What changed in this filing

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Item 1. Financial Statements

2026-05-15 compared with 2025-11-14 · 152 added, 183 removed, 366 unchanged (48% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current Assets:

1 unchanged sentence

Accounts receivable

Deferred costs

Contract assets

2 unchanged sentences

Fixed assets, net

Contract assets

Patents and other intangible assets, net

5 unchanged sentences

Contract liabilities

Other current liabilities

Total current liabilities

5 unchanged sentences

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, 52,517,048 and 50,285,509 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively.

Common stock, $ 0.0001 par value, 87,500,000 shares authorized, 5,409,133 and 5,328,730 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively.

Additional paid-in capital

2 unchanged sentences

Total stockholders' equity

Total Liabilities and Stockholders' Equity

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Cost of goods sold

Gross profit (loss)

Operating expenses:

16 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Month Periods During the Nine Months Ended September 30, 2025 and 2024

For the Three Months Ended March 31, 2026 and 2025

Accumulated Other

(in thousands, except per share data)

(in thousands)

Comprehensive

5 unchanged sentences

Shares issued for services

Exercise of warrants

Exercise of prefunded warrants

Balances at March 31, 2025

Share-based compensation, net of tax withholdings

Shares issued for services

Balances at June 30, 2025

Share-based compensation, net of tax withholdings

Shares issued for services

Foreign-exchange translation adjustment

Balances at September 30, 2025

ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Month Periods During the Nine Months Ended September 30, 2025 and 2024

Balances at March 31, 2026

Accumulated Other

(in thousands, except per share data)

(in thousands)

Comprehensive

2 unchanged sentences

Balances at December 31, 2024

Share-based compensation

Tax withholdings related to share-based compensation

Share-based compensation, net of tax withholdings

Fair value of stock issued in payment of accrued compensation

Shares issued for services

Foreign-exchange translation adjustment

Exercise of warrants

Exercise of prefunded warrants

Balances at March 31, 2025

Share-based compensation

Tax withholdings related to share-based compensation

Shares issued for services

Issuance of common stock in public offering, net of expenses

Issuance of warrants in public offering, net of expenses

Issuance of common stock in private placement, net of expenses

Issuance of prefunded warrants in private placement, net of expenses

Issuance of warrants in private placement, net of expenses

Issuance of common stock for participation right exercise, net of expenses

Issuance of prefunded warrants for participation right exercise, net of expenses

Issuance of warrants for participation right exercise, net of expenses

Foreign-exchange translation adjustment

Balances at June 30, 2024

Share-based compensation

Tax withholdings related to share-based compensation

Shares issued for services

Foreign-exchange translation adjustment

Balances at September 30, 2024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

5 unchanged sentences

Right-of-use asset amortization

Lease amendments

Change in operating assets and liabilities:

Contract assets

Deferred costs

Accounts receivable

Prepaid expenses and other assets

Contract assets

Accounts payable, accrued liabilities, and lease liabilities

Other current liabilities

Accrued compensation and related taxes

6 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of common stock, net of offering costs

Proceeds from exercise of warrants

Taxes paid related to vesting of restricted stock units

Net cash provided by (used in) financing activities

Taxes paid related to employee stock awards

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

4 unchanged sentences

Officer and employee equity awards for prior year accrued compensation

Non-cash impact of new lease

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4 unchanged sentences

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.

These markets include energy (upstream oil production and downstream 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.

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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.

The Combustion segment derives revenues by delivering products and technology solutions to OEMs and end-users.

Our products and solutions can be incorporated into a new or existing customer infrastructure or equipment.

1 unchanged sentence

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 decision maker (“CODM”), reviews quarterly financial information on a consolidated basis for making operating decisions, allocating resources and evaluating financial performance.

The Company’s Chief Executive Officer, who is the chief operating decision-maker (“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.

1 unchanged sentence

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 three and nine months ended September 30, 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.

Customers in the United States accounted for 100 % of revenues during the three months ended March 31, 2026 and 2025.

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.

Note 2 – Summary of Significant Accounting Policies

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The condensed consolidated balance sheet at December 31, 2025 has been derived from the Company’s audited consolidated financial statements as of that date.

In the opinion of management, these condensed consolidated financial statements reflect all normal recurring and other adjustments necessary for a fair presentation.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all normal recurring and other adjustments necessary for a fair presentation.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”).

Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

1 unchanged sentence

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 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 unaudited condensed 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

1 unchanged sentence

Actual results could differ from those estimates.

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 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 condensed consolidated balance sheets.

Although a warranty is a type of guarantee, assurance-type warranties are not subject to the general recognition provisions of Accounting Standards Codification (“ASC”) Topic 460, Guarantees , which requires recognizing guarantees at fair value.

Research and Development

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Research and development costs have been offset by funds received, if any, from strategic partners in cost sharing and/or collaborative projects.

During the three and nine months ended September 30, 2025, the Company received no funds from these types of arrangements.

During the three and nine months ended September 30, 2024, the Company received $ 28 thousand and $ 135 thousand, respectively, from these types of arrangements.

During the three months ended March 31, 2026 and 2025, the Company received $ 115 thousand and zero , respectively, from these types of arrangements.

Foreign Operations

The accompanying unaudited condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024 include assets amounting to approximately $ 145 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, $ 211 thousand of which has been paid as of September 30, 2025.

The accompanying unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025 include assets amounting to approximately $ 149 thousand and $ 175 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 March 31, 2026.

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.

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Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“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.

ASU 2023-09 is effective for our reporting period beginning January 1, 2025.

We are currently assessing the impact that the adoption of ASU 2023-09 will have on the disclosures in our annual consolidated financial statements.

In November 2024, FASB issued ASU No.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”).

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We are currently assessing the impact that the adoption of ASU 2025-04 will have on the disclosures in our annual 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 contract assets that arise from transactions accounted for under Revenue from Contracts with Customers (“ASC 606”).

The standard is effective for annual reporting periods beginning after December 15, 2025, including interim periods, and allows for early adoption.

The Company is currently evaluating the impacts of the adoption of ASU 2025-05 on the consolidated financial statements and related disclosures.

In December 2025 , FASB issued ASU No.

2025-11 , "Interim Reporting (Topic 270):

Narrow-Scope Improvements.” ASU 2025-11 is intended to provide clarity about the current interim reporting requirements, provides a list of the interim disclosures required by all other Codification topics and establishes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASC 2025-11 will be effective for the Company beginning January 1, 2028, with early adoption permitted, and is not expected to have a significant impact on the Company’s condensed consolidated financial statements.

In December 2025, the FASB issued ASU No.

2025-10, "Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities" (“ASU 2025-10”).

The FASB issued ASU 2025-10 to establish authoritative guidance on the accounting for government grants received by business entities.

ASU 2025-10 is effective for our annual and quarterly reporting periods beginning January 1, 2029.

Early adoption is permitted.

We are currently assessing the impact that the adoption of ASU 2025-10 will have on our consolidated financial statements.

Note 3 – Fixed Assets, Net

1 unchanged sentence

Fixed assets, net are summarized as follows:

September 30,

(in thousands)

3 unchanged sentences

Operating lease ROU assets, net

Depreciation expense for the three and nine months ended September 30, 2025 was $ 7 thousand and $ 19 thousand, respectively.

Depreciation expense for the three and nine months ended September 30, 2024 was $ 4 thousand and $ 15 thousand, respectively.

Depreciation expense related to office furniture, equipment and leasehold improvements for the three months ended March 31, 2026 and 2025 was $ 6 thousand and $ 5 thousand, respectively.

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 right-of-use (“ROU”) asset and lease liability by $ 68 thousand during the nine months ended September 30, 2025.

As a result of this renewal, the Company increased the right-of-use (“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 re nt office space in Seattle for approximately $ 2 thousand per month for twelve months .

1 unchanged sentence

The Seattle lease was renewed in October 2025 with similar terms.

The short-term lease expense for the three and nine months ended September 30, 2025 was approximately $ 6 thousand and $ 17 thousand, respectively.

The short-term lease expense for the three and nine months ended September 30, 2024 was approximately $ 5 thousand and $ 16 thousand, respectively.

The Tulsa and Beijing leases are classified as operating leases, each with remaining terms of approximately two years ;

The short-term lease expense for the three months ended March 31, 2026 and 2025 was approximately $ 6 thousand.

The Tulsa and Beijing leases are classified as operating leases, each with remaining terms of less than 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, in the aggregate.

Operating lease costs for the three and nine months ended September 30, 2025 were $ 24 thousand and $ 73 thousand, respectively.

Operating lease costs for the three and nine months ended September 30, 2024 were $ 25 thousand and $ 73 thousand, respectively.

The Tulsa lease contains fixed annual lease payments that increase annually by approximately 2 %.

The Seattle, Tulsa, and Beijing total monthly minimum rent is approximately $ 10 thousand.

Operating lease costs for the three months ended March 31, 2026 and 2025 were $ 25 thousand and $ 24 thousand, respectively.

Supplemental balance sheet information related to operating leases is as follows:

September 30,

(in thousands)

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Supplemental cash flow information related to operating leases is as follows:

For the Nine Months Ended

September 30,

For the Three Months Ended

(in thousands)

1 unchanged sentence

Operating cash flows used in operating leases

Non-cash impact of new leases and lease modifications

Change in operating lease liabilities

Change in operating lease ROU assets

Minimum future payments under the Company’s operating lease liabilities as of September 30, 2025 are as follows:

Minimum future payments under the Company’s operating lease liabilities as of March 31, 2026 are as follows:

(in thousands)

2 unchanged sentences

imputed interest

Note 4 – Patents and Other Intangible Assets

Patents and other intangible assets are summarized as follows:

September 30,

Note 4 – Patents and Other Intangible Assets, Net

Patents and other intangible assets, net are summarized as follows:

(in thousands)

3 unchanged sentences

Accumulated amortization

Amortization expense for three and nine months ended September 30, 2025 was $ 41 thousand and $ 126 thousand, respectively.

Amortization expense for three and nine months ended September 30, 2024 was $ 43 thousand and $ 123 thousand, respectively.

Future amortization expense associated with issued patents and registered trademarks as of September 30, 2025 is as follows:

Amortization expense for the three months ended March 31, 2026 and 2025 was $ 37 thousand and $ 42 thousand, respectively.

Future amortization expense associated with issued patents and registered trademarks as of March 31, 2026 is as follows:

(in thousands)

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The Company does not amortize patents or trademarks classified as pending.

During the three and nine months ended September 30, 2025 and 2024, the Company assessed its patent and trademark assets.

During the three months ended March 31, 2026 and 2025, the Company assessed its patent and trademark assets.

During the three months ended March 31, 2026 and 2025, we recorded impairments of $ 23 thousand and zero , respectively.

These impairment costs are included within research and development in the unaudited condensed consolidated statements of operations and comprehensive loss.

The Company also evaluated its strategic approach to the pursuit and protection of its intellectual property.

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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 three categories, product shipment, burner performance tests and engineering design.

Performance obligations typically fall into one of three categories:

product shipment, customer witness tests, and engineering services, such as delivery of Computational Fluid Dynamic (“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.

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 $ 1,029 thousand of revenues and $ 661 thousand of cost of goods sold during the three months ended September 30, 2025.

The revenue and cost of goods sold were related to delivering spare parts to multiple customers, delivering a flare order, delivering a mid-stream order, completing a customer witness test, finalizing a Computational Fluid Dynamic (“CFD”) analysis, and providing engineering services.

These products and services constitute performance obligations.

The Company recognized $ 1,563 thousand of revenues and $ 944 thousand of cost of goods sold during the nine months ended September 30, 2025.

The revenue and cost of goods sold relate to spare parts orders for multiple customers, a performance burner test, flare order, engineering services, sales of boiler burners, and the successful completion of CFD analysis.

These products and services constitute performance obligations.

The Company recognized $ 1,859 thousand of revenues and $ 1,308 thousand of cost of goods sold during the three months ended September 30, 2024.

The revenue and cost of goods sold predominantly relate to the delivery of multiple process burners to a single customer.

The delivery of products constitutes performance obligations.

The Company recognized $ 3,006 thousand of revenues and $ 1,976 thousand of cost of goods sold during the nine months ended September 30, 2024.

The revenue and cost of goods sold predominantly relate to the Company’s process burner product line.

The Company delivered multiple burners for different customers, successfully completed engineering feasibility studies, including CFD analysis, and fulfilled multiple spare parts orders.

These products and services constitute performance obligations.

The Company had contract assets of $ 514 thousand and $ 194 thousand at September 30, 2025 and December 31, 2024, respectively.

The Company had contract liabilities of $ 1,148 thousand and $ 73 thousand at September 30, 2025 and December 31, 2024, respectively.

Of the $ 73 thousand contract liabilities balance at December 31, 2024, the Company recognized revenue of $ 39 thousand and $ 73 thousand during the three and nine months ended September 30, 2025, respectively.

The Company recognized $ 191 thousand of revenues and $ 584 thousand of cost of goods sold during the three months ended March 31, 2026.

The revenue and cost of goods sold predominately relates to our mid-stream and boiler burner product offerings.

The cost of goods sold is comprised of two components:

(i) costs related to our revenue and (ii) costs related to a warranty accrual estimate (refer to “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operation” below for further details).

The product offerings associated with the recognized revenue constitute performance obligations.

The Company recognized $ 401 thousand of revenues and $ 205 thousand of cost of goods sold during the three months ended March 31, 2025.

The revenue and cost of goods sold predominantly relate to multiple spare parts orders for a single customer.

Additionally, the Company successfully completed a CFD engineering study and sold a single boiler burner.

The product offerings associated with the recognized revenue constitute performance obligations.

The Company had contract assets of $ 135 thousand and zero at March 31, 2026 and December 31, 2025, respectively.

The Company had contract liabilities of $ 63 thousand and $ 100 thousand at March 31, 2026 and December 31, 2025, respectively.

Of the $ 100 thousand contract liabilities balance at December 31, 2025, the Company recognized revenue of $ 49 thousand during the three months ended March 31, 2026.

Note 6 – Deferred Costs

A summary of the Company’s deferred costs activity in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, is as follows:

(in thousands)

Deferred costs at beginning of year

Capitalization

Labor and overhead allocations

Supplier and subcontractor costs

Amortization of deferred costs

Impairment of costs in excess of contractual value

Deferred costs at end of period

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 condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, is as follows:

September 30,

A summary of the Company’s warranty liability activity, which is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025, is as follows:

(in thousands)

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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 sell shares of common stock with an aggregate offering price of up to $ 10.39 million.

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 approximately $ 10.4 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.

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Warrants and Pre-Funded Warrants

The following table summarizes the activity and outstanding balance of our outstanding warrants and pre-funded warrants as of September 30, 2025, along with the associated weighted average exercise price and weighted average remaining life for such warrants and pre-funded warrants.

The following table summarizes the activity and outstanding balance of our outstanding warrants and pre-funded warrants as of March 31, 2026, along with the associated weighted average exercise price and weighted average remaining life for such warrants and pre-funded warrants.

March 31, 2026

Pre-Funded Warrants (1)

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Forfeited/Expired

Outstanding at Period End

(1) Pre-funded warrants have no expiration date and only expire when exercised in full.

Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for additional details related to our outstanding warrants and pre-funded warrants.

Outstanding at end of period

(1) The pre-funded warrants have no expiration date and only expire when exercised in full.

Refer to the Form 10-K for additional details related to our outstanding warrants and pre-funded warrants.

Equity Incentive Plan

On June 17, 2021, the Company's stockholders approved and the Company adopted the ClearSign Technologies Corporation 2021 Equity Incentive Plan (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.

On June 17, 2021, the Company's stockholders approved and the Company adopted the ClearSign Technologies Corporation 2021 Equity Incentive Plan (as it 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.

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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.

In 2025, the Board did not exercise its right to limit the automatic increase.

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:

September 30,

( in thousands )

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Stock Options

Under the terms of the 2021 Plan, incentive stock options and nonstatutory stock options must have an exercise price at or above the fair market value on the date of the grant.

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.

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The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

During the three months ended March 31, 2026, the following weighted-average assumptions were utilized in the calculation of the fair market value of stock options granted:

Expected life

Weighted average volatility

Forfeiture rate

Weighted average risk-free interest rate

Expected dividend rate

No stock options were granted during the three months ended March 31, 2025.

Equity Incentive Plan Options

Compensation expense associated with stock option awards for the three and nine months ended September 30, 2025 totaled $ 4 thousand and $ 42 thousand, respectively.

Compensation expense associated with stock option awards for the three and nine months ended September 30, 2024 totaled $ 37 thousand and $ 87 thousand, respectively.

A summary of the Company’s 2011 Equity Incentive Plan and the 2021 Plan stock option activity and changes are as follows:

September 30,

Compensation expense associated with stock option awards for the three months ended March 31, 2026 and 2025 totaled $ 46 thousand and $ 20 thousand, respectively.

A summary of the Company’s 2011 Equity Incentive Plan and the 2021 Plan stock option activity and changes is as follows:

( in thousands, except per share data )

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This amount changes based on the fair value of the Company’s common stock.

At September 30, 2025, there was $ 244 thousand of total unrecognized compensation cost related to non-vested stock option-based compensation arrangements.

At March 31, 2026, there was $ 234 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.

The maximum contractual term for these options is 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 150 thousand shares of common stock with an exercise price of $ 0.91 per share 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 three and nine months ended September 30, 2025 was $ 10 thousand and $ 28 thousand, respectively.

The compensation expense recognized for these inducement options for the three and nine months ended September 30, 2024 was $ 9 thousand and $ 28 thousand, respectively.

Total unrecognized compensation expense for these inducement options as of September 30, 2025 was $ 4 thousand.

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).

A summary of the Company’s inducement option activity and changes are as follows:

September 30,

The inducement options summarized below were granted outside of the 2021 Plan and in accordance with the employment inducement exemption provided under Nasdaq Listing Rule 5635(c)(4).

The compensation expense recognized for the inducement options for the three months ended March 31, 2026 and 2025 was zero and $ 9 thousand, respectively.

A summary of the Company’s inducement option activity and changes is as follows:

( in thousands, except per share data )

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Restricted Stock Units

The Company awards its directors and certain employees restricted stock units (“RSUs”) in lieu of cash payment for compensation.

The Company awards its directors and certain employees restricted stock units (“RSUs”) in lieu of cash payment for compensation, if such non-executive directors elect to receive RSUs in lieu of cash payment as allowed by the Company’s director compensation policy.

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 the taxes payable in connection with such vesting.

The Company accrued taxes for RSU share-based compensation of $ 38 thousand and $ 38 thousand for the nine months ended September 30, 2025 and 2024, respectively.

Total unrecognized compensation expense for employee RSUs as of September 30, 2025 was $ 214 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 September 30, 2025 was $ 98 thousand.

Director compensation is earned on a quarterly basis with the target value of compensation set at approximately $ 75 thousand per quarter, assuming five directors, one chairperson for each committee and two committee members for each of the three committees.

As of September 30, 2025, we had four directors.

On May 27, 2025, David M.

Maley notified the Company that he would not stand for re-election as a director of the Company upon the expiration of his current term, which expired at the Company’s 2025 annual meeting of stockholders held on July 25, 2025.

In addition, Judith S.

Schrecker and Catharine M.

de Lacy both resigned from the Board and its committees effective as of August 4, 2025.

Employee vesting criteria are 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 $ 6 thousand and $ 8 thousand for the three months ended March 31, 2026 and 2025, respectively.

Total unrecognized compensation expense for employee restricted stock units as of March 31, 2026 was $ 336 thousand.

Director vesting criteria are 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 occurs in accordance with FASB ASC Topic 718 , “Compensation – Stock Compensation.” Total unrecognized compensation expense for director services as of March 31, 2026 was $ 154 thousand.

A summary of the Company’s RSUs activity is as follows:

September 30,

( in thousands, except per share data )

4 unchanged sentences

Nonvested at end of period

1) The 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).

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).

A summary of the Company’s RSU compensation expense is as follows:

For the Three Months Ended

For the Nine Months Ended

September 30,

( in thousands, except per share data )

1 unchanged sentence

Weighted average value per share

During the three months ended September 30, 2025, 756 thousand RSUs vested but remained unissued as of September 30, 2025, which impacted share-based compensation expense and accrued liabilities by $ 729 thousand.

The 756 thousand RSUs vested as a result of two directors resigning from the Board and another director that chose to not stand for re-election at the Company’s 2025 annual meeting of stockholders.

The Company awards employees stock in lieu of cash payment for compensation, typically to satisfy accrued bonus compensation.

The awards are granted from the 2021 Plan.

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.

These awards are granted pursuant to the 2021 Plan.

For the Three Months Ended

( in thousands, except per share data )

10 unchanged sentences

The Consultant Plan activity is as follows:

September 30,

( in thousands )

4 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

( in thousands, except per share data )

5 unchanged sentences

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 three and nine months ended September 30, 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 and are each exercisable into one share of common stock at an exercise price of $ 0.0001 per share.

In addition, 756 thousand shares were included in the weighted average number of shares outstanding for RSUs that vested but were unissued as of September 30, 2025.

The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three and nine months ended September 30, 2025 and 2024, as the result would be anti-dilutive:

September 30,

As such, for the three months ended March 31, 2026 and 2025, the Company included its outstanding pre-funded warrants in its computation of net loss per share.

The pre-funded warrants are each exercisable into one share of common stock at an exercise price of $ 0.001 per share.

The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three months ended March 31, 2026 and 2025, as the result would be anti-dilutive:

( in thousands )

6 unchanged sentences

As of the date of this report, the Company is not a party to any material pending legal proceedings or claims that the Company believes will have a material adverse effect on the business, financial condition or operating results.

On January 16, 2026, Judith Schrecker, David Maley, and Catharine M.

de Lacy (collectively, the “Former Directors”), filed a petition for advancement (case number 2026-0082-CDW) in the Delaware court of Chancery for an advancement of legal fees relating to a request, by us, for the Former Directors to return material generated by a dissolved special committee formed by the Board on February 10, 2025 (“Special Committee”), which was subsequently dissolved following our 2025 annual meeting of stockholders.

The advancement proceeding effectuated an advancement of monies to the Former Directors counsel for monies incurred to represent the Former Directors in this matter.

The advancement proceeding followed a prescribed court process where the legal fees were reviewed to determine a reasonable amount payable to the Former Directors’ counsel for representation in this matter.

We do not believe this advancement claim will have a material adverse effect on the future operations of the Company, and we do not anticipate any additional claims for advancement of legal fees in this case in the future.

The total advancement claim amounted to $ 319 thousand, of which $ 180 thousand was accrued during the three months ended December 31, 2025.

We delivered the full amount of the advancement claim to their legal counsel during the three months ended March 31, 2026.

Indemnification Agreements

5 unchanged sentences

The Phase 2 grant amount totaled approximately $ 1.6 million over a two-year period.

During the three months ended March 31, 2026, we received a deadline extension from the DOE allowing us to continue work until May 27, 2026.

These awards allow the Company to request reimbursements for expenditures such as labor, material, and administrative costs.

During the three and nine months ended September 30, 2025, the Company recognized $ 216 thousand and $ 307 thousand in reimbursements from the DOE, respectively.

During the three and nine months ended September 30, 2024, the Company recognized $ 116 thousand and $ 332 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 three and nine months ended September 30, 2025, the Company did not receive any funds from this program.

During three and nine months ended September 30, 2024, the Company recognized $ 17 thousand and $ 64 thousand in government assistance from this program, respectively.

During the three months ended March 31, 2026 and 2025, the Company recognized $ 28 thousand and $ 48 thousand in reimbursements from the DOE, respectively.

Note 12 – Subsequent Events

On October 27, 2025, 756 thousand shares of common stock were issued to three former directors to satisfy our outstanding RSU liability recorded as of September 30, 2025 (see “Note 7 – Equity Restricted Stock Units” above for additional information).

The Company has evaluated subsequent events as of the date of this report and has none to report.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS REPORT

12 unchanged sentences

● our ability to successfully develop and implement our technologies and achieve profitability;

● our limited operating history;

● our ability to maintain the listing of our common stock on the Nasdaq Capital Market (“Nasdaq”);

● changes in government regulations that could substantially reduce, or even eliminate, the need for our technology;

17 unchanged sentences

Unless otherwise stated or the context otherwise requires, the terms “ClearSign,” “we,” “us,” “our” and the “Company” refer to ClearSign Technologies Corporation and its subsidiary, ClearSign Asia Limited.

Note Regarding Reverse Stock Split

We effected a reverse stock split of our outstanding common stock at a ratio of 1-for-10, effective as of March 16, 2026, for the purpose of complying with Nasdaq Listing Rule 5550(a)(2).

We have reflected the reverse stock split herein, unless otherwise indicated.

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

What changed 10-Q

Item 1. Financial Statements