Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal accounting and financial officer, as appropriate, to allow timely decisions regarding required disclosure.
We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2025, the end of the period covered by this Annual Report on Form 10-K. Based upon the evaluation of our disclosure controls and procedures as of December 31, 2025, our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer) concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
Our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer) are responsible for establishing and maintaining internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
●
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
●
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and
●
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (“2013 Framework”). Based on this assessment, our management, with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), has concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None of the Company’s directors or officers adopted , modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended December 31, 2025, as such terms are defined under Item 408(a) of Regulation S-K.
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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required by this item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS.
The information required by this item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this item is incorporated by reference to our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) (1) Consolidated Financial Statements
The financial statements filed as part of this report are listed and indexed in the Index to Consolidated Financial Statements on page 42 located in this Annual Report on Form 10-K. Financial statement schedules have been omitted because they are not applicable, or the required information has been included elsewhere in this report.
(a) (2) Financial Statement Schedules
Not applicable.
(a) (3) Exhibits
The exhibits filed as part of this Annual Report on Form 10-K are listed in the Exhibit Table below. The Company has identified in the Exhibit Table each management contract and compensation plan filed as an exhibit to this Annual Report on Form 10-K in response to Item 15(a) (3) of Form 10-K.
(b) The exhibits set forth in the following index of exhibits are filed or incorporated by reference as a part of this Annual Report on Form 10-K:
38
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Exhibit
No.
Description of Document
2.1**
Plan of Conversion, dated June 14, 2023 (incorporated by reference to Exhibit 2.1 to the Company ’ s Form 8-K filed with the Securities and Exchange Commission on June 15, 2023).
3.1**
Certificate of Incorporation of ClearSign Technologies Corporation, a Delaware corporation (incorporated by reference to Exhibit 3.3 to the Company ’ s Form 8-K filed with the Securities and Exchange Commission on June 15, 2023).
3.2**
Certificate of Amendment, as filed with the Secretary of the State of Delaware on June 26, 2024 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on June 26, 2024).
3.3**
Certificate of Amendment, as filed with the Secretary of the State of Delaware on March 6, 2026 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on March 10, 2026).
3.4**
Amended and Restated Bylaws of ClearSign Technologies Corporation, a Delaware corporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 17, 2025).
3.5**
Certificate of Conversion, as filed with the Secretary of State of the State of Delaware on June 14, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 15, 2023).
3.6**
Articles of Conversion, as filed with the Secretary of State of the State of Washington on June 14, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 15, 2023).
4.1*
Description of Securities of the Company.
4.2**
Form of Common Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).
4.3**
Form of Underwriter’s Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).
4.4**
Form of Private Warrant (incorporated by reference to Exhibit 4.3 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).
4.5**
Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 23, 2024).
4.6**
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).
10.1+**
Form of Confidentiality and Proprietary Rights Agreement (incorporated by reference to Exhibit 10.6 to the Company ’ s Form 10-K filed with the Securities and Exchange Commission on February 26, 2015).
10.2**
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company ’ s Form 10-Q filed with the Securities and Exchange Commission on August 14, 2023) .
10.3**
ClearSign Combustion Corporation 2013 Consultant Stock Plan (incorporated by reference to Exhibit 10.1 to the Company ’ s Form 10-Q filed with the Securities and Exchange Commission on May 6, 2013) .
10.4+**
Employment Agreement dated January 28, 2019 between the registrant and Colin James Deller (incorporated by reference to Exhibit 10.1 to the Company ’ s Form 8-K filed with the Securities and Exchange Commission on January 30, 2019).
10.5+**
ClearSign Technologies Corporation 2021 Equity Incentive Plan (incorporated by reference to Appendix A from the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on May 7, 2021).
10.6+**
2021 Equity Incentive Plan Form of Stock Option Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 17, 2025).
10.7+**
2021 Equity Incentive Plan Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 17, 2025).
10.8+**
2021 Equity Incentive Plan Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 17, 2025).
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10.9+**
Offer Letter dated October 18, 2021 by and between the Company and Brent Hinds (incorporated by reference to Exhibit 10.1 to the Company ’ s Form 10-Q filed with the Securities and Exchange Commission on November 12, 2021).
10.10**
Lease Agreement, entered into as of June 20, 2016, between Paradigm Realty Advisors, L.L.C. and ClearSign Technologies Corporation (incorporated by reference to Exhibit 10.18 to the Company ’ s Form 10-K filed with the Securities and Exchange Commission on March 31, 2022).
10.11**
First Amendment to Lease, entered into as of July 29, 2019, between Tulsa Portfolio Oklahoma Realty LP and ClearSign Technologies Corporation (incorporated by reference to Exhibit 10.19 to the Company ’ s Form 10-K filed with the Securities and Exchange Commission on March 31, 2022).
10.12**
Second Amendment to Lease, entered into as of January 14, 2020, between Tulsa Portfolio Oklahoma Realty LP and ClearSign Technologies Corporation (incorporated by reference to Exhibit 10.20 to the Company ’ s Form 10-K filed with the Securities and Exchange Commission on March 31, 2022).
10.13+**
Amendment to Employment Agreement between the Company and Colin James Deller (incorporated by reference to Exhibit 10.1 to the Company ’ s Form 10-Q filed with the Securities and Exchange Commission on August 15, 2022).
10.14+**
Amendment to Offer Letter between the Company and Brent Hinds, dated August 8, 2023 (incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission on August 14, 2023).
10.15**
Form of Warrant Agency Agreement, by and between ClearSign Technologies Corporation and VStock Transfer, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).
10.16**
Securities Purchase Agreement, dated as of April 19, 2024 (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).
10.17**
Amendment to Securities Purchase Agreement, dated as of April 22, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on April 23, 2024).
10.18**
Amendment to Warrant Agency Agreement, dated as of May 15, 2024, by and between ClearSign Technologies Corporation and VStock Transfer, LLC (incorporated by reference to Exhibit 10.25 of the Company’s Form S-1 filed with the Securities and Exchange Commission on May 20, 2024) .
10.19**
Securities Purchase Agreement, dated June 24, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on June 26, 2024).
10.20**
Amendment to Securities Purchase Agreement, dated June 26, 2024 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed with the Securities and Exchange Commission on June 26, 2024).
10.21+**
G. Todd Silva’s Offer Letter, effective as of August 1, 2024 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on August 6, 2024).
10.22**
Cooperation Agreement, dated May 22, 2025, by and between ClearSign Technologies Corporation and Richard D. Clarkson (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on May 27, 2025).
10.23**
Cooperation Agreement, dated May 22, 2025, by and between ClearSign Technologies Corporation and Anthony DiGiandomenico (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed with the Securities and Exchange Commission on May 27, 2025).
10.24+**
Louis J. Basenese’s Offer Letter, effective as of May 22, 2025 (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed with the Securities and Exchange Commission on May 27, 2025).
10.25+**
Anthony DiGiandomenico’s Offer Letter, effective as of May 22, 2025 (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed with the Securities and Exchange Commission on May 27, 2025).
10.26**
At The Market Offering Agreement by and between ClearSign Technologies Corporation and H.C. Wainwright & Co., LLC, dated July 17, 2025 (incorporated by reference to Exhibit 1.2 to the Company’s Form S-3 filed with the Securities and Exchange Commission on July 17, 2025).
19 **
Insider Trading Policy (incorporated by reference to Exhibit 19 to the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2025).
21**
Subsidiaries of the registrant (incorporated by reference to Exhibit 21 to the Company ’ s Form 10-K filed with the Securities and Exchange Commission on March 31, 2022).
23.1*
Consent of BPM CPA LLP, Independent Registered Public Accounting Firm
24.1*
Power of Attorney (included on the signature page of this report)
31.1*
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
40
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31.2*
Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1***
Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97**
Clawback Policy (incorporated by reference to Exhibit 97 to the Company’s Form 10-K filed with the Securities and Exchange Commission on April 1, 2024).
101INS*
Inline XBRL Instance Document
101.SCH*
Inline XBRL Taxonomy Extension Schema
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase
104*
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*Filed herewith.
**Previously filed.
***Furnished herewith.
+Agreement with management or compensatory plan or arrangement
ITEM 16. FORM 10-K SUMMARY.
None.
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ClearSign Technologies Corporation
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
No.
ANNUAL FINANCIAL INFORMATION
Report of Independent Registered Public Accounting Firm (PCAOB ID: 207 )
F-1
Consolidated Balance Sheets as of December 31, 2025 and 2024
F-3
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024
F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024
F-6
Notes to Consolidated Financial Statements
F-7
42
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
ClearSign Technologies Corporation and Subsidiary
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ClearSign Technologies Corporation and subsidiary (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "consolidated 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, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the 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 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of this critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.
F-1
Table of Contents
Carrying Cost of Patents and Other Intangible Assets
As described in Notes 2 and 4 to the consolidated financial statements, the Company’s patents and other intangible assets, net balance was $0.8 million as of December 31, 2025. The Company capitalizes third-party legal costs and filing fees, if any, associated with obtaining patents or other intangible assets. Once a patent asset has been placed in service, the Company amortizes these costs over the shorter of the asset’s legal or estimated economic life using the straight-line method. The Company also evaluates for potential impairment of long-lived assets, including intangible assets composed of patents, no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The principal considerations for our determination that performing procedures relating to the carrying value of intangible assets is a critical audit matter are the significant amount of judgment by management in developing the assumptions of future economic benefit in an impairment analysis, which in turn led to significant auditor judgment, subjectivity and effort in performing audit procedures and evaluating audit evidence relating to the analysis.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others, reviewing current and forecasted operating conditions for indication of impairment. We also reviewed board minutes, news, and industry reports for indications of impairment. Last, we obtained an understanding of potential future customers indicating future recoverability.
/s/ BPM CPA LLP
We have served as the Company's auditor since 2011.
San Jose, California
March 31, 2026
F-2
Table of Contents
ClearSign Technologies Corporation
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31,
2025
2024
ASSETS
Current Assets:
Cash and cash equivalents
$
9,178
$
14,035
Accounts receivable
1,360
165
Deferred costs
329
562
Prepaid expenses and other assets
359
454
Total current assets
11,226
15,216
Fixed assets, net
195
238
Patents and other intangible assets, net
760
830
Total Assets
$
12,181
$
16,284
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities
$
1,644
$
1,220
Current portion of lease liabilities
96
75
Accrued compensation and related taxes
564
671
Contract liabilities
100
441
Other current liabilities
180
—
Total current liabilities
2,584
2,407
Long Term Liabilities:
Long term lease liabilities
67
113
Total liabilities
2,651
2,520
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Preferred stock, $ 0.0001 par value, 2,000,000 shares authorized, no shares issued or outstanding
—
—
Common stock, $ 0.0001 par value, 87,500,000 shares authorized, 5,328,730 and 5,028,585 shares issued and outstanding at December 31, 2025 and 2024, respectively.*
1
1
Additional paid-in capital*
114,061
112,800
Accumulated other comprehensive loss
( 20 )
( 21 )
Accumulated deficit
( 104,512 )
( 99,016 )
Total stockholders' equity
9,530
13,764
Total Liabilities and Stockholders' Equity
$
12,181
$
16,284
* Share, additional paid-in capital, and per share amounts for the years ended December 31, 2025 and 2024 have been adjusted to reflect the impact of a 1 -for-10 reverse stock split effected on March 16, 2026.
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
ClearSign Technologies Corporation
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
For the Year Ended
December 31,
2025
2024
Revenues
$
5,234
$
3,596
Cost of goods sold
3,810
2,478
Gross profit
1,424
1,118
Operating expenses:
Research and development
1,422
1,471
General and administrative
6,673
6,135
Total operating expenses
8,095
7,606
Loss from operations
( 6,671 )
( 6,488 )
Other income, net:
Interest income
439
516
Government assistance
736
664
Other income, net
—
9
Total other income, net
1,175
1,189
Net loss
$
( 5,496 )
$
( 5,299 )
Net loss per share - basic and fully diluted
$
( 0.99 )
$
( 1.08 )
Weighted average number of shares outstanding - basic and fully diluted*
5,551,194
4,893,599
Comprehensive loss:
Net loss
$
( 5,496 )
$
( 5,299 )
Foreign-exchange translation adjustments
1
( 4 )
Comprehensive loss
$
( 5,495 )
$
( 5,303 )
* Share and per share amounts for the years ended December 31, 2025 and 2024 have been adjusted to reflect the impact of a 1 -for-10 reverse stock split effected on March 16, 2026.
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
ClearSign Technologies Corporation
Consolidated Statement of Stockholders’ Equity
For the Year Ended December 31, 2025
Accumulated Other
Total
(in thousands, except per share data)
Common Stock
Additional
Comprehensive
Accumulated
Stockholders’
Shares*
Amount*
Paid-In Capital*
Loss
Deficit
Equity
Balances at December 31, 2024
5,028
$
1
$
112,800
$
( 21 )
$
( 99,016 )
$
13,764
Share-based compensation, net of tax withholdings
85
—
893
—
—
893
Fair value of stock issued in payment of accrued compensation
33
—
279
—
—
279
Shares issued for services
10
—
65
—
—
65
Exercise of warrants
2
—
24
—
—
24
Exercise of prefunded warrants
170
—
—
—
—
—
Foreign-exchange translation adjustment
—
—
—
1
—
1
Net loss
—
—
—
—
( 5,496 )
( 5,496 )
Balances at December 31, 2025
5,328
$
1
$
114,061
$
( 20 )
$
( 104,512 )
$
9,530
* Share, additional paid-in capital, and per share amounts for the years ended December 31, 2025 and 2024 have been adjusted to reflect the impact of a 1 -for-10 reverse stock split effected on March 16, 2026.
ClearSign Technologies Corporation
Consolidated Statement of Stockholders’ Equity
For the Year Ended December 31, 2024
Accumulated Other
Total
(in thousands, except per share data)
Common Stock
Additional
Comprehensive
Accumulated
Stockholders'
Shares*
Amount*
Paid-In Capital*
Loss
Deficit
Equity
Balances at December 31, 2023
3,869
$
1
$
98,925
$
( 17 )
$
( 93,717 )
$
5,192
Share-based compensation
31
—
528
—
—
528
Fair value of stock issued in payment of accrued compensation
31
—
326
—
—
326
Shares issued for services
4
—
29
—
—
29
Issuance of common stock in public offering, net of expenses
531
—
2,391
—
—
2,391
Issuance of warrants in public offering, net of expenses
—
—
1,831
—
—
1,831
Issuance of common stock in private placement, net of expenses
225
—
865
—
—
865
Issuance of prefunded warrants in private placement, net of expenses
—
—
1,214
—
—
1,214
Issuance of warrants in private placement, net of expenses
—
—
2,389
—
—
2,389
Issuance of common stock for participation right exercise, net of expenses
335
—
1,447
—
—
1,447
Issuance of prefunded warrants for participation right exercise, net of expenses
—
—
580
—
—
580
Issuance of warrants for participation right exercise, net of expenses
—
—
2,250
—
—
2,250
Exercise of warrants
2
—
25
—
—
25
Foreign-exchange translation adjustment
—
—
—
( 4 )
—
( 4 )
Net loss
—
—
—
—
( 5,299 )
( 5,299 )
Balances at December 31, 2024
5,028
$
1
$
112,800
$
( 21 )
$
( 99,016 )
$
13,764
* Share, additional paid-in capital, and per share amounts for the years ended December 31, 2025 and 2024 have been adjusted to reflect the impact of a 1 -for-10 reverse stock split effected on March 16, 2026.
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
ClearSign Technologies Corporation
Consolidated Statements of Cash Flows
(in thousands)
For the Years Ended December 31,
2025
2024
Cash flows from operating activities:
Net loss
$
( 5,496 )
$
( 5,299 )
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services
65
29
Share-based compensation, net of tax withholdings
893
528
Depreciation and amortization
189
186
Impairment of intangible assets
3
20
Right-of-use asset amortization
88
86
Lease amendments
—
( 3 )
Change in operating assets and liabilities:
Deferred costs
233
360
Accounts receivable
( 1,195 )
122
Prepaid expenses and other assets
95
( 104 )
Accounts payable, accrued liabilities, and lease liabilities
378
816
Other current liabilities
180
—
Accrued compensation and related taxes
172
294
Contract liabilities
( 341 )
( 1,408 )
Net cash used in operating activities
( 4,736 )
( 4,373 )
Cash flows from investing activities:
Acquisition of fixed assets
( 4 )
( 39 )
Disbursements for patents and other intangible assets
( 97 )
( 179 )
Net cash used in investing activities
( 101 )
( 218 )
Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs
—
12,967
Proceeds from exercise of warrants
24
25
Taxes paid related to employee stock awards
( 45 )
( 46 )
Net cash provided by (used in) financing activities
( 21 )
12,946
Effect of exchange rate changes on cash and cash equivalents
1
( 4 )
Net change in cash and cash equivalents
( 4,857 )
8,351
Cash and cash equivalents, beginning of period
14,035
5,684
Cash and cash equivalents, end of period
$
9,178
$
14,035
Supplemental disclosure of cash flow information:
Officer and employee equity awards for prior year accrued compensation
$
279
$
326
Non-cash impact of new lease
$
68
$
32
The accompanying notes are an integral part of these consolidated financial statements.
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ClearSign Technologies Corporation
Notes to Consolidated Financial Statements
Note 1 – Organization and Description of Business
ClearSign Technologies Corporation (“ClearSign” or the “Company”) designs and develops products and technologies for the purpose of decarbonization and improving key performance characteristics of industrial and commercial systems, including operational performance, energy efficiency, emission reduction, safety, and overall cost-effectiveness. The Company’s patented technologies are designed to be embedded in established original equipment manufacturers (“OEM”) products as ClearSign Core™ and ClearSign Eye and other sensing configurations in order to enhance the performance of combustion systems and fuel safety systems in a broad range of markets. These markets include energy (upstream oil production and down-stream refining), commercial/industrial boiler, chemical, petrochemical, transport and power industries. The Company’s primary technology is its ClearSign Core™ technology, which achieves very low emissions without the need of selective catalytic reduction.
The Company was originally incorporated in the State of Washington in 2008. During January 2022, the Company relocated its headquarters from Seattle, Washington to Tulsa, Oklahoma. Effective June 15, 2023, the Company changed its state of incorporation to Delaware. On July 28, 2017, the Company incorporated a subsidiary, ClearSign Asia Limited, in Hong Kong to represent the Company’s business and technological interests throughout Asia. Through ClearSign Asia Limited, the Company has established a wholly foreign owned enterprise in China – ClearSign Combustion (Beijing) Environmental Technologies Co., LTD. On August 22, 2024, the Company’s Board of Directors (the “Board”) authorized management to move forward with filing for dormancy with Chinese regulators to suspend the Company’s Beijing, China operations. A dormancy filing allows the Company to keep its China legal entity in a suspended status for up to three years . The Company can revive its China operations at any time during those three years with minimal cost impact. The effective date of our dormancy filing was March 12, 2025.
Unless otherwise stated or the context otherwise requires, the terms “we,” “us,” “our,” “ClearSign” and the “Company” refer to ClearSign Technologies Corporation and its subsidiary, ClearSign Asia Limited.
Business Segments
The Company operates in one operating and reportable segment engaged in the design, development and sale of combustion technologies that improve the performance and cost-effectiveness of industrial combustion systems, referred to herein as the “Combustion” segment. The Company manages its business activities on a consolidated basis. Since the operations comprise a single reportable segment, amounts reported in the consolidated balance sheets, statements of operations and comprehensive loss, stockholders’ equity, and cash flows represent the activities of the Combustion segment.
The Combustion segment derives revenues by delivering products and technology solutions to OEM’s and end-users. Our products and solutions can be incorporated into a new or existing customer infrastructure or equipment. Customer contracts can include multiple billing milestones and performance obligations. The Company can typically satisfy its performance obligations within a twelve month period, but customer project delays, some of which can be beyond the Company’s control, can impact timing of performance and there is no assurance we will satisfy all performance obligations in such period of time.
The Company’s Chief Executive Officer, who is the chief operating decisionmaker (“CODM”), reviews quarterly and annual financial information on a consolidated basis for making operating decisions, allocating resources and evaluating financial performance. The CODM consistently reviews the consolidated statements of operations and comprehensive loss to manage operations and monitor performance against management expectations. Factors considered by the CODM when assessing a reportable segment include factors such as, but not limited to, human capital, intellectual property, customer relationships and business model design.
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Substantially all the Company’s operating activities, including its long-lived assets, are located within the United States. Customers in the United States accounted for 100 % of revenues during the years ended December 31, 2025 and 2024. The Company disaggregates geographical revenues by selling location, since many of our target customers are global entities, and it would be more likely than not, that these customers would negotiate sales within our current territory in the United States. Our two California refinery customers accounted for 15 % and 86 % of our annual revenues for the years ended December 31, 2025 and 2024, respectively. Birwelco USA Inc. (a BIH Group company) accounted for 66 % and 4 % of our annual revenue for the years ended December 31, 2025 and 2024, respectively. No other customer represented greater than ten percent of annual revenues for the years ended December 31, 2025 and 2024.
For the Year Ended
December 31,
2025
2024
Birwelco
66
%
4
%
Customer A
3
59
Customer B
12
27
81
%
90
%
Liquidity
As of December 31, 2025, the Company’s cash and cash equivalents totaled $ 9,178 thousand, which is sufficient to fund current operating expenses beyond twelve months from the date of issuance of these consolidated financial statements. The Company’s technologies are currently deployed in fully operational commercial installations. In order to generate meaningful revenues and achieve cash flow break-even, we must continue to gain market recognition and acceptance and achieve a critical level of successful sales and product installations.
Historically, the Company has financed operations primarily through issuances of equity securities. Since inception, the Company has raised approximately $ 105.3 million in gross proceeds through the sale of its equity securities. During the year ended December 31, 2024, the Company sold equity securities, which resulted in aggregate gross proceeds of approximately $ 14.2 million and net proceeds of approximately $ 13.0 million, after broker discounts and related fees.
The Company has incurred losses since its inception totaling $ 104.5 million and expects to experience operating losses and negative cash flows for the foreseeable future. Management believes that the successful growth and operation of the Company’s business is dependent upon its ability to obtain adequate sources of funding through co-development agreements, strategic partnering agreements, or equity or debt financing to adequately support product commercialization efforts, protect intellectual property, form relationships with strategic partners, and provide for working capital and general corporate purposes. There can be no assurance that the Company will be successful in achieving its long-term plans as set forth above, or that such plans, if consummated, will result in profitable operations or enable the Company to continue in the long-term as a going concern.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of ClearSign and its subsidiary. Intercompany balances and transactions have been eliminated in consolidation.
Reverse Stock Split
On March 6, 2026, the Company filed a certificate of amendment to its certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1 -for-10 reverse stock split of the Company’s shares of common stock, which became effective at 12:01 a.m. Eastern Time on March 16, 2026. Such amendment and reverse stock split ratio were previously approved by the Company’s stockholders and Board.
As a result of the reverse stock split, which was effective for trading purposes on March 16, 2026, every 10 shares of the Company’s pre-reverse split outstanding common stock were combined and reclassified into one share of common stock. Proportionate voting rights and other rights of holders of common stock, par value and shares authorized were not affected by the reverse stock split. Any
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fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole share at the participant level with the Depository Trust Company. All stock options and restricted stock units outstanding and common stock reserved for issuance under the Company’s equity incentive plans and warrants outstanding immediately prior to the reverse stock split were proportionately adjusted, and the exercise prices were proportionately increased, as a result of the reverse stock split. All share and per-share amounts in these consolidated financial statements have been restated to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition and Cost of Sales
The Company recognizes revenue and related cost of goods sold in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). When applying ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the promises and performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the performance obligations are satisfied. Revenues and cost of goods sold are recognized once the goods or services are delivered to the customer’s control or non-refundable performance obligations are satisfied. The Company’s contracts with customers generally have a schedule of performance obligations that are used to allocate transaction prices, as well as a schedule of non-refundable cancellation obligations. The contracts generally will be fully performed upon delivery of certain drawings, services, reports, or equipment. Revenue related to the contracts is recognized following the completion of non-refundable performance obligations as defined in the contract.
The Company’s contracts generally include progress payments from the customer upon completion of defined milestones. As these payments are received, they are recorded as either contract assets or contract liabilities. Upon completion of the performance obligations and collectibility is determined, revenue is recorded at a point in time. The Company records cost of goods sold based on allocated costs assigned to performance obligations. Allocations can occur based on overall estimated contract profit or readily identifiable cost assignments. For any contract that is expected to incur costs in excess of the contract price, the Company accrues the estimated loss in full in the period such determination is made.
Deferred Costs and Cost of Sales
We recognize an asset for deferred costs incurred to fulfill a contract when those costs meet all of the following criteria: (a) the costs relate directly to a contract or to an anticipated contract that we can specifically identify; (b) the costs generate or enhance our resources that will be used in satisfying performance obligations in the future; and, (c) the costs are expected to be recovered. We capitalize contractual costs incurred for direct labor, overhead allocations, supplier costs and subcontractor costs. Costs capitalized are expensed to costs of goods sold at a point in time upon completion of contractual performance obligations based on allocated costs assigned to such performance obligations. For any contract expected to incur costs in excess of the total contractual value, we accrue the estimated loss in full in the period such determination is made.
Advertising
The Company expenses selling and marketing expenses when incurred within the statements of operations and comprehensive loss in general and administrative expenses. The total amount charged to advertising expense for the years ended December 31, 2025 and 2024 was $ 96 thousand and $ 114 thousand, respectively.
Product Warranties
The Company warrants all installed products against defects in materials and workmanship for a period specified in each contract by replacing failed parts. Accruals for product warranties are based on historical or expected warranty experience and current product performance trends and are recorded as a component of cost of sales at the time revenue is recognized. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The
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Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary, and such adjustments could be material in the future if estimates differ significantly from actual warranty expense. Product warranties are included in accounts payable and accrued liabilities in the consolidated balance sheets. Although a warranty is a type of guarantee, assurance-type warranties are not subject to the general recognition provisions of ASC Topic 460, Guarantees , which requires recognizing guarantees at fair value.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit in a checking and savings account, and short-term money market instruments and U.S. treasury bills with an original maturity of three months or less.
U.S. Treasuries
All of our U.S. treasuries are classified as held-to-maturity based on the Company’s positive intent and ability to hold these securities to maturity and are recorded on an amortized cost basis.
The net carrying amount and amortized cost basis of our treasuries as of December 31, 2025, and 2024 was $ 5,523 thousand and $ 10,790 thousand, respectively. The fair value of our treasuries as of December 31, 2025, and 2024 was $ 5,523 thousand and $ 10,792 thousand, respectively. We experienced no unrecognized holding gains from our treasuries as of December 31, 2025. We experienced $ 2 thousand in unrecognized holding gains from our treasuries as of December 31, 2024.
The Company evaluates whether the decline in fair value of its investments is other-than temporary at each quarter-end. The Company has not experienced any other-than-temporary impairment of its treasuries as of December 31, 2025 and 2024, respectively. A decline in the market value of any held-to-maturity security below cost that is deemed other than temporary results in a reduction in carrying amount to fair value, with the impairment charged to earnings and the establishment of a new cost basis.
Accounts Receivable and Allowance for Credit Losses
Trade accounts receivable are stated at the invoiced amount less an allowance for expected credit losses. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers or interest on past due amounts. Management estimates the allowance for credit losses based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received in addition to an expected credit loss model based on aging analysis as per the invoice date as re-imbursement risks could exist. The vast majority of the outstanding accounts receivable share the same expected credit risk due to the re-imbursement risk and same current customer pool. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. The allowance for credit losses as of December 31, 2025 and 2024 was zero .
Fixed Assets and Leases
Fixed assets are recorded at cost. Fixed assets are depreciated over three to five years . Maintenance and repairs are expensed as incurred.
At contract inception, the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease and reassesses that conclusion if the contract is modified. Operating leases are recorded in operating lease right-of-use (“ROU”) assets, lease liability, current and lease liability, noncurrent on the consolidated balance sheets. The Company did not have any finance leases during the periods presented.
The Company recognizes operating lease ROU assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date. The lease ROU asset is reduced for tenant incentives, if any, and excludes any initial direct costs incurred, if any. The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease. The Company defines the initial lease term to include renewal options determined to be reasonably certain. If the Company determines the option to extend or terminate is reasonably certain, it is included in the determination of lease assets and liabilities. The Company reassesses the lease term if and when a significant event or change in circumstances occurs within the control of the Company, such as construction
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of significant leasehold improvements that are expected to have economic value when the option becomes exercisable. The Company recognizes a single lease cost on a straight-line basis over the term of the lease, and the Company classifies all cash payments within operating activities in the consolidated statements of cash flows.
The Company has lease agreements with lease and non-lease components, which it has elected to not combine for all asset classes. In addition, the Company does not recognize ROU assets or lease liabilities for leases with a term of 12 months or less of all asset classes.
Patents and Trademarks
Third-party expenses related to patents and trademarks are recorded at cost, less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the assets once they are awarded. Patent application costs are deferred pending the outcome of patent and trademark applications. Costs associated with unsuccessful patent applications and abandoned intellectual property are expensed when determined to have no continuing value in current business activity. The Company evaluates the recoverability of the carrying values of intangible assets each reporting period.
Impairment of Long-Lived Assets
The Company tests long-lived assets, consisting of fixed assets, patents, trademarks, and other intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected from the use and eventual disposition of the assets. In the event an asset is not fully recoverable a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Fair value is determined based on the present value of estimated expected cash flows using a discount rate commensurate with the risks involved, quoted market prices, or appraised values depending upon the nature of the assets. Losses on long-lived assets to be disposed are determined in a similar manner, except those fair values are reduced for the cost of disposal.
Fair Value of Financial Instruments
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to establish fair value are the following:
● Level 1 – Quoted prices in active markets for identical assets or liabilities.
● Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
● Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company’s financial instruments primarily consist of cash equivalents, accounts receivable, accounts payable, and accrued expenses. Our cash equivalents include money market funds, which are measured at fair value using Level 1 inputs. As of December 31, 2025 and 2024, we had $ 2,288 thousand and $ 1,354 thousand in our money market account, respectively.
As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the consolidated balance sheets. This is primarily attributable to the short-term nature of these instruments. There were no transfers between levels of the fair value hierarchy during the period.
The Company did not identify any other recurring or non-recurring assets and liabilities that are required to be presented in the consolidated balance sheets at fair value.
Research and Development, and Government Assistance
The cost of research and development is expensed as incurred. Research and development costs consist of salaries, benefits, share-based compensation, consumables, and consulting fees, including costs to develop and test prototype equipment and parts. Research
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and development costs have been offset by funds received, if any, from strategic partners in cost sharing, collaborative projects. During the year ended December 31, 2025, the Company received no funds from these types of arrangements. During the year ended December 31, 2024, the Company received $ 145 thousand from these types of arrangements.
Additionally, from time to time, the Company may receive government grants to fund research and development projects. We record gross monies received from government entities within other income, net, and associated expenses such as salaries and supplies in research and development or general and administration expense, depending on the nature of expenditure. We accrue for reimbursement requests submitted to government entities in accounts receivable.
Income Taxes
The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for 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. A valuation allowance is provided for deferred tax assets if it is more likely than not the Company would not be able to realize their benefits, or that future deductibility is uncertain. Tax benefits are recognized only if it is more likely than not that the tax benefits will be utilized in the foreseeable future.
Share-Based Compensation
The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award, or in the case of performance options, expense is recognized over the remaining service period when the Company has determined it is probable that the performance condition will be achieved. Share-based compensation for stock grants to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.
Foreign Operations
The accompanying consolidated balance sheets as of December 31, 2025 and 2024 include assets amounting to approximately $ 175 thousand and $ 145 thousand, respectively, relating to the operations of ClearSign Asia Limited. The Beijing registered capital requirement is $ 350 thousand, which is required to be paid by June 30, 2032, and of which $ 261 thousand has been paid as of December 31, 2025. On August 22, 2024, the Board authorized management to move forward with filing for dormancy with Chinese regulators to suspend the Company’s Beijing, China operations. A dormancy filing allows the Company to keep its China legal entity in a suspended status for up to three years . The Company can revive its China operations at any time during those three years with minimal cost impact. The dormancy filing became effective as of March 12, 2025.
Foreign Currency
Assets and liabilities of ClearSign Asia Limited with non-U.S. Dollar functional currency are translated to U.S. Dollars using exchange rates in effect at the end of the period. Revenue and expenses are translated to U.S. Dollars using rates that approximate those in effect during the period. The resulting translation adjustments are included in the Company’s consolidated balance sheets in the stockholders’ equity section as a component of accumulated other comprehensive loss.
Net Loss per Common Share
Basic net loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic net loss per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive. As of December 31, 2025 and 2024, potentially dilutive shares outstanding amounted to 2.5 million (or 24.7 million on a pre-reverse stock split basis) and 2.5 million (or 25.1 million on a pre-reverse stock split basis), respectively.
Recently Adopted Accounting Pronouncements
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In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) to enhance the transparency and decision-making usefulness of income tax disclosures by requiring additional information on an entity's tax rate reconciliation, as well as income taxes paid. Effective January 1, 2025, we adopted ASU 2023-09 on a prospective basis. The impact of adoption on this standard to our accounting policies, processes, and systems was not material. Refer to “Note 8 – Income Taxes” of these consolidated financial statements.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which amends ASC 326-20 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current deferred costs that arise from transactions accounted for under ASC 606. We elected to early adopt ASU 2025-05 on December 31, 2025, which did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires enhanced disclosures about types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization, in commonly presented expense captions. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. Entities may apply the amendments prospectively or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact that this guidance will have on the disclosures within our consolidated financial statements. While ASU 2024-03 will impact only our disclosures and not our financial condition and results of operations, we are assessing when we will adopt the ASU 2024-03.
In May 2025, FASB issued ASU No. 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (“Topic 606”): Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”), which clarifies the guidance on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer, with the intent to reduce diversity in practice and improve existing guidance by revising the definition of a “performance condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. ASU 2025-04 also clarifies the guidance in Topic 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred.” ASU 2025-04 is effective for our reporting period beginning January 1, 2027, with early adoption permitted. We are currently assessing the impact that the adoption of ASU 2025-04 will have on the disclosures in our annual consolidated financial statements.
Note 3 – Fixed Assets, Net
Fixed Assets, Net
Fixed assets, net are summarized as follows:
December 31,
(in thousands)
2025
2024
Office furniture and equipment
$
103
$
99
Leasehold improvements
43
43
146
142
Accumulated depreciation and amortization
( 108 )
( 85 )
38
57
Operating lease ROU assets, net
157
181
Total
$
195
$
238
Depreciation expense related to office furniture, equipment and leasehold improvements for the years ended December 31, 2025 and 2024 totaled $ 25 thousand and $ 21 thousand, respectively.
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Leases
The Company leases office space in Tulsa, Oklahoma, Seattle, Washington and Beijing, China. During May 2025, the Company renewed its Beijing, China lease for 24 months with monthly rent at approximately $ 3 thousand. As a result of this renewal, the Company increased the ROU asset and lease liability by $ 68 thousand during the year ended December 31, 2025.
During October 2024, the Company entered into a sub-lease agreement to rent office space in Seattle for approximately $ 2 thousand per month for twelve months . The Seattle lease is considered a short-term lease, as the lease term is 12 months or less from the commencement date. The Seattle lease was renewed in October 2025 with similar terms. The short-term lease expense was $ 23 thousand and $ 22 thousand for the years ended December 31, 2025 and 2024, respectively. The Tulsa and Beijing leases are classified as operating leases, each with remaining terms of approximately two years ; contractual language requires renewal negotiations to occur at or near termination. These leases are normal and customary for office space, in that, contractual guarantees exist requiring the lessee return the premises to its original functional state.
The Tulsa lease contains fixed annual lease payments that increase annually by 2 %. The Seattle, Tulsa, and Beijing total monthly minimum rent is approximately $ 10 thousand. Operating lease costs for the years ended December 31, 2025 and 2024 were $ 98 thousand and $ 97 thousand, respectively.
Supplemental balance sheet information related to operating leases is as follows:
December 31,
December 31,
(in thousands)
2025
2024
Operating lease ROU assets, net
$
157
$
181
Lease Liabilities:
Current lease liabilities
$
96
$
75
Long term lease liabilities
67
113
Total lease liabilities
$
163
$
188
Weighted average remaining lease term (in years):
1.7
2.6
Weighted average discount rate:
4.4
%
5.3
%
Supplemental cash flow information related to operating leases is as follows:
For the Year Ended
December 31,
(in thousands)
2025
2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases
$
99
$
98
Non-cash impact of new leases and lease modifications
Change in operating lease liabilities
$
68
$
29
Change in operating lease ROU assets
$
68
$
32
Minimum future payments under the Company’s operating lease liabilities as of December 31, 2025 are as follows:
(in thousands)
2026
$
101
2027
68
Total future lease payments
169
Less: imputed interest
( 6 )
$
163
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Note 4 – Patents and Other Intangible Assets
Patents and other intangible assets are summarized as follows:
December 31,
(in thousands)
2025
2024
Patents
Patents pending
$
358
$
346
Issued patents
1,110
1,034
1,468
1,380
Trademarks
Registered trademarks
86
86
86
86
Other
8
8
1,562
1,474
Accumulated amortization
( 802 )
( 644 )
$
760
$
830
Amortization expense for the years ended December 31, 2025 and 2024 totaled $ 164 thousand and $ 165 thousand, respectively. Future amortization expense associated with issued patents and registered trademarks as of December 31, 2025 is as follows:
(in thousands)
2026
$
139
2027
118
2028
83
2029
42
2030
12
$
394
The amortization life for patents ranges between three to five years , with trademark lives set at ten years . The Company does not amortize patents or trademarks classified as pending.
During the years ended December 31, 2025 and 2024, the Company assessed its patent and trademark assets. During the years ended December 31, 2025 and 2024, we recorded impairments of $ 3 thousand and $ 20 thousand, respectively. These impairment costs are included within research and development in the consolidated statements of operations and comprehensive loss. The Company also evaluated its strategic approach to the pursuit and protection of its intellectual property. It is the intent of the Company to continue to pursue intellectual property protection. If the Company identifies certain assets where the intellectual property does not directly align with its core technology, the Company will impair the intangible asset and write-off the asset as an expense.
Note 5 – Revenue and Contract Liabilities
The Company’s contracts with customers generally have performance obligations and a schedule of non-refundable cancellation obligations. Performance obligations typically fall into one of four categories, product shipment, customer witness tests, and engineering services, such as delivery of CFD studies, engineering documents, and engineering consultation. Customer payment milestones are unique to individual contracts and may occur prior to completion of performance obligations. Customer payment terms typically range between thirty and sixty days from the date of billing. Our customer contracts typically have a duration of less than twelve months . Delays in contract performance, if any, typically occur as a result of customer onsite project delays outside of our control.
The Company recognized $ 5,234 thousand of revenues and $ 3,810 thousand of cost of goods sold during the year ended December 31, 2025. The revenue and cost of goods sold relate to the Company’s fulfillment of product orders for process burners, mid-stream burners, flares, spare parts, burner performance tests, and engineering services including CFD studies, engineering design documents, and engineering consultation. These products and services constitute performance obligations.
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The Company recognized $ 3,596 thousand of revenues and $ 2,478 thousand of cost of goods sold during the year ended December 31, 2024. The revenue and cost of goods sold predominantly related to the Company’s process burner product line. The Company delivered multiple burners for different customers, successfully completed engineering studies including the CFD analysis, and fulfilled multiple spare parts orders. These products and services constitute performance obligations.
The Company had contract liabilities of $ 100 thousand and $ 441 thousand at December 31, 2025 and 2024, respectively. Of the $ 441 thousand contract liability balance as of December 31, 2024, the Company recognized revenue of $ 421 thousand during the year ended December 31, 2025.
Note 6 – Deferred Costs
A summary of the Company’s deferred costs activity in the accompanying consolidated balance sheets as of December 31, 2025 and 2024 is as follows:
December 31,
(in thousands)
2025
2024
Deferred costs at beginning of year
$
562
$
922
Capitalization
Labor and overhead allocations
484
216
Supplier and subcontractor costs
2,284
1,427
2,768
1,643
Amortization of deferred costs
( 2,996 )
( 2,003 )
Impairment of costs in excess of contractual value
( 5 )
-
Deferred costs at end of period
$
329
$
562
During our year-end financial reporting process, management identified that our deferred costs were incorrectly classified in the prior period financial statements. In the prior period, the net financial position of our customer contracts were assessed on a contract-by-contract basis and we incorrectly offset our contract liabilities with deferred costs, which were previously labeled as contract assets. The correction has been reflected in the current period consolidated financial statements and prior period amounts have been revised, by adjusting deferred costs and contract liabilities by an increase of $ 368 thousand. Management assessed this error and determined that it had no material adverse effect on prior filings, since it had no effect on our overall financial position, specifically our net loss, stockholder’s equity and working capital (as defined in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”).
Note 7 – Product Warranties
A summary of the Company’s warranty liability activity, which is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets as of December 31, 2025 and 2024, is as follows:
December 31,
(in thousands)
2025
2024
Warranty liability at beginning of year
$
471
$
110
Accruals
840
478
Payments
( 488 )
( 114 )
Changes related to expirations and settlements
( 31 )
( 3 )
Warranty liability at end of period
$
792
$
471
F-16
Table of Contents
Note 8 - Income Taxes
Effective January 1, 2025, the Company adopted ASU 2023-09. The implementation of this standard establishes a requirement to disclose differences between the statutory tax rate and the effective tax rate by jurisdiction and disaggregated information about income taxes paid, income (loss) from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations. Management has determined that this standard is preferable in that the reporting will provide users with more useful information and greater transparency about how the Company's operations and related tax risks affect its tax rate and cash flows. The amendments related to the ASU 2023-09 were applied retrospectively to the beginning of the earliest year presented.
For the years ended December 31, 2025 and 2024, the Company's loss from continuing operations before provision for income taxes were as follows:
For the Year Ended
December 31,
( in thousands )
2025
2024
Domestic
$
( 5,399 )
$
( 5,072 )
Foreign
( 54 )
( 227 )
Loss before provision for income taxes
$
( 5,453 )
$
( 5,299 )
There was no provision for income taxes recorded for the years ended December 31, 2025 and 2024.
Income tax benefit attributable to losses from continuing operations differed from the amounts computed by applying the statutory U.S federal income tax rate of 21 % to pretax loss from continuing operations as a result of the following:
For the Year Ended
December 31,
( in thousands )
2025
Percent
2024
Percent
Tax benefit at federal statutory rate
$
( 1,145 )
21.00 %
$
( 1,113 )
21.00 %
Tax benefit at state rate
( 44 )
0.81 %
120
( 2.26 )%
China tax at statutory rate
( 8 )
0.15 %
( 44 )
0.83 %
China valuation allowance
8
( 0.15 )%
44
( 0.83 )%
Hong Kong tax at statutory rate
( 2 )
0.04 %
( 1 )
0.02 %
Hong Kong valuation allowance
2
( 0.04 )%
1
( 0.02 )%
Meals and entertainment
5
( 0.09 )%
8
( 0.15 )%
Deferred rate change
( 10 )
0.18 %
129
( 2.43 )%
Other
( 34 )
0.62 %
( 97 )
1.83 %
Change in valuation allowance
1,228
( 22.52 )%
953
( 17.98 )%
$
-
$
—
F-17
Table of Contents
The significant components of the Company's deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:
For the Year Ended
December 31,
( in thousands )
2025
2024
Deferred tax assets:
Accrued expenses
$
70
$
197
Share-based compensation
658
540
Depreciation
307
405
Prepaid expenses
76
12
Accrued vacation
8
( 4 )
ASC 842 lease standard
12
11
Warranty Liability
186
—
Net operating loss carryforwards
23,843
22,128
Gross deferred tax assets
25,160
23,289
Valuation allowance
( 24,889 )
( 23,054 )
Total deferred tax assets, net of valuation allowance
271
235
Deferred tax liabilities
Other
( 271 )
( 235 )
Net deferred tax assets
$
—
$
—
The Company did not pay any federal, state, or foreign income taxes during the year ended December 31, 2025 and 2024. Accordingly, no disaggregation of cash income taxes paid is presented.
For the year ended December 31, 2025, based on all available objective evidence, including the existence of cumulative losses, the Company determined that it was not more likely than not that the net deferred tax assets were fully realizable as of December 31, 2025. Accordingly, the Company established a full valuation allowance against its deferred tax assets.
As of December 31, 2025, the Company had $ 94.4 million of federal and $ 61.4 million of state net operating loss carryforwards available to reduce future taxable income, of which federal net operating loss carryforwards of $ 47.6 million have an indefinite life. The federal net operating losses begin to expire in 2028, while state net operating losses begin to expire in 2035.
The Company experienced an “ownership change” within the meaning of Section 382 of the Internal Revenue Code in April 2012, subjecting net operating loss carryforwards (incurred prior to the ownership change) to an annual limitation, which may restrict the ability to use these losses to offset taxable income in periods following the ownership change. The Company determined the amount of the annual limitation to be $ 686 thousand annually. The net operating loss carryforwards generated before 2018 may be used to reduce taxable income through the years 2028 to 2037. Federal net operating loss carryforwards generated for year 2018 and thereafter do not expire.
The Company files income tax returns in the U.S. federal, state and foreign jurisdictions. All tax years generally remain subject to examination by the IRS and various state taxing authorities, although the Company is not currently under examination in any jurisdiction.
The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. As of December 31, 2025 and 2024, there was no accrued interest or penalties related to uncertain tax positions.
Note 9 – Equity
Common Stock and Preferred Stock
The Company is authorized to issue 87.5 million shares of common stock and 2.0 million shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Board. The Company has not issued any shares of preferred stock.
F-18
Table of Contents
In July 2018, in connection with a private placement of the Company’s common stock pursuant to a Stock Purchase Agreement, the Company granted clirSPV LLC (“clirSPV”) a right to purchase certain new equity securities that the Company sells for purpose of raising capital on terms and conditions no different from those offered to other purchasers (the “Participation Right”), so that clirSPV could maintain a 19.99 % percentage ownership of the Company’s outstanding common stock. In no event may the Participation Right be exercised to the extent it would cause clirSPV or any of its affiliates to beneficially own 20 % or more of the Company’s then outstanding common stock.
In May 2022, in connection with a waiver of the Participation Right’s notice requirements and other related closing mechanics for such Participation Right (the “Waiver”) the Company and clirSPV, agreed that the Participation Right may be extended from December 31, 2023, to such date that the holders of two -thirds of the outstanding units of clirSPV agree to extend each such holder’s existing agreement that he/she/it will have no right to force a redemption of his/her/its interests in clirSPV (the “Redemption Right”); provided, however, that the Participation Right could not be extended to a date later than June 30, 2027. On December 30, 2023, the Company received notice from clirSPV that the holders of at least two -thirds of the outstanding units of clirSPV agreed to extend the waiver of the Redemption Right until December 31, 2024. Accordingly, the Participation Right has expired as of December 31, 2024.
The Company has an At-The-Market (“ATM”) program pursuant to an ATM Offering Agreement with H.C. Wainwright & Co., LLC (“Wainwright”) as sales agent, dated July 17, 2025 (the “Sales Agreement”), pursuant to which the Company may offer and sell shares of common stock with an aggregate offering price of up to $ 10.39 million. As of the date of this report, no shares have been sold pursuant to the Sales Agreement. We previously had an ATM program with Virtu Americas LLC (the “Virtu ATM”), which was terminated effective as of July 12, 2025.
The Company is currently subject to the SEC’s “baby shelf rules,” which prohibit companies with a public float of less than $75 million from issuing securities under a “shelf” registration statement in excess of one-third of such company’s public float in a 12-month period. These rules may limit future issuances of shares by the Company under our “shelf” registration statement on Form S-3, including through the ATM program with Wainwright or other securities offerings.
Equity Offerings
Equity Offering Terms
During the year ended December 31, 2024 we completed three equity offerings referred to herein as “Public Offering,” “Private Placement” and “Participation Right Exercise.”
The Public Offering and Private Placement were completed concurrently on April 23, 2024. The Public Offering included an over-allotment option, which was exercised in full on May 15, 2024. As noted above, clirSPV maintained a contractual Redemption Right to participate in this offering and exercised its right in full and thus completed the Participation Right Exercise on June 24, 2024. Pursuant to these equity offerings we sold common stock, redeemable warrants to purchase shares of common stock and pre-funded warrants to purchase shares of common stock. The warrants and pre-funded warrants issued in the Public Offering, Private Placement and Participation Right Exercise are referred to herein as “Public Warrants,” “Private Warrants,” “Participation Right Warrants,” “Private Pre-Funded Warrants” and “Participation Right Pre-Funded Warrants,” as applicable. The Public Warrants, Private Warrants and Participation Right Warrants are collectively referred to herein as the “Warrants,” and the Private Pre-Funded Warrants and Participation Right Pre-Funded Warrants are collectively referred to herein as the “Pre-Funded Warrants.” In connection with the Public Offering and Private Placement, we issued warrants to purchase shares of common stock to Public Ventures, LLC as consideration for services provided as the underwriter and placement agent for the Public Offering and Private Placement,
F-19
Table of Contents
respectively, which are hereinafter referred to as the “Underwriter Warrants” and “Placement Agent Warrants,” respectively. The quantities, prices and terms of these equity offerings are noted in the table below.
Shares* (in thousands)
Purchase Price Per Share
Public Offering
Private Placement
Participation Right Exercise
Public Offering
Private Placement
Participation Right Exercise
Common Stock
531
225
335
$
9.10
$
9.10
$
9.10
Pre-Funded warrants 1
—
316
134
$
—
$
9.10
$
9.10
Warrants 2
531
811
704
$
0.10
$
0.10
$
0.10
Underwriter Warrants 3
43
—
—
**
**
**
Placement Agent Warrants 3
—
43
—
**
**
**
* Retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
** Not Applicable
(1) Each Pre-Funded Warrant has an exercise price of $ 0.001 (or $ 0.0001 per share on a pre-reverse stock split basis) per share and expire when exercised in full. In accordance with the terms of the Pre-Funded Warrants, the Company is prohibited from effecting an exercise of any of these warrants to the extent that such exercise would result in the number of shares of common stock beneficially owned by the holder and its affiliates exceeding 4.99 % (or 9.99 % at election of the holder) of the total number of shares of common stock outstanding immediately after giving effect to the exercise, which percentage may be increased or decreased at the holder’s election not to exceed 9.99 %.
(2) Each Warrant has an exercise price of $ 10.50 per share (or $ 1.05 per share on a pre-reverse stock split basis) and is exercisable for a period of five years starting from the date of its issuance. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s common stock. We have the option, but not the obligation, to redeem these warrants anytime between issuance and expiration, at a price of $ 0.10 per warrant, provided that the closing price of the common stock reported equals or exceeds $ 22.75 (or $ 2.275 on a pre-reverse stock split basis) (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) per share for any 20 business days within a 30 consecutive business-day period.
(3) Each Underwriter Warrant and Placement Agent Warrant has an exercise price of $ 11.375 per share (or $ 1.1375 per share on a pre-reverse stock split basis) commencing 180 days from April 19, 2024, and expire on their fifth year anniversary. The Underwriter Warrants can be exercised on a cashless basis based on a formula set forth therein and are non-redeemable.
After deducting customary professional service fees, the net proceeds from the Public Offering, Private Placement and Participation Right Exercise amounted to an aggregate of approximately $ 12,967 thousand.
Reporting
The shares of common stock, Warrants, and Pre-Funded Warrants issued in the Public Offering, Private Placement and Participation Right Exercise have been classified and recorded as part of stockholders’ equity. The amount allocated to such instruments were based on their relative fair value, resulting in an initial carrying value for each of those instruments to be as follows:
Allocated Amount
(in thousands)
Public Offering
Private Placement
Participation Right Exercise
Common stock
$
2,391
$
865
$
1,447
Pre-Funded Warrants
-
1,214
580
Warrants
1,831
2,389
2,250
$
4,222
$
4,468
$
4,277
F-20
Table of Contents
In determining the fair values of the Warrants and Pre-Funded Warrants from the Public Offering, Private Placement and Participation Right Exercise, we used a Black-Scholes option pricing model with the following assumptions:
Public Offering
Private Placement
Participation Right Exercise
Stock price
(1)
$
7.90
$
7.90
$
6.50
Expected volatility
108.01
%
108.01
%
108.01
%
Contractual/expected term (in years)
5.00
5.00
5.00
Risk-Free interest rate
4.64
%
4.64
%
4.25
%
Expected dividend yield
0
%
0
%
0
%
(1) The fair value of the shares of common stock issued in connection with the offerings was determined using the closing price of the Company’s common stock immediately preceding the closing date of the particular offering.
The Underwriter Warrants and Placement Agent Warrants issued in the Public Offering and Private Placement were accounted for as a direct cost of such offerings resulting in no net effect to the overall stockholders’ equity.
Activity
Warrants and Pre-Funded Warrants
The following tables summarize activity and outstanding balances as of December 31, 2025 and 2024 for the Warrants and Pre-Funded Warrants from the Public Offering, Private Placement, and Participation Right Exercise, along with the associated weighted average exercise price and weighted average remaining life.
December 31, 2025
Warrants
Pre-Funded Warrants (1)
( in thousands, except per share data )
Number*
Wtd. Avg. Exercise Price
Wtd. Avg. Remaining Life (in years)
Aggregate Intrinsic Value
Number*
Wtd. Avg. Exercise Price
Aggregate Intrinsic Value
Outstanding at beginning of year
2,130
$
10.5352
4.74
$
8,230
450
$
0.0010
$
6,478
Granted
—
—
—
—
Exercised
( 2 )
10.5000
( 170 )
0.0010
Forfeited/Expired
—
—
—
—
Outstanding at end of year
2,128
$
10.5353
3.74
$
—
280
$
0.0010
$
1,554
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
(1) The Pre-Funded Warrants have no expiration date and only expire when exercised in full.
F-21
Table of Contents
December 31, 2024
Warrants
Pre-Funded Warrants(1)
(in thousands, except per share data)
Number*
Wtd. Avg. Exercise Price
Wtd. Avg. Remaining Life (in years)
Aggregate Intrinsic Value
Number*
Wtd. Avg. Exercise Price
Aggregate Intrinsic Value
Outstanding at beginning of year
—
—
—
—
—
Granted
2,132
$
10.5352
450
$
0.0010
Exercised
( 2 )
10.5000
—
—
Forfeited/Expired
—
—
—
—
Outstanding at end of year
2,130
$
10.5352
4.74
8,230
450
$
0.0010
6,478
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
(1) The Pre-Funded Warrants have no expiration date and only expire when exercised in full.
Equity Incentive Plan
On June 17, 2021, the Company's stockholders approved and the Company adopted the ClearSign Technologies Corporation 2021 Equity Incentive Plan (as may be amended from time to time, the “2021 Plan”) which permits the Company to grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and performance shares, to eligible participants, which includes employees, directors and consultants. The Board’s Human Capital and Compensation Committee (the “Compensation Committee”) is authorized to administer the 2021 Plan.
The 2021 Plan provides for an annual increase in available shares equal to the lesser of (i) 10 % of the aggregate number of shares of common stock issued by the Company in the prior fiscal year; or (ii) such number provided by the Compensation Committee; provided, however, that the total cumulative increase in the number of shares available for issuance pursuant to this automatic share increase shall not exceed 40 thousand shares of common stock (or 400 thousand on a pre-reverse stock split basis). In 2025, the Board did not exercise their right to limit the automatic increase. Accordingly, the 2021 Plan share reserve increased by 40 thousand shares.
Ending balances for the 2021 Plan is as follows:
December 31,
December 31,
( in thousands )
2025
2024
Outstanding options and restricted stock units
291
332
Reserved but unissued shares under the 2021 Plan
149
186
Reserved but unissued shares at end of period
440
518
Stock Options
Under the terms of the 2021 Plan, incentive stock options and non-statutory stock options must have an exercise price at or above the fair market value on the date of the grant. At the time of grant, the Company will determine the period within which the option may be exercised and will specify any conditions that must be satisfied before the option vests and may be exercised. The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model.
As permitted by SEC Staff Accounting Bulletin (“SAB”) 107, management utilized the simplified approach to estimate the expected term of the options, which represents the period of time that options granted are expected to be outstanding. Expected volatility has been determined through the Company’s historical stock price volatility. The Company has not made an estimate of forfeitures at the time of the grant, but rather accounts for forfeitures at the time they occur. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.
F-22
Table of Contents
Equity Incentive Plan Options
Compensation expense associated with stock option awards for the years ended December 31, 2025 and 2024 totaled $ 36 thousand and $ 113 thousand, respectively.
A summary of the Company’s 2011 Equity Incentive Plan and the 2021 Plan stock option activity and changes is as follows:
December 31,
December 31,
2025
2024
( in thousands, except per share data )
Options to Purchase Common Stock*
Weighted Average Exercise Price*
Weighted Average Remaining Contractual Life (in years)
Aggregate Intrinsic Value
Options to Purchase Common Stock*
Weighted Average Exercise Price*
Weighted Average Remaining Contractual Life (in years)
Aggregate Intrinsic Value
Outstanding at beginning of year
245
$
20.40
4.92
$
496
276
$
20.70
5.38
$
180
Granted
—
$
—
—
—
—
$
—
—
—
Exercised
—
$
—
—
—
—
$
—
—
—
Forfeited/Expired
( 7 )
$
26.47
—
—
( 31 )
$
22.50
—
18
Outstanding at end of period
238
$
20.24
3.64
$
855
245
$
20.40
4.92
$
496
Exercisable at end of period
186
$
16.86
3.24
$
855
187
$
17.00
4.55
$
485
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
The intrinsic value is the difference between the Company’s common stock price and the option exercise prices multiplied by the number of in-the-money options. This amount changes based on the fair value of the Company’s common stock.
At December 31, 2025, there was $ 250 thousand of total unrecognized compensation cost related to non-vested stock option-based compensation arrangements. Vesting criteria ranges from time-based to performance-based. The Company records costs for time-based arrangements ratably across the timeframe, whereas performance-based arrangements require management to continually evaluate predetermined goals against actual circumstances. The maximum contractual term for these options are ten years from the grant date.
Inducement Options
During the year ended December 31, 2023, the Company granted non-qualified stock options to its Chief Technology Officer to purchase an aggregate of 15 thousand shares of common stock (or 150 thousand on a pre-reverse stock split basis) with an exercise price of $ 9.10 per share (or $ 0.91 per share on a pre-reverse stock split basis) as a material inducement to accept employment with the Company. These inducement options vest in three equal installments, with one third of the option vesting on the grant date, and each remaining third vesting on the second and third anniversaries of the grant date, subject to continued employment with the Company. The fair value of these inducement options was $ 112 thousand, which was estimated on the grant date using the Black-Scholes valuation model. The compensation expense recognized for these inducement options for the years ended December 31, 2025 and 2024 was $ 32 thousand and $ 37 thousand, respectively. These options are now fully vested as of December 31, 2025.
These inducement options were granted outside of the 2021 Plan and in accordance with the employment inducement exemption provided under Nasdaq Listing Rule 5635(c)(4).
F-23
Table of Contents
A summary of the Company’s inducement option activity and changes is as follows:
December 31,
December 31,
2025
2024
( in thousands, except per share data )
Options to Purchase Common Stock*
Weighted Average Exercise Price*
Weighted Average Remaining Contractual Life (in years)
Aggregate Intrinsic Value
Options to Purchase Common Stock*
Weighted Average Exercise Price*
Weighted Average Remaining Contractual Life (in years)
Aggregate Intrinsic Value
Outstanding at beginning of year
49
$
15.27
5.49
$
119
49
$
15.27
6.49
$
30
Granted
—
$
—
—
$
—
Exercised
—
$
—
—
$
—
Forfeited/Expired
—
$
—
—
$
—
Outstanding at end of year
49
$
15.27
4.53
$
—
49
$
15.27
5.49
$
119
Exercisable at end of year
49
$
15.27
4.53
$
—
44
$
16.00
5.10
$
93
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
Restricted Stock Units
The Company awards its directors and certain employees restricted stock units (“RSUs”) in lieu of cash payment for compensation. These awards are granted pursuant to the 2021 Plan. Employee vesting criteria is time based, and compensation expense is recognized ratably across the timeframe. The Company pays payroll withholding taxes on behalf of the employee at vesting by withholding shares from the employee’s award to cover taxes payable in connection with such vesting. The Company accrued taxes for RSU share-based compensation of $ 50 thousand and $ 32 thousand for the years ended December 31, 2025 and 2024, respectively. Total unrecognized compensation expense for employee restricted stock units as of December 31, 2025 was $ 176 thousand.
Director vesting criteria is contingent upon the occurrence of one of four future events, which the Company cannot predict or control. Therefore, compensation expense for director RSUs is not recognized until one of these four future events occur in accordance with FASB ASC Topic 718 , “ Compensation – Stock Compensation .” Total unrecognized compensation expense for director services as of December 31, 2025 was $ 139 thousand. During the year ended December 31, 2025, director compensation was earned on a quarterly basis with the target value of compensation set at approximately $ 75 thousand per quarter, assuming four compensated directors, one chairperson for each of the three committees and two committee members for each of the three committees.
A summary of the Company’s RSUs activity is as follows:
December 31,
December 31,
2025
2024
( in thousands, except per share data )
Number of Shares*
Weighted Average Grant Date Fair Value*
Weighted Average Contractual Life (in years) (1)
Number of Shares*
Weighted Average Grant Date Fair Value*
Weighted Average Remaining Contractual Life (in years) (1)
Nonvested at beginning of year
87
$
9.90
0.88
67
$
10.50
1.08
Granted
60
$
8.02
52
$
9.70
Vested
( 88 )
$
9.56
( 32 )
$
10.80
Forfeited
( 6 )
$
9.19
-
$
—
Nonvested at end of period
53
$
8.36
0.85
87
$
9.90
0.88
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
1) Weighted Average Contractual Life calculation excludes the number of director RSUs that vest upon one of four performance events (refer to discussion above for details).
F-24
Table of Contents
A summary of the Company’s RSU compensation expense is as follows:
For the Year Ended
December 31,
( in thousands, except per share data )
2025
2024
Share-based compensation expense
$
866
$
397
Weighted average value per share*
$
9.33
$
12.70
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
Stock Awards
The Company awards employees stock in lieu of cash payment for compensation, typically to satisfy accrued bonus compensation and for ad-hoc bonuses for exemplary performance. The awards are granted from the 2021 Plan.
2025
2024
( in thousands, except per share data )
Number of Shares*
Fair Value
Weighted Average per Share
Number of Shares*
Fair Value
Weighted Average per Share
Share-based compensation
1
$
9
$
9.06
2
$
27
$
11.50
Fair value of stock payments in accrued compensation
33
$
279
$
8.57
31
$
326
$
10.62
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
Consultant Stock Plan
The Company’s 2013 Consultant Stock Plan (the “Consultant Plan”) provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and Board members are not entitled to receive grants from the Consultant Plan. The Compensation Committee is authorized to administer the Consultant Plan and establish the grant terms. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1 % of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board shall determine.
The Consultant Plan activity is as follows:
December 31,
( in thousands )
2025*
2024*
Reserved but unissued shares at beginning of period
26
18
Increases in the number of authorized shares
3
12
Grants
( 10 )
( 4 )
Reserved but unissued shares at end of period
19
26
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
The Consultant Plan compensation expense is summarized as follows:
For the Year Ended
December 31,
( in thousands, except per share data )
2025
2024
Share-based compensation expense
$
65
$
29
Weighted average value per share*
$
6.31
$
7.50
* retroactively reflects 1 -for-10 reverse split effective on March 13, 2026
F-25
Table of Contents
Note 10 – Net Loss per Common Share
The Company calculates net loss per common stock in accordance with ASC Topic 260, Earnings Per Share (“ASC 260”). Basic and diluted net loss per common stock was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Under ASC 260, shares issuable for little or no cash consideration are considered outstanding common stock and included in the computation of basic net loss per share. As such, for the years ended December 31, 2025 and 2024, the Company included its outstanding Pre-Funded Warrants in its computation of net loss per share. The Pre-Funded Warrants were issued in April and June 2024, as described above in Note 9, and are each exercisable into one share of common stock at an exercise price of $ 0.001 per share (or $ 0.0001 per share on a pre-reverse stock split basis).
The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the years ended December 31, 2025 and 2024, as the result would be anti-dilutive:
December 31,
December 31,
( in thousands )
2025
2024
Stock options
287
294
Restricted stock units
53
87
Warrants
2,128
2,130
Total shares excluded from calculation
2,468
2,511
Note 11 – Retirement Plan
The Company has a defined contribution retirement plan covering all of its U.S. employees whereby the Company matches employee contributions up to 3 % of their base salary. The Company’s matching contribution expense totaled $ 63 thousand and $ 68 thousand during the years ended December 31, 2025 and 2024, respectively.
Note 12 – Commitments and Contingencies
Litigation
From time to time the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in any such matter may harm the Company’s business.
On January 16, 2026, Judith Schrecker, David Maley, and Catharine M. de Lacy (collectively, the “Former Directors”), filed a petition for advancement in the Delaware Court of Chancery for an advancement of legal fees relating to a request by the Company for the Former Directors to return material of the Board and the former Special Committee of the Board. The advancement proceedings will effectuate an advancement of monies to the Former Directors counsel for monies incurred to represent the Former Directors in this matter. The advancement proceeding will follow a prescribed court process where the legal fees will be reviewed with the goal of concluding reasonable amount payable to the Former Directors’ counsel for representation in this matter. At the date of this report, we do not believe this proceeding will have a material adverse effect on the future operations of the Company. To account for this matter, we have accrued $ 180 thousand as an estimate for legal services rendered during 2025. Subsequent to December 31, 2025, the total advancement request amounted to $ 319 thousand, which includes expenses for legal services rendered during 2026.
Indemnification Agreements
The Company maintains indemnification agreements with our directors and officers that may require the Company to indemnify these individuals against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by law.
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Note 13 – Government Assistance
During 2022, the Company was awarded a research grant from the Department of Energy (“DOE”) for approximately $ 250 thousand with the completion of such grant occurring in March 2023. The purpose of the grant was to produce a research paper for a flexible fuel ultra-low NOx process burner capable of burning 100% hydrogen fuel. During 2023, the Company was awarded a Phase 2 grant from the DOE to continue developing this ultra-low NOx hydrogen burner. The Phase 2 grant amount totaled approximately $ 1.6 million over a two-year period. On December 9, 2025, we received a deadline extension from the DOE allowing us to continue to work until February 27, 2026. These awards allow the Company to request reimbursements for expenditures such as labor, material, and administrative costs. During the years ended December 31, 2025 and 2024, the Company recognized $ 736 thousand and $ 633 thousand in reimbursements from the DOE, respectively.
Beginning in 2021, the Company received funds relating to the Oklahoma 21 st Century Quality Jobs Act. The estimated duration of the program is up to 10 years and is designed to attract growth industries to Oklahoma. By reporting quarterly salary statistics and meeting agreed upon employment thresholds, the state remits benefit monies to the Company. During the year ended December 31, 2025, the Company did no t receive any funds from this program. During the year ended December 31, 2024, the Company recognized $ 31 thousand in government assistance from this program.
Note 14 – Quarterly Results (unaudited)
Quarterly results for the years ended December 31, 2025 and 2024 are as follows:
(in thousands, except per share data)
First
Second
Third
Fourth
For the year ended December 31, 2025
Quarter
Quarter
Quarter
Quarter
Revenue
$
401
$
133
$
1,029
$
3,671
Gross profit
$
196
$
55
$
368
$
805
Operating expense
$
2,453
$
1,893
$
2,118
$
1,631
Net loss
$
( 2,076 )
$
( 1,680 )
$
( 1,429 )
$
( 311 )
Net loss per share - basic and fully diluted
$
( 0.37 )
$
( 0.30 )
$
( 0.26 )
$
( 0.06 )
For the year ended December 31, 2024
Revenue
$
1,102
$
45
$
1,859
$
590
Gross profit
$
437
$
42
$
551
$
88
Operating expense
$
1,689
$
2,179
$
1,984
$
1,754
Net loss
$
( 1,108 )
$
( 1,872 )
$
( 1,155 )
$
( 1,164 )
Net loss per share - basic and fully diluted
$
( 0.30 )
$
( 0.40 )
$
( 0.20 )
$
( 0.25 )
Note 15 – Subsequent Events
On March 6, 2026, the Company filed a certificate of amendment to its certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1 -for-10 reverse stock split of the Company’s shares of common stock. See Note 2 – Summary of Significant Accounting Policies – Reverse Stock Split for more information.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CLEARSIGN TECHNOLOGIES CORPORATION
Date: March 31, 2026
By:
/s/ Colin J. Deller
Colin J. Deller
Chief Executive Officer
Date: March 31, 2026
By:
/s/ Brent Hinds
Brent Hinds
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Colin James Deller and Brent Hinds as their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in- fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: March 31, 2026
/s/ Colin J. Deller
Colin J. Deller
Chief Executive Officer and Director
(Principal Executive Officer)
Date: March 31, 2026
/s/ Brent Hinds
Brent Hinds
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: March 31, 2026
/s/ G. Todd Silva
G. Todd Silva, Director
Date: March 31, 2026
/s/ Anthony DiGiandomenico
Anthony DiGiandomenico, Director
Date: March 31, 2026
/s/ Louis J. Basenese
Louis J. Basenese, Director