What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-11 compared with 2026-05-12 · 64 added, 33 removed, 142 unchanged (41% of the section changed)

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The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.

The amounts contained herein are presented in thousands, except historical investment, share and per share amounts.

The amounts contained herein are presented in thousands except share and per share amounts and as otherwise noted.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

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• the ability of the Company to execute its business model, including market acceptance of gasoline derived from renewable feedstocks;

• litigation and the ability to adequately protect intellectual property rights;

• litigation and the ability to adequately protect intellectual property rights, (see Part II, Item 1.

Legal Proceedings);

• competition from companies with greater resources and financial strength in the industries in which the Company operates;

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The technology has been validated through a fully integrated demonstration plant that has completed over 10,000 hours of operation.

As of March 31, 2026, we are still in the process of deploying our STG+ ® technology and have not derived revenue from our principal business activities.

As of June 30, 2026, we are still in the process of deploying our STG+ ® technology and have not derived revenue from our principal business activities.

We acquired our STG+ ® technology from Primus Green Energy in 2020, which was originally founded in 2007 and invested over $150 million in developing and demonstrating such technology, including the construction and operation of the demonstration plant.

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These announcements are part of the Company’s continued advancement of its previously announced restructuring and cost reduction initiatives.

Burdette succeeds Ernie Miller who has stepped down from his role as CEO to pursue another opportunity.

Burdette succeeded Ernie Miller who stepped down from his role as CEO to pursue another opportunity.

Miller remains with the Company as a senior advisor.

Burdette, who has served as the Company’s CFO since October 2024, continues to serve in that role.

On June 3, 2026, Martijn Dekker informed the Company's board of directors (the "Board") of his resignation as a director effective as of that same date.

On June 12, 2026, the Company held its 2026 Annual Meeting of Stockholders (the "Annual Meeting") and the stockholders re-elected Jonathan Siegler to serve as the sole Class III director until the 2029 annual meeting of stockholders.

Claire did not stand for re-election as a Class III director and, consequently, ceased to serve as a director as well as a member of the Company's audit committee (“Audit Committee”) following the Annual Meeting.

Immediately following the Annual Meeting, Ron Hulme replaced Ms.

Claire as a member of the Company's Audit Committee.

The Board determined to decrease the total number of directors from eight to six effective as of the Annual Meeting.

PIPE Investment

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In connection with the closing of the PIPE Investment, on January 29, 2025, (i) Cottonmouth and the Company amended an equity participation right agreement, dated February 13, 2023 (the “Existing Equity Participation Right Agreement”), to remove certain preemptive rights with respect to the Company’s equity securities granted to Cottonmouth under the Existing Equity Participation Right Agreement and (ii) the Company entered into a Second Amended and Restated Registration Rights Agreement with Cottonmouth and the other parties thereto, which amended and restated that certain Amended and Restated Registration Rights Agreement, dated February 15, 2023, by and among the Company and certain stockholders named therein (the “Existing Registration Rights Agreement”), to add Cottonmouth as a party to the Existing Registration Rights Agreement.

Restated Charter

On December 18, 2024, the holder of a majority of the issued and outstanding shares of Class A common stock and Class C common stock, par value $0.0001 (“Class C common stock”) adopted resolutions by written consent, in lieu of a meeting of stockholders to, among other things, amend and restate, immediately prior to and contingent upon the consummation of the closing of the PIPE Investment, our fourth amended and restated certificate of incorporation (the “Restated Charter”) to (A) increase the amount of authorized shares of Class C common stock from 25,000,000 to 26,000,000 and (B) increase the size of our Board of Directors (the “Board” or "Board of Directors") from seven to eight and to provide Cottonmouth with certain director designation and board observer rights.

The Restated Charter was approved and recommended by the Board prior to the stockholder action by written consent.

Immediately prior to closing of the PIPE Investment, on January 29, 2025, the Company filed the Restated Charter with the Delaware Secretary of State.

Key Factors and Trends Influencing our Prospects and Future Results

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The JDA conditions precedent include finalizing applicable project contracts, obtaining necessary permits, obtaining project financing on terms satisfactory to each party and receiving FID by each party.

In June 2024, we entered into a contract with Chemex Global, LLC (“Chemex”), a Shaw Group company (“Shaw Group”), for a front-end engineering and design (“FEED”) study related to the Permian Basin Project.

In May 2024, the Company and Koch Modular Process Systems, LLC ("KMPS") entered into a license agreement for certain front-end engineering and design ("FEED") work product prepared by KMPS related to the Permian Basin Project.

In June 2024, we entered into a contract with Chemex Global, LLC (“Chemex”), a Shaw Group company (“Shaw Group”), for a FEED study related to the Permian Basin Project.

In connection with entering into the JDA and the commencement of the FEED study, we began to incur development costs with respect to the project.

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We believe the FEED study will continue to be useful as we explore other opportunities to deploy the STG+® technology.

In the event that the Company desires to obtain ownership rights to the FEED work product prepared by KMPS, such ownership could be obtained upon (i) KMPS being awarded a supply contract for the reaction and distillation modular system for the first commercial production facility utilizing the Company's STG+® technology or (ii) payment to KMPS of $1.0 million.

Also in February 2026, we announced a revised strategy to deploy our innovative and proprietary liquid fuels processing technology through capital-lite opportunities.

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We have not generated any revenue to date.

We expect that future revenue generation opportunities would result from capital-lite opportunities to deploy our STG+® technology.

We expect that future revenue generation opportunities would result from capital-lite opportunities to deploy our STG+® technology, if any.

Such opportunities include licensing technology and providing engineering, technical, and operational services.

There can be no assurance that we will be successful in this endeavor.

General and Administrative Expenses

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Results of Operations

Comparison of the three months ended March 31, 2026 and 2025

Comparison of the three months ended June 30, 2026 and 2025

Three Months Ended

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Loss before income taxes (2,046) (2,574)

Income tax expense (benefit) (106) (28)

Net loss $ (1,940) $ (2,546)

General and Administrative Expenses

For the three months ended June 30, 2026, our general and administrative expenses decreased by $735, or 24%, as compared to the same period in 2025.

The decrease was primarily due to implementation of our cost savings initiatives, including a reduction in employee headcount and lower outside services and insurance expenses, which was partially offset by contingency expense.

Of our general and administrative expenses for the three months ended June 30, 2026 and 2025, $0 and $7, respectively, were business development costs.

The decrease was primarily due to reduced development activities driven by our revised strategy to deploy our technology through capital-lite opportunities.

Research and Development Expenses

For the three months ended June 30, 2026, our research and development expenses increased by $20, or 14%, as compared to the same period in 2025.

The increase was primarily due to higher employee compensation as a portion of the engineers’ time associated with the Permian Basin Project in 2025 was capitalized as construction in progress, which was largely offset by lower engineering software costs.

For the three months ended June 30, 2026, our other income decreased by $187, or 28%, as compared to the same period in 2025.

The decrease was primarily due to lower interest and dividend income earned on our cash and cash equivalents.

Income Tax Expense

For the three months ended June 30, 2026, our income tax expense decreased approximately $78, or 276%, as compared to the same period in 2025.

The decrease was primarily due to the recognition in 2026 of additional research expenditures related to the Permian Basin Project in 2025, which were eligible for immediate expensing in accordance with the provisions of the OBBB Act.

Comparison of the six months ended June 30, 2026 and 2025

Six Months Ended

(in thousands) 2026 2025

General and administrative expenses $ 5,032 $ 6,092

Research and development expenses 346 329

Total operating loss 5,378 6,421

Other (income) (985) (1,196)

Loss before income taxes (4,393) (5,225)

Income tax expense (benefit) (60) 25

Net loss $ (4,333) $ (5,250)

General and Administrative

For the three months ended March 31, 2026, our general and administrative expenses decreased by $325, or 11%, as compared to the same period in 2025.

The decrease was primarily due to lower outside services and insurance expenses, which was offset by additional share-based compensation expense.

Of our general and administrative expenses for the three months ended March 31, 2026 and 2025, $17 and $66, respectively, were business development costs.

General and Administrative Expenses

General and administrative expenses decreased approximately $1,060, or 17%, for the six months ended June 30, 2026 as compared to the same period in 2025.

Of our general and administrative expenses for the six months ended June 30, 2026 and 2025, $17 and $73, respectively, were business development costs.

The decrease was primarily due to reduced development activities driven by our revised strategy to deploy our technology through capital-lite opportunities.

Research and Development

For the three months ended March 31, 2026, our research and development expenses decreased by $2, or 1%, as compared to the same period in 2025.

The decrease was primarily due to lower engineering software costs, which were largely offset by higher employee compensation as a portion of the engineers’ and consultants’ time associated with the Permian Basin Project in 2025 was capitalized as construction in progress.

For the three months ended March 31, 2026, our other income decreased by $23, or 4%, as compared to the same period in 2025.

The decrease was primarily due to lower interest and dividend income earned on our cash and cash equivalents resulting from lower cash and cash equivalents.

Research and Development Expenses

Research and development expenses increased by $18, or 5%, for the six months ended June 30, 2026 as compared to the same period in 2025.

Other income decreased by $211, or 18%, for the six months ended June 30, 2026 as compared to the same period in 2025.

The decrease was primarily due to lower interest and dividend income earned on our cash and cash equivalents.

Income tax expense decreased approximately $85, or 342%, for the six months ended June 30, 2026 as compared to the same period in 2025.

Liquidity and Capital Resources

We have not generated any revenue to date.

We expect that future revenue generation opportunities would result from capital-lite opportunities to deploy our STG+® technology.

We expect that any future revenue generation opportunities would result from capital-lite opportunities to deploy our STG+® technology.

Such opportunities include licensing technology and providing engineering, technical, and operational services.

As of March 31, 2026, we are still in the process of deploying our STG+® technology and have not derived revenue from our principal business activities.

We do not expect to generate revenue unless and until we are able to deploy our STG+® technology.

As of June 30, 2026, we are still in the process of deploying our STG+® technology and have not derived revenue from our principal business activities.

We do not expect to generate revenue unless and until we are able to deploy our STG+® technology and there can be no assurance that we will be successful in this endeavor.

Since inception, we have incurred operating losses and generated negative operating cash flows that were primarily attributable to our general and administrative expenses and development activities.

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Our current liquidity needs primarily involve general and administrative expenses.

As of March 31, 2026, we had cash and cash equivalents of $54,281.

As of June 30, 2026, we had cash and cash equivalents of $53,454.

We expect that our cash and cash equivalents will be sufficient to fund our cash requirements, including ongoing general and administrative expenses, for the next 12 months from the reporting date.

Comparison of Cash Flows for the Three Months Ended March 31, 2026 and 2025

Comparison of Cash Flows for the Six Months Ended June 30, 2026 and 2025

The following table sets forth the primary sources and uses of cash and cash equivalents for the periods presented below:

Three Months Ended

Six Months Ended

(in thousands) 2026 2025

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Cash Flows Used in Operating Activities

For the three months ended March 31, 2026, our net cash used in operating activities decreased by $1,085 as compared to the same period in 2025.

The decrease was primarily due to lower working capital requirements, lower general administrative and research and development costs, and higher non-cash shared-based compensation expense.

For the six months ended June 30, 2026, our net cash used in operating activities decreased by $2,440 as compared to the same period in 2025.

The decrease was primarily due to lower working capital requirements and implementation of our cost savings initiatives, which resulted in lower general administrative expenses.

Cash Flows Used in Investing Activities

For the three months ended March 31, 2026, our net cash used in investing activities increased by $305 as compared to the same period in 2025.

The increase was primarily attributable to the timing of payments made related to the Permian Basin Project, net of amounts reimbursable by Cottonmouth in accordance with the JDA.

For the six months ended June 30, 2026, our net cash used in investing activities decreased by $234 as compared to the same period in 2025.

The decrease was primarily attributable to the timing of payments made related to the Permian Basin Project, net of amounts reimbursable by Cottonmouth in accordance with the JDA.

See Notes 3, 4 and 5 in the accompanying unaudited condensed consolidated financial statements for further information.

Cash Flows Provided by Financing Activities

For the three months ended March 31, 2026, our net cash provided by financing activities decreased by $49,950 as compared to the same period in 2025.

For the six months ended June 30, 2026, our net cash provided by financing activities decreased by $49,446 as compared to the same period in 2025.

The decrease was due to the net proceeds received from the closing of the PIPE Investment in January 2025.

Commitments and Contractual Obligations

As of March 31, 2026 and December 31, 2025, we had a restricted cash balance of $100 maintained in support of a letter of credit.

As of June 30, 2026 and December 31, 2025, we had a restricted cash balance of $100 maintained in support of a letter of credit.

Off-Balance Sheet Arrangements

As of March 31, 2026, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

As of June 30, 2026, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Estimates

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis