What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-02-27 compared with 2025-03-28 · 68 added, 112 removed, 146 unchanged (55% of the section changed)

1 unchanged sentence

Our common stock is quoted on the Nasdaq Capital Market under the symbol LIQT.

As of December 31, 2024, there were approximately 42 stockholders of record of our common stock as reported by our transfer agent, one of which is Cede & Co., a nominee for Depository Trust Company (“DTC”).

As of February 26, 2026 there were approximately 44 stockholders of record of our common stock as reported by our transfer agent, one of which is Cede & Co., a nominee for Depository Trust Company (“DTC”).

All of the shares of common stock held by brokerage firms, banks, and other financial institutions as nominees for beneficial owners are deposited into participant accounts at DTC and are therefore considered to be held of record by Cede & Co.

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2025 Developments

On January 10, 2024, Simon Stadil tendered his resignation as Chief Financial Officer of the Company, effective as of April 10, 2024.

On February 14, 2024, the Company entered into a distribution agreement with Razorback Direct for produced water treatment solutions in the U.S.

On March 19, 2024, the Board of Directors of the Company appointed Phillip Massie Price as Interim Chief Financial Officer of the Company, effective April 1, 2024.

On May 7, 2024, the Company entered into a distribution agreement with Dan Marine Group for marine water treatment solutions for the Chinese market.

On May 14, 2024, the Company entered into a distribution agreement with Franman for marine water treatment solutions for the Greek Market.

On July 25, 2024, the Company entered into a distribution agreement with Danbee Marine Co.

for marine water treatment solutions for the South Korean market.

On September 27, 2024, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to issue and sell an aggregate of 3,630,129 shares of Common Stock, 1,369,871 pre-funded warrants to purchase shares of Common Stock, and warrants to purchase up to an aggregate of 5,000,000 shares of Common Stock for gross proceeds of approximately $10 million.

The combined purchase price of one share of Common Stock and one accompanying warrant to purchase one share of Common Stock is $2.00.

The combined purchase price of one pre-funded warrant and one accompanying warrant to purchase one share of Common Stock under the Purchase Agreement is $1.999.

The Company agreed to issue the Common Stock, warrants, and pre-funded warrants in two tranches:

(i) a first tranche comprised of 29,227 shares of Common Stock, 555,302 pre-funded warrants, and warrants to purchase an aggregate of 584,529 shares of Common Stock, which closed on September 27, 2024;

and (ii) a second tranche comprised of 3,600,902 shares of Common Stock, 814,569 pre-funded warrants, and warrants to purchase an aggregate of 4,415,471 shares of Common Stock, which closed on November 12, 2024.

On November 7, 2024, the Company announced the establishment of a joint venture in China for the marine water treatment market.

On January 31, 2025, LiqTech announced appointment of David Kowalczyk as Chief Financial and Operating Officer

On February 20, 2025, LiqTech received supplier approval water treatment system for the WinGD Dual-Fuel Engine

On March 11, 2025, LiqTech expanded distribution coverage in the Irish swimming pool water filtration system market

On May 13, 2025, LiqTech International Signed distribution and Partnership Agreement with NAF Aquatics for U.S.

commercial swimming pool market

On June 25, 2025, LiqTech' s Advanced Oily Wastewater Filtration was selected by North Star BlueScope Steel

On September 15, 2025, LiqTech expanded its U.S.

presence with Texas service center to support produced water and industrial filtration solutions

On November 20, 2025, Jitri LiqTech broke ground on marine-focused R&D Test Center and Localization Facility in China and completes regional spare parts warehouse

Results of Operations

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Interest and other income

Interest expense

Interest and other expense

Amortization of debt discount

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Gain (loss) on disposal of property and equipment

Loss on assets held for sale

Total Other Expense

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Income Tax Benefit

Revenue for the year ended December 31, 2024, was $14,604,618 compared to $18,001,652 for the same period in 2023, representing a decrease of $3,397,034, or 18.9%.

The decline was mainly due to reduced deliveries of liquid filtration systems, plastics products, ceramic membranes, and aftermarket sales, partly offset by increased sales of DPFs.

The decrease in deliveries of liquid filtration systems was mainly driven by reduced deliveries of pool filtration systems and marine scrubber systems.

The decline in aftermarket sales was primarily due to remediation work carried out in the same period of 2023, which did not recur in 2024.

The reduction in sales of plastic products was largely due to a significant one-time sale recorded in 2023 that did not recur in the current period.

The increase in sales of DPFs was primarily driven by the effective execution of strategies designed to capitalize on the increased demand for DPFs.

Gross profit for the year ended December 31, 2024, was $250,905 (or a gross profit margin of 1.7%), compared to $2,775,476 (or a gross profit margin of 15.4%) for the same period in 2023, representing a decrease of $2,524,571, or approximately 91.0%.

This decline in gross profit can be attributed to the decrease in revenue, resulting in lower overall activity levels and underutilization of our manufacturing capacity, as well as an unfavorable sales mix, which resulted in a lower proportion of high-margin products such as liquid filtration systems and ceramic membranes.

Specifically, the deliveries of containerized oil and gas pilot systems to the Middle East and the U.S.

contributed to lower-than-usual margins, reflecting a strategic decision aimed at demonstrating and validating the value proposition associated with our technology and seeding the market for future growth.

This approach has proven successful, securing an order for a full-scale system scheduled for delivery in 2025.

Additionally, a thorough inventory review led to necessary adjustments for obsolescence and slow-moving items.

The decline in gross profit was partly offset by decreased depreciation as well as continued initiatives aimed at optimizing manufacturing processes, which have improved profitability within DPF and ceramic membrane production.

Revenue for the year ended December 31, 2025, was $16,507,558 compared to $14,604,618 for the same period in 2024, representing an increase of $1,902,940, or 13.0%.

The increase was mainly due to increased deliveries of systems (Pool, Energy & Industry), and components (plastics), partly offset by decreased sales of filters.

The increase in deliveries of systems was mainly driven by increased deliveries of pool filtration systems and water treatment systems for industrial applications.

The increase in components was mainly related to machine building for the food & beverage industry.

The decrease in sales of filters was primarily driven by a refocusing of our strategy to capitalize on sub segments where we see increased future demand for DPFs outside of the automotives sector.

Gross profit for the year ended December 31, 2025, was $1,250,523 (or a gross profit margin of 7.6%), compared to $250,905 (or a gross profit margin of 1.7%) for the same period in 2024, representing an increase of $999,618, or 398.4%.

This increase in gross profit can be attributed to both an increase in revenue as well as a more favorable sales mix, which resulted in a higher proportion of high-margin products within our Systems segment.

We did, however, continue to invest in deliveries of containerized oil and gas systems to the U.S., which contributed to lower-than-usual margins, reflecting a strategic decision aimed at demonstrating and validating the value proposition associated with our technology and seeding the market for future growth.

Despite the significant improvement in both gross profit and gross profit margin, we continue to see an underutilization of our manufacturing capacity that has a material, adverse effect on profitability.

The continued refocusing of the company led to an inventory review and related adjustments for obsolescence and slow-moving inventory items, which also had an unfavorable impact on gross profit margin.

The increase in gross profit was partly supported by decreased depreciation as well as continued initiatives aimed at optimizing manufacturing processes.

Included in the gross profit was depreciation of $1,519,439 and $1,830,553 for the years ended December 31, 2025, and 2024, respectively.

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Total operating expenses for the year ended December 31, 2025, were $9,559,223, representing a decrease of $179,531, or 1.8%, compared to $9,738,754 for the same period in 2024.

In local currency, the cost decrease was higher driven by a DKK/USD appreciation of 3.9% for the full year.

Selling expenses for the year ended December 31, 2025, were $2,718,047, compared to $2,725,239 for the same period in 2024, representing a decrease of $7,192, or 0.3%.

This decline was primarily driven by a reduction in executive officers, along with reductions in bonus payouts, travel costs, marketing expenses, and expenditures related to external sales consultancy services.

The decrease was partially offset by increased bad debt expenses.

This decrease was partly driven by full year effect of savings made in 2024 and lower account receivable write-offs and provision needs.

This were partly offset by costs associated with the newly formed joint venture in China, Nantong JiTRI LiqTech Green Energy Technology Co., Ltd.(the "JV").

The primary focus of the JV is to develop and commercialize systems for the marine water treatment market in China.

Costs for outbound distribution, including tariffs, and expenditures related to external sales consultancy services also increased in 2025.

General and administrative expenses for the year ended December 31, 2025, were $5,677,525 compared to $5,661,455 for the same period in 2024, representing an increase of $16,070, or 0.3%.

The increase was primarily due to newly created positions in supply chain and project management, as well as higher legal expenses, insurance costs, and recruitment costs associated with the resignations of our CFO and VP of Sales.

Additionally, one-time expenses were incurred for the relocation of our plastics production facility.

The increase was also partially attributable to the release of bonus provisions in the comparable period of 2023.

The increase was primarily due to higher legal expenses, the filling of open positions, including the CFO, as well as higher recruitment costs.

Included in general and administrative expenses was non-cash compensation of $987,072 and $664,434 for the years ended December 31, 2025, and 2024, respectively.

Non-cash compensation increased due to a 2025 conversion of 50% of the Board fee and 10% of Senior Leadership Team salary to stock awards and due to this being the second year of a new three-year, long-term incentive plan program for the Senior Leadership Team.

The following is a summary of our non-cash compensation:

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Research and development expense for the year ended December 31, 2025, was $1,163,651 compared to $1,352,060 for the same period in 2024, representing a decrease of $188,409, or 13.9%.

The decrease was primarily due to a more focused R&D strategy with fewer ongoing projects and a reduced average number of employees engaged in external research and development activities, as the Company streamlined and centralized its R&D function.

This was partially offset by one-time exit costs associated with a loss-making external development project.

The decrease was primarily due to a more focused R&D strategy with fewer ongoing projects and a reduced average number of employees engaged in external research and development activities.

Other income (expense)

Total Other expense for the year ended December 31, 2024, was $896,246 compared to $978,302 for the comparable period in 2023, representing decreased expense of $82,056, or 8.4%.

The decrease was primarily attributable to a gain on currency transactions resulting from the EUR/DKK decline against the USD during the period and a loss on assets held for sale in the comparable period in 2023.

This decrease in other expenses was partially offset by a non-cash loss related to the disposal of property and equipment, decreased interest income, and higher debt discount amortization costs due to the extension of the maturity date for the senior promissory notes, with additional warrants issued as consideration for the extension.

Total Other expense for the year ended December 31, 2025, was $294,694 compared to $896,246 for the comparable period in 2024, representing a decrease of $601,552, or 67.1%.

The decrease was primarily attributable to reduced losses on the disposal of property and equipment, increased interest income, and lower debt discount amortization costs due to the extension of the maturity date for the senior promissory notes.

Income taxes provision

The income tax benefit for the year ended December 31, 2025 , was $1,454 compared to a benefit of $38,837 for the comparable period in 2024 , representing a decrease of $37,383 , or 96.3% , mainly driven by a decrease in tax credits associated with research and development activities in Denmark.

As a result of the cumulative effect of the factors described above, we had a net loss for the year ended December 31, 2024, of $10,345,258 compared to $8,571,145 for the comparable period in 2023, representing an increase in net loss of $1,774,113, or 20.7%.

As a result of the cumulative effect of the factors described above, we reported a net loss for the year ended December 31, 2025, of $8,601,940 compared to $10,345,258 for the comparable period in 2024, representing an improvement in net loss of $1,743,318, or 16.9%.

Going Concern and Management’s Plans

The financial statements included herein for the period ended December 31, 2025, have been prepared under the assumption that the Company will continue as a going concern and contemplate the realization of assets and settlement of liabilities in the normal course of business.

As of December 31, 2025, the Company had cash and cash equivalents of $5,070,385, net working capital of $11,237,788, an accumulated deficit of 94,795,121, and total assets and liabilities of $27,278,097 and $16,905,861, respectively.

The Company has experienced operating losses and cash outflows from continuing operations and may require additional funding to support operations for the twelve months following the issuance of these financial statements.

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

Management has implemented cost optimization and operational initiatives designed to improve liquidity and support a sustainable path toward profitability, supported by an updated strategic focus and strengthened leadership.

The Company continues to evaluate financing alternatives and strategic opportunities to enhance its capital position.

While there can be no assurance that additional funding will be obtained on favorable terms, management believes its ongoing initiatives position the Company to support operations and advance its strategic objectives.

Year Ended December 31, 2025, Compared to Year Ended December 31, 2024

Cash used by operating activities is net loss adjusted for certain non-cash items and changes in assets and liabilities.

Cash used by operating activities for the year ended December 31, 2024, was $7,534,072 compared to cash used by operating activities of $4,183,918 for the year ended December 31, 2023, representing an increase of $3,350,154.

The cash used by operating activities for the year ended December 31, 2024, consists mainly of the net loss for the year of $(10,345,258) adjusted by depreciation and other non-cash items of $4,432,671.

Further, changes in assets and liabilities included a decrease in accounts payable of $1,050,406, a decrease in accrued expenses of $908,607, and an increase in inventories of $587,806, partly offset by a decrease in contract assets of $1,102,791 and a decrease in accounts receivable of $620,116.

Cash used by operating activities for the year ended December 31, 2025, was $6,108,176 compared to cash used by operating activities of $7,534,072 for the year ended December 31, 2024, representing an improvement of $1,425,896.

The cash used by operating activities for the year ended December 31, 2025, consists mainly of the net loss for the year which improved by $1,743,318, adjusted by depreciation and other non-cash items of which decreased $657,120.

Further, changes in assets and liabilities decrease $339,698 primarily due to an increase in the development in account payables from 2024 to 2025 of $1,150,188 related to inventory build up of Pool systems and a decrease in contract assets relating to fewer ongoing research and development projects.

Net cash used in investing activities was $217,930 for the year ended December 31, 2025, as compared to $424,036 for the year ended December 31, 2024, representing a decrease of $206,106.

The investing activities include general purchases of production equipment to continue optimizing production throughput and the internal production of rental assets, partly offset by proceeds from the disposition of production equipment in our Ballerup facility.

Cash provided by financing activities was $8,493,300 for the year ended December 31, 2024, as compared to $580,645 for the year ended December 31, 2023, representing an increase of $7,912,655.

The increase was mainly driven by the equity raise, generating net proceeds of $9,922,063 from the issuance of common stock and prefunded warrants, partly offset by the repayment of lease agreements in connection with the sales of production equipment in Ballerup as mentioned above.

With our current strategic focus and the excess capacity already in place, we expect capital expenditures to be significantly lower than historical levels, allowing us to leverage our existing infrastructure.

Cash provided by financing activities was $719,287 for the year ended December 31, 2025, as compared to $8,493,300 for the year ended December 31, 2024, representing a decrease of $7,774,013 or 92%.

The decrease was mainly driven by the equity raise, generating net proceeds of $9,922,063 from the issuance of common stock and prefunded warrants in 2024.

Net Cash Used in Operating Activities

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Our most critical accounting estimates include:

The assessment of revenue recognition, which impacts revenue and cost of sales;

The assessment of allowance for product warranties, which impacts cost of sales;

The assessment of collectability of accounts receivable, which impacts operating expenses when and if we record bad debt or adjust the allowance for doubtful accounts;

The assessment of recoverability of long-lived assets, which impacts gross margin or operating expenses when and if we record asset impairments or accelerate their depreciation;

The recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions), which impact our provision for taxes;

The valuation of inventory, which impacts cost of sales;

The recognition and measurement of loss contingencies, which impact cost of sales or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.

The assessment of recoverability of long-lived assets, which impacts gross margin or operating expenses when and if we record asset impairments or accelerate their depreciation;

The assessment of Contract assets, which impacts valuation of assets and revenue and cost when performance obligations have been satisfied;

The assessment of revenue recognition, which impacts revenue and cost of sales;

The assessment of stock-based awards, which impact operating expenses from the grant date throughout the vesting period;

The recognition and measurement of loss contingencies, which impacts cost of sales or operating expenses when we recognize a loss contingency, revise the estimate for a loss contingency, or record an asset impairment.

We discuss these policies further below as well as the estimates and judgments involved.

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Accounts receivable balances are written off when they are determined to be uncollectible.

The roll-forward of the allowance for current expected credit losses for the year ended December 31, 2024, and December 31, 2023 were as follows:

Allowance for current expected credit losses at the beginning of the period

Bad debt expense

Receivables written off during the periods

Effect of exchange rate changes

Allowance for current expected credit losses at the end of the period

Inventories directly purchased are carried at the lower of cost or net realizable value, as determined on the first-in, first-out (“FIFO”) method.

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Inventory valuation adjustments for excess and obsolete inventories are calculated based on current inventories levels, movement, expected useful lives, and estimated future demand for our products.

Goodwill and Intangible assets

The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business, with the residual purchase price recorded as goodwill.

The determination of the value of the intangible assets acquired involves certain judgments and estimates.

These judgments can include, but are not limited to, the cash flows that an asset is expected to generate in the future and the appropriate weighted average cost of capital.

Acquired intangible assets with determinable useful lives are amortized on a straight-line or accelerated basis over the estimated periods benefited, ranging from one to ten years.

Customer relationships and other non-contractual intangible assets with determinable lives are amortized over periods of five years.

The Company evaluates the recoverability of long-lived assets by comparing the carrying amount of an asset to estimated future net undiscounted cash flows generated by the asset.

If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets.

The evaluation of recoverability involves estimates of future operating cash flows based upon certain forecasted assumptions, including, but not limited to, revenue growth rates, gross profit margins, and operating expenses over the expected remaining useful life of the related asset.

A shortfall in these estimated operating cash flows could result in an impairment charge in the future.

Goodwill is not amortized but is evaluated annually for impairment at the reporting unit level or when indicators of a potential impairment are present.

The Company estimates the fair value of the reporting unit using the discounted cash flow and market approaches.

Forecasts of future cash flows are based on the Company’s best estimate of future net sales and operating expenses, using primarily expected category expansion, pricing, market segment fundamentals, and general economic conditions.

During the years ended December 31, 2024, and 2023, no impairment charge for goodwill was recorded.

Long-Lived Assets

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Management has analyzed the impact of the current economic climate on its financial statements as of December 31, 2025, and has determined that the changes to its significant judgements and estimates did not have a material impact with respect to goodwill, intangible assets, or long-lived assets.

During the years ended December 31, 2024, and 2023, no impairment charge of long-lived assets has been recorded.

Contracts Assets and Liabilities

Contract assets are the Company’s rights to consideration in exchange for goods or services and are recognized when a performance obligation has been satisfied but has not yet been billed.

When the Company issues invoices to the customer, and the billing is higher than the capitalized Contract assets, the net amount is transferred to Contract liabilities.

Contract assets/liabilities are transferred to revenue and cost of revenues when the right to consideration is unconditional and billed per the terms of the contractual agreement.

Contract assets also include unbilled receivables, which usually comprise the last invoice remaining after the delivery of the system, where revenue is recognized at the transfer of control based upon signed acceptance of the unit by the customer.

Most commonly, this invoice is sent to the customer at commissioning of the product or no later than 12 months after delivery.

Also included in Contract Assets are short-term receivables such as VAT and other receivables.

Revenue Recognition

The Company records revenue in accordance with FASB ASC Topic 606, “ Revenue from Contracts with Customers .” Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company records revenue in accord

ance with FASB ASC Topic 606, “

Revenue from Contracts with Customers .” Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve this core principle, the Company applies the following five-step approach:

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and (5) recognize revenue when or as a performance obligation is satisfied.

The Company sells products throughout the world.

Sales by geographical region for the years ended December 31, 2024, and 2023 were as follows:

% Distribution

For the Year Ended December 31

Middle East & Africa

The Company’s sales by product line for the years ended December 31, 2024, and 2023 were as follows:

% Distribution

For the Year Ended December 31

For Water (systems and aftermarket), Ceramics (diesel particulate filters and membranes), and Plastics (components), revenue is recognized when performance obligations specified within the terms of a contract with the customer are satisfied, which occurs when control of the product transfers to the customer or when services are rendered by the Company.

The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title along with risks and rewards of ownership have transferred to the customer.

For Systems and Aftermarket, Filters and Membranes, and Components, revenue is recognized when performance obligations specified within the terms of a contract with the customer are satisfied, which occurs when control of the product transfers to the customer or when services are rendered by the Company.

The majority of the Company's sales contracts contain performance obligations satisfied at a point in time when title along with risks and rewards of ownership have been transferred to the customer.

This generally occurs when the product is shipped or accepted by the customer.

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Standalone selling prices are generally determined based on the prices charged to customers or using expected cost-plus margin.

System sales are recognized when the Company transfers control to the customer based upon sales and delivery conditions specified in the sales contract.

System sales are recognized when the Company transfers control to the customer based upon sales and delivery conditions specified in the sales contract, or for larger projects in line with completion.

This typically occurs upon shipment of the system from the production facility but can also occur upon other agreed delivery terms.

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Part of the invoicing to the customer is also attributed to the commissioning, and at transfer of the control of the system (i.e., the first performance obligation), this portion is recognized as contract liabilities.

Aftermarket sales represent parts, extended warranties, and maintenance services.

Aftermarket sales represent spare parts, extended warranties, and maintenance services.

For the sale of aftermarket parts, the Company transfers control and recognizes revenue when parts are shipped to the customer.

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Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported on our balance sheet as contract liabilities.

Contracts Assets and Liabilities

Contract assets are the Company’s rights to consideration in exchange for goods or services and are recognized when a performance obligation has been satisfied but has not yet been billed.

When the Company issues invoices to the customer, and the billing is higher than the capitalized Contract assets, the net amount is transferred to Contract liabilities.

Contract assets/liabilities are transferred to revenue and cost of revenues when the right to consideration is unconditional and billed per the terms of the contractual agreement.

Contract assets also include unbilled receivables, which usually comprise the last invoice remaining after the delivery of the water treatment unit, where revenue is recognized at the transfer of control based upon signed acceptance of the unit by the customer.

Most commonly, this invoice is sent to the customer at commissioning of the product or no later than 12 months after delivery.

Further included in Contract Assets are short-term receivables such as VAT and other receivables.

The roll-forward of contract assets and contract liabilities for the years ended December 31, 2024, and 2023 were as follows:

Cost incurred

Unbilled project deliveries

Other receivables

Deferred Revenue

Distributed as follows:

Contract assets

Contract liabilities

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, “ Income Taxes .” Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and establishes a valuation allowance if, based on the weight of available evidence, it believes it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company recognizes the tax benefit of an uncertain tax position only if it is more likely than not the position will be sustainable upon examination by the taxing authority, including resolution of any related appeals or litigation processes.

This evaluation is based on all available evidence and assumes that the tax authorities have full knowledge of all relevant information concerning the tax position.

The tax benefit recognized is measured as the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense.

Stock-Based Compensation

Stock-based awards granted to qualified employees, non-employee directors, and consultants are measured at fair value and recognized as an expense in accordance with ASC Topic 718, “ Share-Based Payments .” For service-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

Stock-based awards granted to qualified employees, non-employee directors, and consultants are measured at fair value and recognized as an expense in accordance with ASC Topic 718, “

Share-Based Payments .” For service-based awards, stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally the vesting period.

The fair value of our stock options is estimated using a Black-Scholes option valuation model.

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The Company has elected to recognize forfeitures as they occur.

Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants in accordance with ASC 480, “ Distinguishing Liabilities from Equity ,” and ASC 815-40, “ Contracts in Entity ’ s Own Equity .” This assessment, which requires the use of professional judgment, considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815-40, including whether the warrants are indexed to the Company’s own shares and whether the events where holders of the warrants could potentially require net cash settlement are within the Company’s control, among other conditions for equity classification.

Warrant liabilities are recognized at fair value, with changes in fair value recognized in the consolidated statement of operations each period.

Loss Contingencies

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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-K

Item 5. Market for Registrant’s Common Equity