What changed in this filing

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Item 1. Financial Statements

2025-05-15 compared with 2024-11-14 · 130 added, 258 removed, 331 unchanged (54% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current Assets:

18 unchanged sentences

Stockholders’ Equity:

Preferred stock, $ 0.0001 par value, zero shares issued and outstanding

Common stock, $ 0.0001 par value, 50,234,407 and 38,687,061 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

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, 52,422,532 and 50,285,509 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively.

Additional paid-in capital

8 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Cost of goods sold

7 unchanged sentences

Government assistance

Gain from sale of assets

Other income, net

3 unchanged sentences

Comprehensive loss:

Foreign-exchange translation adjustments, net of taxes

Foreign-exchange translation adjustments

Comprehensive loss

2 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Month Periods During the Nine Months Ended September 30, 2024 and 2023

For the Three Months Ended March 31, 2025 and 2024

Accumulated Other

4 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

ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Month Periods During the Nine Months Ended September 30, 2024 and 2023

Accumulated Other

4 unchanged sentences

Balances at December 31, 2023

Share-based compensation

Share-based compensation, net of tax withholdings

Fair value of stock issued in payment of accrued compensation

Shares issued for services ($ 0.66 per share)

Shares issued for services

Foreign-exchange translation adjustment

Balances at March 31, 2024

Share-based compensation

Shares issued upon exercise of options ($ 0.54 per share)

Shares issued for services ($ 0.66 per share)

Foreign-exchange translation adjustment

Balances at June 30, 2023

Share-based compensation

Shares issued for services ($ 0.66 per share)

Foreign-exchange translation adjustment

Balances at September 30, 2023

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:

1 unchanged sentence

Common stock issued for services

Share-based compensation

Reserve for share-based compensation tax withholdings

Share-based compensation, net of tax withholdings

Depreciation and amortization

Impairment of intangible assets

Gain from sale of fixed assets

Right-of-use asset amortization

Realized gain from marketable securities

Lease amendments

Change in operating assets and liabilities:

9 unchanged sentences

Disbursements for patents and other intangible assets

Proceeds from sale of fixed assets

Purchases of held-to-maturity short-term U.S.

Redemption of held-to-maturity short-term U.S.

Net cash provided by (used in) investing activities

Net cash provided used in investing activities

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

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

Prior year prepaid expenses repurposed to fixed assets as demonstration equipment

Non-cash impact of new lease

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

10 unchanged sentences

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 (“WFOE”) in China – ClearSign Combustion (Beijing) Environmental Technologies Co., LTD.

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.

1 unchanged sentence

The Company can revive its China operations at any time during those three years with minimal cost impact.

Based on the Company’s current project plans, it expects to file for dormancy on or near December 31, 2024.

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 decision maker (“CODM”), reviews quarterly 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.

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 months ended March 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.

Note 2 – Summary of Significant Accounting Policies

8 unchanged sentences

Intercompany balances and transactions have been eliminated in consolidation.

The Annual Report on Form 10-K filed with the SEC on April 1, 2024, contained a “going concern” note, which raised substantial doubt about our ability to continue as a going concern.

We believe that we have alleviated the substantial doubt by selling equity securities on April 23, 2024, May 15, 2024, and June 24, 2024, 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.

Refer to “Note 7 – Equity” for further details about the offerings effectuated during the nine months ended September 30, 2024.

Use of Estimates

5 unchanged sentences

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

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

During the three and nine months ended September 30, 2023, the Company received $ 60 thousand from these arrangements.

During the three months ended March 31, 2025 and 2024, the Company received zero and $ 107 thousand, respectively, from these types of arrangements.

Foreign Operations

The accompanying unaudited condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 include assets amounting to approximately $ 209 thousand and $ 334 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 $ 211 thousand has been paid as of September 30, 2024.

The accompanying unaudited condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 include assets amounting to approximately $ 93 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 $ 211 thousand has been paid as of March 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.

1 unchanged sentence

The Company can revive its China operations at any time during those three years with minimal cost impact.

Based on the Company’s current project plans, it expects to file for dormancy on or near December 31, 2024.

We will incur one-time non-recurring costs related to this project for severance and related benefit costs, equipment disposal and shipment costs, and legal filing fees.

During the three months ended September 30, 2024, we recorded a one-time non-recurring $ 394 thousand accrual estimate related to our decision to suspend our China operations.

The dormancy filing became effective as of March 12, 2025.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

ASU 2023-07 requires expanded disclosures about reportable segments including additional information on segment expenses, expanded interim period disclosures, and an explanation of how the chief operating decision maker utilizes segment information in evaluating segment performance.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

We are currently assessing the impact that the adoption of ASU 2023-07 will have on the disclosures in our consolidated financial statements.

In December 2023, the FASB issued ASU No.

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”).

The FASB issued 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.

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 consolidated financial statements.

Note 3 – Fixed Assets

Fixed assets are summarized as follows:

September 30,

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.

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.

Note 3 – Fixed Assets, Net

Fixed Assets, Net

Fixed assets, net are summarized as follows:

(in thousands)

3 unchanged sentences

Operating lease ROU assets, net

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

Depreciation expense for the three and nine months ended September 30, 2023 was $ 41 thousand and $ 122 thousand, respectively.

Depreciation expense for the three months ended March 31, 2025 and 2024 was $ 5 thousand and $ 7 thousand, respectively.

The Company leases office space in Tulsa, Oklahoma, Seattle, Washington, and Beijing, China.

During the nine months ended September 30, 2024 and 2023, the Company renewed its Beijing, China lease for 13 months with monthly rent at approximately $ 3 thousand.

As a result of these renewals, the Company increased the right-of-use (“ROU”) asset and lease liability by $ 32 thousand and $ 34 thousand during the nine months ended September 30, 2024 and 2023, respectively.

The Company exited our long term Seattle operating lease on September 30, 2023.

During October 2023, the Company entered into a sub-lease agreement to rent office space in Seattle for approximately $ 2 thousand per month for twelve months .

We renewed the twelve month Seattle sub-lease during October 2024 with substantially the same terms.

The Tulsa and Beijing leases are classified as operating leases, with remaining terms ranging from less than twelve months to approximately four years ;

During July 2024, the Company renewed its Beijing, China lease for 13 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 $ 32 thousand during the year ended December 31, 2024.

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 .

The Seattle lease is considered a short-term lease, as the lease term is 12 months or less from the commencement date.

The short-term lease expense was approximately $ 6 thousand and $ 5 thousand for the three months ended March 31, 2025 and 2024, respectively.

The Tulsa and Beijing leases are classified as operating leases, with remaining terms ranging from less than twelv e months to approximately three 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 Company did no t incur restoration expenses for the three and nine months ended September 30, 2024.

The Company did no t incur restoration expenses for the three months ended September 30, 2023, and incurred $ 31 thousand for the nine months ended September 30, 2023.

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 three and nine months ended September 30, 2024 were $ 25 thousand and $ 73 thousand, respectively.

Operating lease costs for the three and nine months ended September 30, 2023 were $ 35 thousand and $ 117 thousand, respectively.

Operating lease costs for the three months ended March 31, 2025 and 2024 was $ 24 thousand.

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

September 30,

(in thousands)

7 unchanged sentences

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, 2024 are as follows:

Minimum future payments under the Company’s operating lease liabilities as of March 31, 2025 are as follows:

(in thousands)

2024 (remaining 3 months)

At September 30, 2024, $ 15 thousand of our future minimum lease payments represents interest.

2025 (remaining)

Total future lease payments

imputed interest

Note 4 – Patents and Other Intangible Assets

Patents and other intangible assets are summarized as follows:

September 30,

(in thousands)

1 unchanged sentence

Issued patents

Trademarks pending

Registered trademarks

Accumulated amortization

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

Amortization expense for the three and nine months ended September 30, 2023 was $ 32 thousand and $ 109 thousand, respectively.

Future amortization expense associated with issued patents and registered trademarks as of September 30, 2024 is as follows:

Amortization expense for the three months ended March 31, 2025 and 2024 was $ 42 thousand and $ 38 thousand, respectively.

Future amortization expense associated with issued patents and registered trademarks as of March 31, 2025 is as follows:

(in thousands)

2024 (remaining 3 months)

2025 (remaining)

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 three and nine months ended September 30, 2024 and 2023, the Company assessed its patent and trademark assets for impairment.

The Company incurred $ 17 thousand impairment costs for the three and nine months ended September 30, 2024.

The Company did no t incur impairment costs for the three months ended September 30, 2023, and incurred $ 14 thousand impairment costs for the nine months ended September 30, 2023.

During the three months ended March 31, 2025 and 2024, the Company assessed its patent and trademark assets.

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

2 unchanged sentences

Note 5 – Revenue, Contract Assets and Contract Liabilities

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 per Accounting Standards Codification (“ASC”) 606.

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 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.

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 $ 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 an engineering study referred herein as a

Computational Fluid Dynamic analysis (“CFD”), and sold a single boiler burner.

These products and services constitute performance obligations.

The Company recognized $ 1,102 thousand of revenues and $ 665 thousand of cost of goods sold during the three months ended March 31, 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 computational fluid dynamic analysis, and fulfilled multiple spare parts orders.

These products and services constitute performance obligations per ASC 606.

The Company recognized $ 85 thousand of revenues and $ 61 thousand of cost of goods sold during the three months ended September 30, 2023.

The revenue and cost of goods sold relate to a sale of our boiler burner product line.

The Company recognized $ 1,129 thousand of revenues and $ 870 thousand of cost of goods sold during the nine months ended September 30, 2023.

The revenue and cost of goods sold predominantly relate to the Company’s process burner product line, where the Company successfully completed a burner performance customer witness test, which represented a contractual performance obligation per ASC 606.

The Company had contract assets of $ 149 thousand and $ 188 thousand at September 30, 2024 and December 31, 2023, respectively.

The Company had contract liabilities of $ 174 thousand and $ 1,116 thousand at September 30, 2024 and December 31, 2023, respectively.

Of the $ 1,116 thousand contract liability balance at December 31, 2023, the Company recognized revenue of $ 772 thousand and $ 1,025 thousand during the three and nine months ended September 30, 2024, respectively.

The Company delivered multiple burners in connection with a single customer order, successfully completed an engineering study and a CFD analysis, and fulfilled multiple spare parts orders.

These products and services constitute performance obligations.

The Company had contract assets of $ 150 thousand and $ 194 thousand at March 31, 2025 and December 31, 2024, respectively.

The Company had contract liabilities of $ 887 thousand and $ 73 thousand at March 31, 2025 and December 31, 2024, respectively.

Of the $ 73 thousand contract liabilities balance at December 31, 2024, the Company recognized revenue of $ 23 thousand during the three months ended March 31, 2025.

Note 6 – Product Warranties

A summary of the Company’s warranty liability activity, which is included in accrued liabilities in the accompanying consolidated balance sheets as of September 30, 2024 and December 31, 2023, 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 condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024, is as follows:

(in thousands)

Warranty liability at beginning of year

Changes in accrual related to expirations

Changes related to expirations and settlements

Warranty liability at end of period

4 unchanged sentences

The Company has not issued any shares of preferred stock.

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 will now expire on December 31, 2024.

The Company has an At-The-Market (“ATM”) program pursuant to a Sales Agreement with Virtu Americas LLC, as sales agent, dated December 23, 2020 (the “Sales Agreement”), pursuant to which the Company may sell shares of common stock with an aggregate offering price of up to $ 8.7 million.

2 unchanged sentences

however, the Sales Agreement remains in full force and effect.

During the nine months ended September 30, 2024, the Company issued zero shares of its common stock from the ATM program.

As of September 30, 2024, the Company has cumulatively issued approximately 1.6 million shares of common stock under the ATM program, at an average price of $ 3.84 per share.

During the three months ended March 31, 2025, the Company did not issue any shares of its common stock from the ATM program.

As of March 31, 2025, the Company has cumulatively issued approximately 1.6 million shares of common stock under the ATM program, at an average price of $ 3.84 per share.

Gross proceeds totaled approximately $ 6.1 million and net cash proceeds was approximately $ 5.9 million.

1 unchanged sentence

These rules may limit future issuances of shares by the Company under our “shelf” registration statement on Form S-3, the ATM program or other securities offerings.

Equity Offerings

Public Offering

On April 23, 2024, we completed an underwritten public offering (the “Public Offering”), pursuant to which we sold approximately 4,621 thousand shares of our common stock and 4,621 thousand redeemable warrants (the “Public Warrants”) at a price of $ 0.91 per share of common stock and $ 0.01 for the accompanying Public Warrant.

On May 15, 2024, Public Ventures, LLC (“Public Ventures”), the underwriter of the Public Offering, exercised its over-allotment option in full to purchase an additional 693 thousand shares of common stock and 693 thousand Public Warrants.

After deducting customary professional service fees, the net proceeds from the Public Offering amounted to approximately $ 4,222 thousand.

Each Public Warrant has an exercise price of $ 1.05 per share and is exercisable for a period of five years starting from the date of its issuance.

Holders of the Public Warrants are not able to exercise their warrants on a cashless basis.

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 the Public Warrants anytime between issuance and expiration, at a price of $ 0.01 per Public Warrant, provided that the closing price of the common stock reported equals or exceeds $ 2.275 (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.

In connection with the Public Offering, we also issued approximately 425 thousand warrants to Public Ventures (the “Underwriter Warrants”), as consideration for the services provided as underwriter for the Public Offering.

The Underwriter’s Warrants are exercisable at a per share exercise price of $ 1.1375 commencing 180 days from April 19, 2024, and expire on their fifth year anniversary.

The Underwriter’s Warrants can be exercised on a cashless basis based on a formula set forth therein and are non-redeemable.

The shares of common stock and Public Warrants issued in the Public Offering 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:

(in thousands)

Allocated Amount

Public Warrants

In determining the fair values of the Public Warrants and Underwriter Warrants, we used a Black-Scholes option pricing model with the following assumptions:

Expected volatility

Contractual/expected term (in years)

Risk-free interest rate

Expected dividend yield

The Underwriter Warrants issued in connection with the Public Offering have been accounted for as a direct cost of the Public Offering, resulting in no net effect to the overall stockholders’ equity.

The fair value of the shares of common stock issued in the Public Offering was determined using the closing price of our common stock immediately preceding the closing date of the Public Offering.

Private Placement

On April 23, 2024, we completed a private placement (the “Private Placement”) concurrent with the Public Offering noted above.

As part of the Private Placement, we sold (i) approximately 2,250 thousand shares of common stock at a price of $ 0.91 per share of common stock;

(ii) redeemable warrants to purchase up to approximately 8,108 thousand shares of our common stock (the “Private Warrants”) at a price of $ 0.01 per accompanying Private Warrant;

and (iii) pre-funded warrants to purchase up to approximately 3,156 thousand shares of common stock (the “Private Pre-Funded Warrants”) at a price of $ 0.9099 per accompanying Private Pre-Funded Warrant.

After deducting customary professional service fees, the net proceeds from the Private Placement amounted to approximately $ 4,468 thousand.

The Private Warrants have the same terms as the Public Warrants noted above, except that they are only exercisable six months after their issuance.

Each Private Pre-Funded Warrant has an exercise price of $ 0.0001 per share and expire when exercised in full.

In accordance with the terms of the Private Pre-Funded Warrants, the Company is prohibited from effecting an exercise of any Private Pre-Funded 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 %.

In connection with the Private Placement, we issued approximately 432 thousand warrants to Public Ventures, as compensation for their services as our exclusive placement agent in the Private Placement (the “Placement Agent Warrants”).

The terms of the Placement Agent Warrants are the same as the Underwriter Warrants noted above.

The shares of common stock, Private Pre-Funded Warrants and Private Warrants issued in the Private Placement 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:

(in thousands)

Allocated Amount

Private Pre-Funded Warrants

Private Warrants

In determining the fair values of the Private Warrants, Private Pre-Funded Warrants, and Placement Agent Warrants, we used a Black-Scholes option pricing model with the following assumptions:

Expected volatility

Contractual/expected term (in years)

Risk-free interest rate

Expected dividend yield

The Placement Agent Warrants issued in the Private Placement have been accounted for as a direct cost of the Private Placement resulting in no net effect to the overall stockholders’ equity.

The fair value of the shares of common stock issued in the Private Placement was determined using the closing price of our common stock immediately preceding the closing date of the Private Placement.

Participation Right Exercise

On June 24, 2024, in connection with the Public Offering and concurrent Private Placement noted above, clirSPV exercised its Participation Right (the “Participation Right Exercise”) and purchased (i) 3,350 thousand shares of our common stock at a price of $ 0.91 per share;

(ii) redeemable warrants to purchase up to approximately 7,040 thousand shares of our common stock (the “Participation Right Warrants,” and together with the Public Warrants, Private Warrants, Underwriter Warrants, Placement Agent Warrants, the “Warrants”) at a price of $ 0.01 per accompanying Participation Right Warrant;

and (iii) pre-funded warrants to purchase up to approximately 1,343 thousand shares of common stock (the “Participation Right Pre-Funded Warrants,” and together with the Private Pre-Funded Warrants, the “Pre-Funded Warrants”) at a price of $ 0.9099 per accompanying Participation Right Pre-Funded Warrant.

After deducting customary professional service fees, the net proceeds from the Participation Right Exercise amounted to approximately $ 4,277 thousand.

The Participation Right Warrants have the same terms as the Private Warrants noted above.

The Participation Right Pre-Funded Warrants have the same terms as the Private Pre-Funded Warrants noted above, except that, in accordance with the terms of the Participation Right Pre-Funded Warrants, the Company is prohibited from effecting an exercise that would result in beneficial ownership exceeding 19.99 %.

The shares of common stock, Participation Right Pre-Funded Warrants, and Participation Right Warrants issued in the Participation Right 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:

(in thousands)

Allocated Amount

Participation Right Pre-Funded Warrants

Participation Right Private Warrants

In determining the fair values of the Participation Right Warrants and Participation Right Pre-Funded Warrants, the Company used a Black-Scholes option pricing model with the following assumptions:

Expected volatility

Contractual/expected term (in years)

Risk-free interest rate

Expected dividend yield

The fair value of the shares of common stock issued in connection with the Participation Right Exercise was determined using the closing price of the Company’s common stock immediately preceding the closing date of the Participation Right Exercise.

Warrants & Pre-Funded Warrants

The following table summarizes the Warrants (as defined above) and Pre-Funded Warrants (as defined above) activity and outstanding balance as of September 30, 2024, along with the associated weighted average exercise price and weighted average remaining life.

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, 2025, along with the associated weighted average exercise price and weighted average remaining life for such warrants and pre-funded warrants.

Pre-Funded Warrants (1)

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Remaining Life (in years)

Aggregate Intrinsic Value

Exercise Price (2)

Aggregate Intrinsic Value

Beginning Balance

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(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 details related to our outstanding warrants and pre-funded warrants.

Equity Incentive Plan

On June 17, 2021, the Company's shareholders 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 (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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Ending balances for the 2021 Plan is as follows:

September 30,

( in thousands )

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Reserved but unissued shares under the Plan

Total authorized shares under the Plan

Reserved but unissued shares at end of period

Stock Options

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Equity Incentive Plan Options

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

Compensation expense associated with stock option awards for the three and nine months ended September 30, 2023 totaled $ 42 thousand and $ 132 thousand, respectively.

Compensation expense associated with stock option awards for the three months ended March 31, 2025 and 2024 totaled $ 20 thousand and $ 22 thousand, respectively.

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

September 30,

( in thousands, except per share data )

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Weighted Average Remaining Contractual Life (in years)

Aggregate Intrinsic Value

Outstanding at beginning of year

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Exercisable at end of period

The estimated aggregate pretax intrinsic value of the Company’s outstanding vested stock options at September 30, 2024 is $ 21 thousand.

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 September 30, 2024, there was $ 315 thousand of total unrecognized compensation cost related to non-vested stock option-based compensation arrangements.

At March 31, 2025, there was $ 266 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 150 thousand shares of common stock with an exercise price of $ 0.91 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 options were estimated on the grant date using the Black-Scholes valuation model, and totaled $ 112 thousand.

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

During the three and nine months ended September 30, 2023, compensation expense for these options was zero .

During the nine months ended September 30, 2023, the Company granted non-qualified stock options to its Director of Customer Relationships and Business Development to purchase an aggregate of 150 thousand shares of common stock with an exercise price of $ 1.31 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 options were estimated on the grant date using the Black-Scholes valuation model, which resulted in $ 112 thousand.

The compensation expense recognized for these awards for the three and nine months ended September 30, 2023 was $ 62 thousand.

During the three months ended December 30, 2023, two -thirds of these inducement options were forfeited upon the departure of the Director of Customer Relationships and Business Development.

The compensation expense recognized for these awards for the three months ended March 31, 2025 and 2024 was $ 9 thousand.

Total unrecognized compensation expense for these inducement options as of March 31, 2025 was $ 23 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 is as follows:

( 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

Outstanding at beginning of year

Forfeited/Expired

Outstanding at end of period

Exercisable at end of period

Restricted Stock Units

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The Company pays payroll withholding taxes on behalf of the employee at vesting, and withholds shares from the employee’s award to cover the taxes payable.

The Company accrued taxes for RSU share-based compensation of $ 38 thousand and $ 15 thousand for the nine months ended September 30, 2024 and 2023, respectively.

The Company accrued taxes for RSU share-based compensation of $ 8 thousand and $ 16 thousand for the three months ended March 31, 2025 and 2024, respectively.

Total unrecognized compensation expense for employee RSUs as of March 31, 2025 was $ 304 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, which is in accordance with FASB ASC Topic 718 , “Compensation-Stock Compensation” (“ASC 718”).

Total unrecognized compensation expense for director services as of September 30, 2024 was $ 501 thousand.

Director compensation is earned on a quarterly basis with the target value of compensation set at $ 79 thousand per quarter, assuming four directors;

one lead independent director;

one chair for each committee;

and two committee members for each of the three committees.

Therefore, compensation expense for director RSUs is not recognized until one of these four future events occur, which is in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718 , “ Compensation – Stock Compensation .” Total unrecognized compensation expense for director services as of March 31, 2025 was $ 658 thousand.

Director compensation is earned on a quarterly basis with the target value of compensation set at $ 79 thousand per quarter, assuming four directors, one lead independent director, one chairperson for each committee and two committee members for each of the three committees.

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

September 30,

( in thousands, except per share data )

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Weighted Average Grant Date Fair Value

Weighted Average Contractual Life (in years) (1)

Nonvested at beginning of period

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).

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 )

Compensation Expense

Share-based compensation expense

Weighted average value per share

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The awards are granted from the 2021 Plan.

For the Nine Months Ended

September 30,

( in thousands, except per share data )

Weighted Average Value Per Share

For the three months ended for September 30, 2024 and 2023, the Company issued zero stock awards respectively.

Number of Shares

Weighted Average per Share

Number of Shares

Weighted Average per Share

Fair value of stock payments in accrued compensation

Consultant Stock Plan

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The Consultant Plan activity is as follows:

September 30,

( in thousands )

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For the Three Months Ended

For the Nine Months Ended

September 30,

( in thousands, except per share data )

Compensation Expense

Share-based compensation expense

Weighted average value per share

Note 8 – Net Loss per Common Share

The Company calculates net loss per common share in accordance with ASC 260 “Earnings Per Share” (“ASC 260”).

The Company calculates net loss per common share in accordance with ASC Topic 260, “Earnings Per Share” (“ASC 260”).

Basic and diluted net loss per common share 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 shares and included in the computation of basic net loss per share.

As such, for the three and nine months ended September 30, 2024, the Company included Pre-Funded Warrants to purchase shares of common stock in its computation of net loss per share.

The Pre-Funded Warrants were issued in April and June 2024 with an exercise price of $0.0001 (See "Note 7 - Equity" for additional information).

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, 2024 and 2023, as the result would be anti-dilutive:

September 30,

260, shares issuable for little or no cash consideration are considered outstanding common shares and included in the computation of basic net loss per share.

As such, for the three months ended March 31, 2025, 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 with an exercise price of $ 0.0001 per pre-funded warrant.

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, 2025 and 2024, as the result would be anti-dilutive:

( in thousands )

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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, 2024, the Company recognized $ 116 thousand and $ 332 thousand in reimbursements from the DOE, respectively.

During the three and nine months ended September 30, 2023, the Company recognized $ 26 thousand and $ 95 thousand in reimbursements from the DOE, respectively.

During the three months ended March 31, 2025 and 2024, the Company recognized $ 48 thousand in reimbursements from the DOE.

Beginning in 2021, the Company received funds relating to the Oklahoma 21 st Century Quality Jobs Act.

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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, 2024, the Company recognized $ 17 thousand and $ 64 thousand in government assistance from this program, respectively.

During three and nine months ended September 30, 2023, the Company recognized $ 12 thousand and $ 51 thousand in government assistance from this program, respectively.

During three months ended March 31, 2025 and 2024, the Company recognized zero and $ 31 thousand in government assistance from this program, respectively.

Note 11 – Subsequent Events

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● general economic conditions and events and the impact they may have on us and our potential customers;

● our doing business in China and related risks with respect to intellectual property protection, currency exchange, contract enforcement, and rules on foreign investment;

● the impact of global supply-chain constraints and the threat of, or implementation of, tariffs on imported or exported goods and materials may adversely affect our commercialization efforts and business operations;

● our revenue has been highly concentrated among a small number or customers, and our results of operations could be harmed if we lose a key revenue source and fail to replace it;

● the impact of a cybersecurity incident or other technology disruption;

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

What changed 10-Q

Item 1. Financial Statements