thousand, or 33.2%, and by $411 thousand, or 39.9%, for the three and nine months ended September 30, 2025, respectively, compared to the same time periods in 2024.

The unfavorable decrease in gross profit for the three months ended September 30, 2025 was predominantly due to lower revenues during the three months ended September 30, 2025.

This decrease was partially offset by a $63 thousand increase in profit margin, which was predominantly due to the higher profit margin related to our spare parts orders during three months ended September 30, 2025 compared to the profit margin for the products and services that generated revenues during the same period in 2024.

The unfavorable decrease in gross profit for the nine months ended September 30, 2025 was predominantly due to lower revenues during the nine months ended September 30, 2025.

This decrease was partially offset by a $83 thousand increase in profit margin, which was predominantly due to the higher profit margin related to our spare parts orders during nine months ended September 30, 2025 compared to the profit margin for the products and services that generated revenues during the same period in 2024.

Operating Expenses

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Research and Development

R&D expenses decreased $155 thousand, or 38.6%, and increased $11 thousand, or 1.6%, for the three and six months ended June 30, 2025, respectively, as compared to the same time periods in 2024.

The favorable decrease in R&D expenses during the three months ended June 30, 2025 was predominantly driven by a year-over-year decrease in product development costs of $168 thousand related to our process burner product line.

R&D expenses during the six months ended June 30, 2025 remained relatively consistent year-over-year.

R&D expenses remained relatively consistent year-over-year for both the three and nine months ended September 30, 2025 respectively, compared to the same time periods in 2024.

General and Administrative

G&A expenses decreased $131 thousand, or 7.4%, for the three months ended June 30, 2025, as compared to the same time period in 2024.

We experienced year-over-year savings of $260 thousand related to the vesting of restricted stock units triggered by the departure of a member of our Board during the three months ended June 30, 2024, which did not occur during the same period in 2025.

Our labor and overhead expenses also decreased by $105 thousand during the three months ended June 30, 2025 compared to the same period in 2024, primarily due to certain contract work we performed to one of our U.S.

Gulf Coast refinery customers during the three months ended June 30, 2025.

These labor and overhead costs were capitalized onto the unaudited condensed consolidated balance sheet within our “Contract Assets” account and will be released to “Cost of Goods Sold” when we recognize revenue for this customer order.

Decreases in G&A expenses for the three months ended June 30, 2025 were partially offset by an increase in expenses related to an accrual for legal fees of $300 thousand pertaining to work performed for the Special Committee (see “Recent Developments – Special Committee of the Board of Directors” above for additional information), and an accrual of $22 thousand for the reimbursement of certain legal fees incurred by the Clarkson Parties and DiGiandomenico Parties (each as defined above) in connection with the Cooperation Agreements (as defined above) they entered into with us (see “Recent Developments – Stockholder Cooperation Agreements” above for additional information).

G&A expenses for the six months ended June 30, 2025, increased by $467 thousand, or 14.7%, compared to the same period in 2024.

This unfavorable increase in G&A expenses was primarily due to an increase of $903 thousand in legal fees, including (i) $131 thousand in legal fees pertaining to work performed in connection with a regulatory inquiry by the SEC into the trading of our securities in 2020;

(ii) an accrual of $750 thousand in legal fees pertaining to work performed for the Special Committee (see “Recent Developments – Special Committee of the Board of Directors” above for additional information);

and (iii) an accrual of $22 thousand for the reimbursement of certain legal fees incurred by the Clarkson Parties and DiGiandomenico Parties in connection with the Cooperation Agreements they entered into with us (see “Recent Developments – Stockholder Cooperation Agreements” above for additional information).

Increases in G&A expenses for the six months ended June 30, 2025 were partially offset by decreases of $260 thousand related to the vesting of restricted stock units that did not occur compared to the same period in 2024 and $105 thousand for labor and overhead expenses as described in the above paragraph.

G&A expenses increased $153 thousand, or 9.3%, for the three months ended September 30, 2025, compared to the same time period in 2024.

We experienced an increase of approximately $729 thousand in non-cash expenses for the vesting of RSUs in connection with the departure of three directors from the Board.

Legal and audit expenses also increased by approximately $205 thousand related to services provided for the filing of our “shelf” registration statement on Form S-3 and ATM Agreement with Wainwright.

Increases in G&A expenses were partially offset by a year-over-year savings of $394 thousand as a result of a decrease in costs accrued related to the suspension of our China activities that occurred during the three months ended September 30, 2024, which did not occur during the same period in 2025.

We also decreased our Special Committee legal cost accrual by $315 thousand after negotiating discounts with law firms engaged by the Special Committee (see “Recent Developments – Special Committee and Cooperation Agreements” above for additional information).

G&A expense increases were further partially offset by year-over-year labor and overhead cost decreases of $127 thousand related to customer contract work performed during the three months ended September 30, 2025.

G&A expenses for the nine months ended September 30, 2025 increased by $620 thousand, or 12.8%, compared to the same period in 2024.

This unfavorable increase in G&A expenses was primarily due to an increase of approximately $588 thousand in legal fees, including (i) approximately $131 thousand in legal fees pertaining to work performed in connection with a regulatory inquiry by the SEC into the trading of our securities in 2020;

(ii) an accrual of approximately $435 thousand in legal fees pertaining to work performed for the Special Committee;

and (iii) an accrual of $22 thousand for the reimbursement of certain legal fees incurred by the Clarkson Parties and DiGiandomenico Parties in connection with the Cooperation Agreements they entered into with us (see “Recent Developments – Special Committee and Cooperation Agreements” above for additional information).

We also incurred an increase in legal and audit costs of approximately $205 thousand related to services provided for the preparation and filing of our “shelf” registration statement on Form S-3 and work performed in connection with our ATM Agreement with Wainwright.

In addition, non-cash expenses increased approximately $469 thousand year-over-year related to the vesting of RSUs in connection with the departure of three directors from the Board.

Increases in G&A expenses for the nine months ended September 30, 2025 were partially offset by an expense decrease of approximately $394 thousand related to our China exit cost accrual that occurred during the three months ended September 30, 2024, which did not occur during the same

period in 2025.

G&A expense increases were further partially offset by year-over-year labor and overhead cost decreases of $232 thousand related to customer contract work performed during the nine months ended September 30, 2025.

Other Income, Net

Other income, net decreased by $107 thousand, or 40.4%, for the three months ending June 30, 2025, as compared to the same period in 2024.

The unfavorable decrease is primarily due to $125 thousand decrease in government assistance from our Department of Energy hydrogen burner development grant.

The decrease in grant funding is primarily the result of the timing related to scheduling the burner test facility, which caused a delay in our development activities.

The decrease in other income, net for the three months ended June 30, 2025 was partially offset by an increase of $38 thousand in interest income driven by our year-over-year cash position.

Other income, net for the six months ended June 30, 2025 was relatively unchanged compared to the same time period in 2024.

Other income, net remained relatively consistent year-over-year for both the three and nine months ended September 30, 2025 respectively, compared to the same time periods in 2024.

Liquidity and Capital Resources

At June 30, 2025, our cash and cash equivalents balance totaled $12,339 thousand compared to $14,035 thousand at December 31, 2024, a decrease of $1,696 thousand.

At September 30, 2025, our cash and cash equivalents balance totaled $10,488 thousand compared to $14,035 thousand at December 31, 2024, a decrease of $3,547 thousand.

The decrease in cash and cash equivalent balance is primarily attributable to our net loss of $5,185 thousand which was partially offset by our non-cash expenses of $1,135 thousand and an increase in contract liabilities of $1,075 thousand.

At June 30, 2025, our current assets were in excess of current liabilities resulting in working capital of $9,480 thousand as compared to $12,809 thousand at December 31, 2024.

At September 30, 2025, our current assets were in excess of current liabilities resulting in working capital of $8,168 thousand compared to $12,809 thousand at December 31, 2024.

We believe we have sufficient cash and expected cash collections to fund current operating expenses for over twelve months.

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Until the growth of revenue increases to a level that covers our operating expenses, we intend to continue to fund operations in this manner, although the volatility in the capital markets may negatively affect our ability to do so.

As of June 30, 2025, approximately 21.3 million shares of our common stock are issuable upon exercise of our outstanding warrants, which number excludes the shares of common stock issuable upon exercise of our outstanding pre-funded warrants, and we may receive up to $22.5 million in aggregate gross proceeds from the cash exercises thereof, subject to certain beneficial ownership limitations set forth therein.

As of September 30, 2025, approximately 21.3 million shares of our common stock are issuable upon exercise of our outstanding warrants, which number excludes the shares of common stock issuable upon exercise of our outstanding pre-funded warrants, and we may receive up to $22.5 million in aggregate gross proceeds from the cash exercises thereof, subject to certain beneficial ownership limitations set forth therein.

These warrants require the warrant holder to tender cash upon exercise, with the exception of the warrants issued to Public Ventures LLC as compensation for their services in connection with our public offering and concurrent private placement in April 2024, which allow the holder to exercise cashless if they so desire.

These equity financial instruments may from time-to-time fund future cash needs, but the volatility of our common stock price and the risk tolerance of warrant holders will determine the extent in which we will be able to raise funds in this manner.

Operating activities for the six months ended June 30, 2025, resulted in cash outflows of $1,622 thousand, primarily due to the net loss of $3,756 thousand partially offset by non-cash expenses of $245 thousand and an increase in contract liabilities of $1,603 thousand during such period.

The change in contract liabilities during the six months ended June 30, 2025, was impacted by customer collections for orders we have yet to complete

Operating activities for the six months ended June 30, 2024, resulted in cash outflows of $2,525 thousand, primarily due to the net loss for the period of $2,980 thousand, offset with non-cash expense of $519 thousand.

Investing activities for the six months ended June 30, 2025, resulted in cash outflows of $57 thousand, which is primarily attributable to disbursements for patents and other intangible assets.

Investing activities for the six months ended June 30, 2024, resulted in cash outflows of $117 thousand, which is primarily attributable to $99 thousand of disbursements for patents and other intangible assets.

Financing activities for the six months ended June 30, 2025, resulted in cash outflows of $17 thousand, which is primarily attributable to $41 thousand of disbursements related to taxes paid for the vesting of certain employee restricted stock units, partially offset by $24 thousand in net proceeds received from the exercise of our warrants.

Financing activities for the six months ended June 30, 2024, resulted in cash inflows of $12,936 thousand, which is primarily attributable to the issuance of securities in connection with our public offering and concurrent private placement in April 2024, offset by $31 thousand in disbursements for taxes paid related to vesting of employee restricted stock units.

Operating activities for the nine months ended September 30, 2025, resulted in cash outflows of $3,453 thousand, primarily due to the net loss of $5,185 thousand partially offset by non-cash expenses of $1,135 thousand and an increase in contract liabilities of $1,075 thousand during such period.

The change in contract liabilities during the nine months ended September 30, 2025 was impacted by customer collections for orders we have yet to complete.

Operating activities for the nine months ended September 30, 2024, resulted in cash outflows of $3,958 thousand, primarily due to the net loss of $4,135 thousand during such period, which was partially offset by a non-cash expense of $688 thousand.

The decision to suspend our China operations increased accounts payable and accrued liabilities by $394 thousand during the three months ended September 30, 2024, which represented a one-time accrual estimate for the costs to prepare and place our Beijing China entity into a dormant state.

Investing activities for the nine months ended September 30, 2025, resulted in cash outflows of $78 thousand, which is primarily attributable to disbursements for patents and other intangible assets.

Investing activities for the nine months ended September 30, 2024, resulted in cash outflows of $177 thousand, which is primarily attributable to $159 thousand of disbursements for patents and other intangible assets.

Financing activities for the nine months ended September 30, 2025, resulted in cash outflows of $17 thousand, which is primarily attributable to $41 thousand of disbursements related to taxes paid for the vesting of certain employee restricted stock units, partially offset by $24 thousand in net proceeds received from the exercise of our warrants.

Financing activities for the nine months ended September 30, 2024, resulted in cash inflows of $12,936 thousand, which is primarily attributable to the net proceeds received of $12,967 thousand from the issuance of securities in connection with our 2024 equity offerings.

Off-Balance Sheet Transactions

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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-Q

Item 2. Management’s Discussion and Analysis