CLEARSIGN TECHNOLOGIES CORPORATION

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number: 001-35521

CLEARSIGN TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		26-2056298 (I.R.S. Employer Identification No.)

8023 E. 63rd Place, Suite 101

Tulsa, Oklahoma 74133

(Address of principal executive offices)

(Zip Code)

(918) 500-7312

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CLIR		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐		Accelerated filer ☐

Non-accelerated filer ⌧		Smaller reporting company ☒

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of August 8, 2026, the issuer has 6,807,455 shares of common stock, par value $0.0001, issued and outstanding.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except share and per share data)		June 30,			December 31,
		2026			2025
ASSETS

Current Assets:
Cash and cash equivalents		$	9,889		$	9,178
Accounts receivable			234			1,360
Deferred costs			471			329
Prepaid expenses and other assets			591			359
Total current assets			11,185			11,226

Fixed assets, net			141			195
Contract assets			127			—
Patents and other intangible assets, net			737			760
Total Assets		$	12,190		$	12,181

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued liabilities		$	1,437		$	1,644
Current portion of lease liabilities			100			96
Accrued compensation and related taxes			387			564
Contract liabilities			415			100
Other current liabilities			—			180
Total current liabilities			2,339			2,584
Long Term Liabilities:
Long term lease liabilities			17			67
Total liabilities			2,356			2,651

Commitments and contingencies (Note 10)

Stockholders’ Equity:
Preferred stock, $0.0001 par value, 2,000,000 shares authorized, no shares issued or outstanding			—			—
Common stock, $0.0001 par value, 87,500,000 shares authorized, 6,307,455 and 5,328,730 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively			1			1
Additional paid-in capital			117,859			114,061
Accumulated other comprehensive loss			(17)			(20)
Accumulated deficit			(108,009)			(104,512)
Total stockholders' equity			9,834			9,530

Total Liabilities and Stockholders' Equity		$	12,190		$	12,181

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

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ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


(in thousands, except share and per share data)		For the Three Months Ended						For the Six Months Ended
		June 30,						June 30,
		2026			2025			2026			2025

Revenues		$	560		$	133		$	751		$	534
Cost of goods sold			332			78			916			283
Gross profit (loss)			228			55			(165)			251

Operating expenses:
Research and development			448			247			697			694
General and administrative			1,278			1,646			2,915			3,652
Total operating expenses			1,726			1,893			3,612			4,346

Loss from operations			(1,498)			(1,838)			(3,777)			(4,095)

Other income, net:
Interest income			61			115			123			248
Government assistance			131			43			159			91
Other income, net			(1)			—			(2)			—
Total other income, net			191			158			280			339
Net loss		$	(1,307)		$	(1,680)		$	(3,497)		$	(3,756)

Net loss per share - basic and fully diluted		$	(0.22)		$	(0.30)		$	(0.61)		$	(0.70)

Weighted average number of shares outstanding - basic and fully diluted			5,931,470			5,521,797			5,780,139			5,510,759

Comprehensive loss:
Net loss		$	(1,307)		$	(1,680)		$	(3,497)		$	(3,756)
Foreign-exchange translation adjustments			1			—			3			—
Comprehensive loss		$	(1,306)		$	(1,680)		$	(3,494)		$	(3,756)

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

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ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Month Periods During the Six Months Ended June 30, 2026 and 2025

(Unaudited)


						Accumulated Other				Total
(in thousands)	Common Stock			Additional		Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Paid-In Capital			Loss	Deficit		Equity
Balances at December 31, 2025	5,328	$	1	$	114,061	$	(20)	$	(104,512)	$	9,530
Share-based compensation, net of tax withholdings	11		—		76		—		—		76
Fair value of stock issued in payment of accrued compensation	36		—		203		—		—		203
Shares issued for services	1		—		3		—		—		3
Exercise of prefunded warrants	33		—		—		—		—		—
Foreign-exchange translation adjustment	—		—		—		2		—		2
Net loss	—		—		—		—		(2,190)		(2,190)
Balances at March 31, 2026	5,409		1		114,343		(18)		(106,702)		7,624
Share-based compensation, net of tax withholdings	—		—		80		—		—		80
Fair value of stock issued in payment of accrued compensation	4		—		20		—		—		20
Shares issued for services	—		—		3		—		—		3
Issuance of common stock in public offering, net of expenses	894		—		3,413		—		—		3,413
Foreign-exchange translation adjustment	—		—		—		1		—		1
Net loss	—		—		—		—		(1,307)		(1,307)
Balances at June 30, 2026	6,307	$	1	$	117,859	$	(17)	$	(108,009)	$	9,834

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ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Month Periods During the Six Months Ended June 30, 2026 and 2025

(Unaudited)


						Accumulated Other					Total
(in thousands)	Common Stock			Additional		Comprehensive		Accumulated			Stockholders'
	Shares	Amount		Paid-In Capital			Loss	Deficit			Equity
Balances at December 31, 2024	5,028	$	1	$	112,800	$	(21)	$	(99,016)		$	13,764
Share-based compensation, net of tax withholdings	8		—		45		—		—			45
Fair value of stock issued in payment of accrued compensation	33		—		279		—		—			279
Shares issued for services	1		—		4		—		—			4
Exercise of warrants	2		—		24		—		—			24
Exercise of prefunded warrants	170		—		—		—		—			—
Net loss	—		—		—		—		(2,076)			(2,076)
Balances at March 31, 2025	5,242		1		113,152		(21)		(101,092)			12,040
Share-based compensation, net of tax withholdings	—		—		51		—		—			51
Shares issued for services	1		—		3		—		—			3
Net loss	—		—		—		—		(1,680)			(1,680)
Balances at June 30, 2025	5,243	$	1	$	113,206	$	(21)	$	(102,772)		$	10,414

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

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ClearSign Technologies Corporation and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)


(in thousands)	For the Six Months Ended June 30,
	2026		2025
Cash flows from operating activities:
Net loss	$	(3,497)	$	(3,756)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services		6		7
Share-based compensation, net of tax withholdings		156		96
Depreciation and amortization		81		98
Impairment of intangible assets		39		—
Right-of-use asset amortization		45		44
Change in operating assets and liabilities:
Deferred costs		(142)		(967)
Accounts receivable		1,126		140
Prepaid expenses and other assets		(232)		(96)
Contract assets		(127)		—
Accounts payable, accrued liabilities, and lease liabilities		(221)		330
Other current liabilities		(180)		—
Accrued compensation and related taxes		47		(13)
Contract liabilities		315		2,495
Net cash used in operating activities		(2,584)		(1,622)

Cash flows from investing activities:
Acquisition of fixed assets		—		(4)
Disbursements for patents and other intangible assets		(89)		(53)
Net cash used in investing activities		(89)		(57)

Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs		3,413		—
Proceeds from exercise of warrants		—		24
Taxes paid related to employee stock awards		(32)		(41)
Net cash provided by (used in) financing activities		3,381		(17)
Effect of exchange rate changes on cash and cash equivalents		3		—

Net change in cash and cash equivalents		711		(1,696)
Cash and cash equivalents, beginning of period		9,178		14,035
Cash and cash equivalents, end of period	$	9,889	$	12,339

Supplemental disclosure of cash flow information:
Officer and employee equity awards for prior year accrued compensation	$	223	$	279
Non-cash impact of new lease	$	—	$	68

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

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ClearSign Technologies Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – Organization and Description of Business

ClearSign Technologies Corporation (“ClearSign” or the “Company”) designs and develops products and technologies for the purpose of decarbonization and improving key performance characteristics of industrial and commercial systems, including operational performance, energy efficiency, emission reduction, safety, and overall cost-effectiveness. The Company’s patented technologies are designed to be embedded in established original equipment manufacturers (“OEM”) products as ClearSign Core™ and ClearSign Eye and other sensing configurations in order to enhance the performance of combustion systems and fuel safety systems in a broad range of markets. These markets include energy (upstream oil production and downstream refining), commercial/industrial boiler, chemical, petrochemical, transport and power industries. The Company’s primary technology is its ClearSign Core™ technology, which achieves very low emissions without the need of selective catalytic reduction.

The Company was originally incorporated in the State of Washington in 2008. During January 2022, the Company relocated its headquarters from Seattle, Washington to Tulsa, Oklahoma. Effective June 15, 2023, the Company changed its state of incorporation to Delaware. On July 28, 2017, the Company incorporated a subsidiary, ClearSign Asia Limited, in Hong Kong to represent the Company’s business and technological interests throughout Asia. Through ClearSign Asia Limited, the Company has established a wholly foreign owned enterprise in China – ClearSign Combustion (Beijing) Environmental Technologies Co., LTD. On August 22, 2024, the Company’s Board of Directors (the “Board”) authorized management to move forward with filing for dormancy with Chinese regulators to suspend the Company’s Beijing, China operations. A dormancy filing allows the Company to keep its China legal entity in a suspended status for up to three years. The Company can revive its China operations at any time during those three years with minimal cost impact. The effective date of our dormancy filing was March 12, 2025.

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

Business Segments

The Company operates in one operating and reportable segment engaged in the design, development and sale of combustion technologies that improve the performance and cost-effectiveness of industrial combustion systems, referred to herein as the “Combustion” segment. The Company manages its business activities on a consolidated basis. Since the operations comprise a single reportable segment, amounts reported in the consolidated balance sheets, statements of operations and comprehensive loss, stockholders’ equity, and cash flows represent the activities of the Combustion segment.

The Combustion segment derives revenues by delivering products and technology solutions to OEMs 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 and annual financial information on a consolidated basis for making operating decisions, allocating resources and evaluating financial performance. The CODM consistently reviews the consolidated statements of operations and comprehensive loss to manage operations and monitor performance against management expectations. Factors considered by the CODM when assessing a reportable segment include factors such as, but not limited to, human capital, intellectual property, customer relationships and business model design.

Substantially all the Company’s operating activities, including its long-lived assets, are located within the United States. Customers in the United States accounted for 100% of revenues during the three and six months ended June 30, 2026 and 2025. The Company disaggregates geographical revenues by selling location, since many of our target customers are

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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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet at December 31, 2025 has been derived from the Company’s audited consolidated financial statements as of that date.

In the opinion of management, these unaudited condensed consolidated financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”). Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of ClearSign and its subsidiary. Intercompany balances and transactions have been eliminated in consolidation.

Reverse Stock Split

On March 6, 2026, the Company filed a certificate of amendment to its certificate of incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split of the Company’s shares of common stock, which became effective at 12:01 a.m. Eastern Time on March 16, 2026. Such amendment and reverse stock split ratio were previously approved by the Company’s stockholders and Board.

As a result of the reverse stock split, which was effective for trading purposes on March 16, 2026, every 10 shares of the Company’s pre-reverse split outstanding common stock were combined and reclassified into one share of common stock. Proportionate voting rights and other rights of holders of common stock, par value and shares authorized were not affected by the reverse stock split. Any fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole share at the participant level with the Depository Trust Company. All stock options and restricted stock units outstanding and common stock reserved for issuance under the Company’s equity incentive plans and warrants outstanding immediately prior to the reverse stock split were proportionately adjusted, and the exercise prices were proportionately increased, as a result of the reverse stock split. All share and per-share amounts in these unaudited condensed consolidated financial statements have been restated to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Product Warranties

The Company warrants all installed products against defects in materials and workmanship for a period specified in each contract by replacing failed parts. Accruals for product warranties are based on historical or expected warranty experience and current product performance trends and are recorded as a component of cost of sales at the time revenue is recognized. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded

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warranty liabilities and adjusts the amounts as necessary, and such adjustments could be material in the future if estimates differ significantly from actual warranty expense. Product warranties are included in accounts payable and accrued liabilities in the condensed consolidated balance sheets. Although a warranty is a type of guarantee, assurance-type warranties are not subject to the general recognition provisions of Accounting Standards Codification (“ASC”) Topic 460, Guarantees, which requires recognizing guarantees at fair value.

Research and Development

The cost of research and development is expensed as incurred. Research and development costs consist of salaries, benefits, share-based compensation, consumables, and consulting fees, including costs to develop and test prototype equipment and parts. Research and development costs have been offset by funds received, if any, from strategic partners in cost sharing and/or collaborative projects. During the three and six months ended June 30, 2026, the Company received zero and $115 thousand, respectively, from these types of arrangements. During the three and six months ended June 30, 2025, the Company received no funds from these type of arrangements.

Foreign Operations

The accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 include assets amounting to approximately $118 thousand and $175 thousand, respectively, relating to the operations of ClearSign Asia Limited. The Beijing registered capital requirement is $350 thousand, which is required to be paid by June 30, 2032, and of which $261 thousand has been paid as of June 30, 2026.

Recently Issued Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires enhanced disclosures about types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization, in commonly presented expense captions. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. Entities may apply the amendments prospectively or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the impact that this guidance will have on the disclosures within our consolidated financial statements. While ASU 2024-03 will impact only our disclosures and not our financial condition and results of operations, we are assessing when we will adopt the ASU 2024-03.

In May 2025, FASB issued ASU No. 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (“Topic 606”): Clarifications to Share-Based Consideration Payable to a Customer (“ASU 2025-04”), which clarifies the guidance on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer, with the intent to reduce diversity in practice and improve existing guidance by revising the definition of a “performance condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. ASU 2025-04 also clarifies the guidance in Topic 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred.” ASU 2025-04 is effective for our reporting period beginning January 1, 2027, with early adoption permitted. We are currently assessing the impact that the adoption of ASU 2025-04 will have on the disclosures in our condensed consolidated financial statements.

In December 2025, FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements.” ASU 2025-11 is intended to provide clarity about the current interim reporting requirements, provides a list of the interim disclosures required by all other Codification topics and establishes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASC 2025-11 will be effective for the Company beginning January 1, 2028, with early adoption permitted, and is not expected to have a significant impact on the Company’s condensed consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-12, "Codification Improvements". The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is

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effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently assessing the impact that the adoption of ASU 2025-12 will have on our condensed consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10, "Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities" (“ASU 2025-10”). The FASB issued ASU 2025-10 to establish authoritative guidance on the accounting for government grants received by business entities. ASU 2025-10 is effective for our annual and quarterly reporting periods beginning January 1, 2029. Early adoption is permitted. We are currently assessing the impact that the adoption of ASU 2025-10 will have on our condensed consolidated financial statements.

Note 3 – Fixed Assets, Net

Fixed Assets, Net

Fixed assets, net are summarized as follows:


		June 30,		December 31,
(in thousands)		2026		2025
Office furniture and equipment		$	103	$	103
Leasehold improvements			43		43
			146		146
Accumulated depreciation and amortization			(117)		(108)
			29		38
Operating lease ROU assets, net			112		157
Total		$	141	$	195

Depreciation expense related to office furniture, equipment and leasehold improvements for the three and six months ended June 30, 2026 was $3 thousand and $9 thousand, respectively.

Depreciation expense related to office furniture, equipment and leasehold improvements for the three and six months ended June 30, 2025 was $7 thousand and $12 thousand, respectively.

Leases

The Company leases office space in Tulsa, Oklahoma, Seattle, Washington, and Beijing, China. During May 2025, the Company renewed its Beijing, China lease for 24 months with monthly rent at approximately $3 thousand. As a result of this renewal, the Company increased the right-of-use (“ROU”) asset and lease liability by $68 thousand during the year ended December 31, 2025.

During October 2024, the Company entered into a sub-lease agreement to rent office space in Seattle for approximately $2 thousand per month for twelve months. The Seattle lease is considered a short-term lease, as the lease term is 12 months or less from the commencement date. The Seattle lease was renewed in October 2025 with similar terms. The short-term lease expense for the three and six months ended June 30, 2026 was approximately $6 thousand and $12 thousand, respectively. The short-term lease expense for the three and six months ended June 30, 2025 was approximately $5 thousand and $11 thousand, respectively. The Tulsa and Beijing leases are classified as operating leases, each with remaining terms of less than two years; contractual language requires renewal negotiations to occur at or near termination. These leases are normal and customary for office space, in that, contractual guarantees exist requiring the lessee return the premises to its original functional state.

The Tulsa lease contains fixed annual lease payments that increase annually by approximately 2%. The Seattle, Tulsa, and Beijing total monthly minimum rent is approximately $10 thousand. Operating lease costs for the three and six months ended June 30, 2026 were $25 thousand and $49 thousand, respectively. Operating lease costs for the three and six months ended June 30, 2025 were $25 thousand and $49 thousand, respectively.

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


		June 30,			December 31,
(in thousands)		2026			2025
Operating lease ROU assets, net	$	112		$	157
Lease Liabilities:
Current lease liabilities	$	100		$	96
Long term lease liabilities		17			67
Total lease liabilities	$	117		$	163

Weighted average remaining lease term (in years):		1.2			1.7
Weighted average discount rate:		4.4	%		4.4	%

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


	For the Six Months Ended
	June 30,
(in thousands)		2026		2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	50	$	49
Non-cash impact of new leases and lease modifications
Change in operating lease liabilities	$	—	$	68
Change in operating lease ROU assets	$	—	$	68

Minimum future payments under the Company’s operating lease liabilities as of June 30, 2026 are as follows:


(in thousands)

2026 (remaining)	$	52
2027		68
Total future lease payments		120
Less: imputed interest		(3)
	$	117

Note 4 – Patents and Other Intangible Assets, Net

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


		June 30,		December 31,
(in thousands)		2026		2025
Patents
Patents pending		$	401	$	358
Issued patents			1,081		1,110
			1,482		1,468
Trademarks
Registered trademarks			86		86
			86		86
Other			8		8
			1,576		1,562
Accumulated amortization			(839)		(802)
		$	737	$	760

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Amortization expense for the three and six months ended June 30, 2026 was $35 thousand and $72 thousand, respectively.

Amortization expense for the three and six months ended June 30, 2025 was $43 thousand and $85 thousand, respectively.

Future amortization expense associated with issued patents and registered trademarks as of June 30, 2026 is as follows:


(in thousands)
2026 (remaining)	$	67
2027		113
2028		80
2029		48
2030		19
Thereafter		1
	$	328

The amortization life for patents ranges between three to five years and trademark lives are set at ten years. The Company does not amortize patents or trademarks classified as pending.

During the three and six months ended June 30, 2026 and 2025, the Company assessed its patent and trademark assets. During the three and six months ended June 30, 2026, we recorded impairments of $16 thousand and $39 thousand, respectively. During the three and six months ended June 30, 2025, we did not have impairments. These impairment costs are included within research and development in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company also evaluated its strategic approach to the pursuit and protection of its intellectual property. It is the intent of the Company to continue to pursue intellectual property protection. If the Company identifies certain assets where the intellectual property does not directly align with its core technology, the Company will impair the intangible asset and write-off the asset as an expense.

Note 5 – Revenue, Contract Assets, and Contract Liabilities

The Company’s contracts with customers generally have performance obligations and a schedule of non-refundable cancellation obligations. Performance obligations typically fall into one of three categories: product shipment, customer witness tests, and engineering services, such as delivery of Computational Fluid Dynamic (“CFD”) studies, engineering documents, and engineering consultation. Customer payment milestones are unique to individual contracts and may occur prior to completion of performance obligations. Customer payment terms typically range between thirty and sixty days from the date of billing. 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 $560 thousand of revenues and $332 thousand of cost of goods sold during the three months ended June 30, 2026. The revenue and cost of goods sold predominantly relates to delivery of a portion of our flare system order, completing multiple spare parts orders, and the successful completion of CFD studies. These products and services constitute performance obligations.

The Company recognized $751 thousand of revenues and $916 thousand of cost of goods sold during the six months ended June 30, 2026. The revenue and cost of goods sold predominantly relates to delivery of a portion of our flare system order, mid-stream offerings, multiple spare parts orders, finalizing CFD studies, and completing a boiler burner order. The cost of goods sold is primarily comprised of two components: (i) costs related to our revenue and (ii) costs related to a warranty accrual estimate (refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operation” below for further details). These products and services constitute performance obligations.

The Company recognized $133 thousand of revenues and $78 thousand of cost of goods sold during the three months ended June 30, 2025. The revenue and cost of goods sold relate to spare parts orders from multiple customers, and delivery of a boiler burner to a repeat customer. These products and services constitute performance obligations.

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The Company recognized $534 thousand of revenues and $283 thousand of cost of goods sold during the six months ended June 30, 2025. The revenue and cost of goods sold predominantly relate to spare parts orders for multiple customers, sales of boiler burners to a single customer, and the successful completion of a CFD study. These products and services constitute performance obligations.

The Company had contract assets of $127 thousand and zero at June 30, 2026 and December 31, 2025, respectively. The Company had contract liabilities of $415 thousand and $100 thousand at June 30, 2026 and December 31, 2025, respectively. Of the $100 thousand contract liabilities balance at December 31, 2025, the Company recognized revenue of zero and $49 thousand during the three and six months ended June 30, 2026, respectively.

Note 6 – Deferred Costs

A summary of the Company’s deferred costs activity in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, is as follows:


	June 30,		December 31,
(in thousands)	2026		2025
Deferred costs at beginning of year	$	329	$	562
Capitalization
Labor and overhead allocations		175		484
Supplier and subcontractor costs		413		2,284
		588		2,768
Amortization of deferred costs		(431)		(2,996)
Impairment of costs in excess of contractual value		(15)		(5)
Deferred costs at end of period	$	471	$	329

Note 7 – Product Warranties

A summary of the Company’s warranty liability activity, which is included in accounts payable and accrued liabilities in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, is as follows:


	June 30,		December 31,
(in thousands)	2026		2025
Warranty liability at beginning of year	$	792	$	471
Accruals		470		840
Payments		(148)		(488)
Changes related to expirations and settlements		-		(31)
Warranty liability at end of period	$	1,114	$	792

Note 8 – Equity

Common Stock and Preferred Stock

The Company is authorized to issue 87.5 million shares of common stock and 2.0 million shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Board. The Company has not issued any shares of preferred stock.

The Company has an At-The-Market (“ATM”) program pursuant to an ATM Offering Agreement with H.C. Wainwright & Co., LLC (“Wainwright”) as sales agent, dated July 17, 2025 (the “Sales Agreement”), pursuant to which the Company may offer and sell shares of common stock with an aggregate offering price of up to approximately $6,875 thousand. As of the date of this report, no shares have been sold pursuant to the Sales Agreement.

The Company is currently subject to the SEC’s “baby shelf rules,” which prohibit companies with a public float of less than $75 million from issuing securities under a “shelf” registration statement in excess of one-third of such company’s

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public float in a 12-month period. These rules may limit future issuances of shares by the Company under our “shelf” registration statement on Form S-3 (File No. 333-288736) (the “Form S-3”), including through the ATM program with Wainwright or other securities offerings.

Warrants and Pre-Funded Warrants

The following table summarizes the activity and outstanding balance of our outstanding warrants and pre-funded warrants as of June 30, 2026, along with the associated weighted average exercise price and weighted average remaining life for such warrants and pre-funded warrants.


	June 30, 2026
	Warrants						Pre-Funded Warrants⁽¹⁾
(in thousands, except per share data)	Number		Wtd. Avg. Exercise Price	Wtd. Avg. Remaining Life (in years)		Aggregate Intrinsic Value	Number		Wtd. Avg. Exercise Price		Aggregate Intrinsic Value
Outstanding at beginning of year	2,128	$	10.54	3.37	$	—	280	$	0.001	$	1,554
Granted	—		—				—		—
Exercised	—		—				(33)		0.001
Forfeited/Expired	—		—				—		—
Outstanding at end of period	2,128	$	10.54	2.87	$	—	247	$	0.001	$	905

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

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

Equity Incentive Plan

On June 8, 2026, the date of the Company’s 2026 annual meeting of stockholders, the Company’s stockholders approved, and the Company adopted, the amended and restated ClearSign Technologies Corporation 2021 Equity Incentive Plan (“A&R 2021 Plan”), under which the Company is able to grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), 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 A&R 2021 Plan.

The A&R 2021 Plan provides for an annual increase in available shares equal to either (i) 10% of the total number of shares of common stock issued and outstanding on the last day of the immediately preceding fiscal year; or (ii) such number of shares determined by the Compensation Committee no later than the last day of the immediately preceding fiscal year; provided, however, that the total cumulative increase in the number of shares available for issuance pursuant to this automatic share increase shall not exceed 1.0 million shares of common stock. In connection with the stockholders’ approval of the A&R 2021 Plan, at the 2026 annual meeting of stockholders, the number of shares authorized for issuance thereunder increased by 1,077 thousand. Prior to the adoption of the A&R 2021 Plan, pursuant to the previously effective evergreen provision of our 2021 Equity Incentive Plan, the number of shares authorized for issuance under such plan automatically increased by 30 thousand. Taking into account the foregoing increases and adoption of the A&R 2021 Plan, the Company is currently authorized to issue up to 1,496 thousand shares of its common stock pursuant to the A&R 2021 Plan.

Ending balances for the A&R 2021 Plan is as follows:


		June 30,	December 31,
(in thousands)		2026	2025
Outstanding options and restricted stock units		320	291
Reserved but unissued shares under the A&R 2021 Plan		1,176	149
Total shares reserved under the A&R 2021 Plan at end of period		1,496	440

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Stock Options

Under the terms of the A&R 2021 Plan, incentive stock options and non-statutory stock options must have an exercise price at or above the fair market value on the date of the grant. At the time of grant, the Company will determine the period within which the option may be exercised and will specify any conditions that must be satisfied before the option vests and may be exercised. The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option pricing model.

As permitted by SEC Staff Accounting Bulletin 107, management utilized the simplified approach to estimate the expected term of the options, which represents the period of time that options granted are expected to be outstanding. Expected volatility has been determined through the Company’s historical stock price volatility. The Company has not made an estimate of forfeitures at the time of the grant, but rather accounts for forfeitures at the time they occur. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.

During the six months ended June 30, 2026, the following weighted-average assumptions were utilized in the calculation of the fair market value of stock options granted:


		June 30,
		2026
Expected life		5.00	years
Weighted average volatility		91.67	%
Weighted average risk-free interest rate		4.07	%
Expected dividend rate		0	%

No stock options were granted during the three and six months ended June 30, 2025.

Equity Incentive Plan Options

Compensation expense associated with stock option awards for the three and six months ended June 30, 2026 totaled $47 thousand and $93 thousand, respectively. Compensation expense associated with stock option awards for the three and six months ended June 30, 2025 totaled $17 thousand and $38 thousand, respectively.

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


	June 30,
	2026
(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	238	$	20.24	3.64	$	855
Granted	23	$	3.94
Exercised	—	$	—
Forfeited/expired	(19)	$	17.16
Outstanding at end of period	242	$	18.94	4.12	$	—
Exercisable at end of period	190	$	15.28	3.99	$	—

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 June 30, 2026, there was $217 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

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management to continually evaluate predetermined goals against actual circumstances. The maximum contractual term for these options is ten years from the grant date.

Inducement Options

The inducement options summarized below were granted outside of the A&R 2021 Plan and in accordance with the employment inducement exemption provided under Nasdaq Listing Rule 5635(c)(4). The compensation expense recognized for the inducement options for the three and six months ended June 30, 2026 was zero. The compensation expense recognized for the inducement options for the three and six months ended June 30, 2025 was $9 thousand and $18 thousand, respectively.

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


	June 30,
	2026
(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	49	$	15.27	4.53	$	—
Granted	—	$	—
Exercised	—	$	—
Forfeited/expired	—	$	—
Outstanding at end of period	49	$	15.27	3.99	$	—
Exercisable at end of period	49	$	15.27	3.99	$	—

Restricted Stock Units

The Company awards RSUs to its non-executive directors and certain employees in lieu of cash payment for compensation, if such non-executive directors elect to receive RSUs in lieu of cash payment as allowed by the Company’s director compensation policy. These awards are granted pursuant to the A&R 2021 Plan. Employee vesting criteria are time-based, and compensation expense is recognized ratably across the timeframe. The Company pays payroll withholding taxes on behalf of the employee at vesting by withholding shares from the employee’s award to cover taxes payable in connection with such vesting. The Company accrued taxes for RSU share-based compensation of $12 thousand and $18 thousand for the six months ended June 30, 2026 and 2025, respectively. Total unrecognized compensation expense for employee restricted stock units as of June 30, 2026 was $290 thousand.

Director vesting criteria are contingent upon the occurrence of one of four future events, which the Company cannot predict or control. Therefore, compensation expense for director RSUs is not recognized until one of these four future events occurs in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation.” Total unrecognized compensation expense for director services as of June 30, 2026 was $169 thousand.

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


	June 30,
	2026
(in thousands, except per share data)	Number of Shares	Weighted Average Grant Date Fair Value		Weighted Average Contractual Life (in years) ⁽¹⁾
Nonvested at beginning of year	53	$	8.36	0.85
Granted	42	$	5.32
Vested	(16)	$	8.88
Forfeited	(1)	$	5.62
Nonvested at end of period	78	$	6.64	1.44

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 Six Months Ended
	June 30,				June 30,
(in thousands, except per share data)	2026		2025		2026			2025
Share-based compensation expense	$	41	$	34	$	75	$	66
Weighted average value per share	$	7.45	$	8.88	$	7.52	$	8.90

Stock Awards

The Company awards employees stock in lieu of cash payment for compensation, typically to satisfy accrued bonus compensation and for ad-hoc bonuses for exemplary performance. These awards are granted pursuant to the A&R 2021 Plan.


	For the Six Months Ended
	June 30,
	2026					2025
(in thousands, except per share data)	Number of Shares	Fair Value		Weighted Average per Share		Number of Shares	Fair Value		Weighted Average per Share
Fair value of stock payments in accrued compensation	40	$	223	$	5.60	33	$	279	$	8.57

Consultant Stock Plan

The Company’s 2013 Consultant Stock Plan (the “Consultant Plan”) provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and Board members are not entitled to receive grants from the Consultant Plan. The Compensation Committee is authorized to administer the Consultant Plan and establish the grant terms. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board shall determine.

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The Consultant Plan activity is as follows:


		June 30,
(in thousands)		2026
Reserved but unissued shares at beginning of period			19
Increases in the number of authorized shares			10
Grants			(1)
Reserved but unissued shares at end of period			28

The Consultant Plan compensation expense is summarized as follows:


	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
(in thousands, except per share data)	2026		2025		2026		2025
Share-based compensation expense	$	3	$	3	$	6	$	7
Weighted average value per share	$	8.59	$	9.40	$	8.59	$	9.40

Note 9 – Net Loss per Common Share

The Company calculates net loss per common stock in accordance with ASC Topic 260, Earnings Per Share (“ASC 260”). Basic and diluted net loss per common stock was determined by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Under ASC 260, shares issuable for little or no cash consideration are considered outstanding common stock and included in the computation of basic net loss per share. As such, for the three and six months ended June 30, 2026 and 2025, the Company included its outstanding pre-funded warrants in its computation of net loss per share. The pre-funded warrants are each exercisable into one share of common stock at an exercise price of $0.001 per share.

The following potentially dilutive securities have not been included in the computation of diluted net loss per share for the three and six months ended June 30, 2026 and 2025, as the result would be anti-dilutive:


	June 30,	June 30,
(in thousands)	2026	2025
Stock options	291	289
Restricted stock units	78	108
Warrants	2,128	2,128
Total shares excluded from calculation	2,497	2,525

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Note 10 – Commitments and Contingencies

Litigation

From time to time the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in any such matter may harm the Company’s business. As of the date of this report, the Company is not a party to any material pending legal proceedings or claims that the Company believes will have a material adverse effect on the business, financial condition or operating results.

On January 16, 2026, Judith Schrecker, David Maley, and Catharine M. de Lacy (collectively, the “Former Directors”), filed a petition for advancement (case number 2026-0082-CDW) in the Delaware court of Chancery for an advancement of legal fees relating to a request, by us, for the Former Directors to return material generated by a dissolved special committee formed by the Board on February 10, 2025 (“Special Committee”), which was subsequently dissolved following our 2025 annual meeting of stockholders. The advancement proceeding effectuated an advancement of monies to the Former Directors counsel for monies incurred to represent the Former Directors in this matter. The advancement proceeding followed a prescribed court process where the legal fees were reviewed to determine a reasonable amount payable to the Former Directors’ counsel for representation in this matter. We do not believe this advancement claim will have a material adverse effect on the future operations of the Company, and we do not anticipate any additional claims for advancement of legal fees in this case in the future. The total advancement claim amounted to $319 thousand, of which $180 thousand was accrued during the three months ended December 31, 2025. We delivered the full amount of the advancement claim to their legal counsel during the three months ended March 31, 2026.

Indemnification Agreements

The Company maintains indemnification agreements with our directors and officers that may require the Company to indemnify these individuals against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by law.

Note 11 – Government Assistance

During 2022, the Company was awarded a research grant from the Department of Energy (“DOE”) for approximately $250 thousand with the completion of such grant occurring in March 2023. The purpose of the grant was to produce a research paper for a flexible fuel ultra-low NOx process burner capable of burning 100% hydrogen fuel. During 2023, the Company was awarded a Phase 2 grant from the DOE to continue developing this ultra-low NOx hydrogen burner. The Phase 2 grant amount totaled approximately $1.6 million over a two-year period. We completed the Phase 2 grant on May 27, 2026. These awards allow the Company to request reimbursements for expenditures such as labor, material, and administrative costs. During the three and six months ended June 30, 2026, the Company recognized $131 thousand and $159 thousand in reimbursements from the DOE, respectively. During the three and six months ended June 30, 2025, the Company recognized $43 thousand and $91 thousand in reimbursements from the DOE, respectively.

Note 12 – Subsequent Events

On July 21, 2026, the Company entered into a Stock Purchase Agreement (the “Private Purchase Agreement”) with Otter Capital LLC, an accredited investor and existing stockholder of the Company (the “Investor”), which Investor holds more than 5% of the issued and outstanding shares of common stock, pursuant to which the Company sold and the Investor purchased 500,000 shares of common stock at a price per share of $3.54, for aggregate gross proceeds of $1,770,000. Our net proceeds were approximately $1,749,000 after deducting for legal fees and transaction costs.

The pro forma impact of the transactions contemplated by the Private Purchase Agreement on the Company’s unaudited condensed consolidated balance as of June 30, 2026, results in a cash and cash equivalents balance of $11,638 thousand and additional paid-in capital balance of $119,608 thousand.

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

This Quarterly Report on Form 10-Q (this “Form 10-Q” or “report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may,” “will” or other similar expressions in this report. In particular, these include statements relating to future actions; prospective products, applications, customers, and technologies; future performance or results of any products; anticipated expenses; and future financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to:

●

our limited cash, history of losses, and our expectation that we will continue to experience operating losses and negative cash flows in the near future;

●

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

●

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

●

emerging competition and rapidly advancing technology in our industry that may outpace our technology;

●

customer demand for the products and services we develop;

●

the impact of competitive or alternative products, technologies, and pricing;

●

our ability to manufacture any products we design;

●

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

●

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;

●

our ability to protect our intellectual property;

●

our ability to obtain adequate financing in the future;

●

lawsuits and other claims by third parties or investigations by various regulatory agencies that we may be subjected to;

●

our ability to retain and hire personnel with the experience and talent to develop our products and business;

●

our success at managing the risks involved in the foregoing items; and

●

other factors discussed in this report and in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K.

Forward-looking statements may appear throughout this report, including, without limitation, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements included in this report. You should not place undue reliance on these forward-looking statements.

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

Note Regarding Reverse Stock Split

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

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q as well as our audited consolidated financial statements and related notes included in our most recent Annual Report on Form 10-K. In addition to historical information, this discussion and analysis here and throughout this Form 10-Q contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, the risks described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Overview

We design and develop technologies for the purpose of decarbonization and improving key performance characteristics of combustion systems, including emission and operational performance, energy efficiency and overall cost-effectiveness. Our ClearSign Core™ technology has been proven in full scale industrial test furnaces and boilers and first customer installations are currently operating in normal commercial applications. We have generated nominal revenues from operations to date to meet operating expenses.

We have incurred losses since inception totaling $108.0 million and we expect to experience operating losses and negative cash flow for the foreseeable future. We have historically financed our operations primarily through issuances of equity securities. As of June 30, 2026, we have raised approximately $109.2 million in gross proceeds through the sale of our equity securities. We may need to raise additional capital in the future, however, the significant volatility in the capital markets may negatively affect our ability to raise this additional capital.

In order to generate meaningful revenues, our technologies must gain market recognition and acceptance to develop sufficient recurring sales. In addition, management believes that the successful growth and operation of our business is dependent upon our ability to obtain adequate sources of funding through co-development agreements, strategic partnering agreements, or equity or debt financing to support commercialization of our research and development efforts, protect intellectual property, form relationships with strategic partners and provide for working capital and general corporate purposes. There can be no assurance that we will be successful in achieving our long term plans, or that such plans, if consummated, will result in profitable operations or enable us to continue in the long term as a going concern.

Our costs include employee salaries and benefits, compensation paid to consultants, materials and supplies for prototype development and manufacture, costs associated with development activities including materials, sub-contractors, travel and administration, legal and accounting expenses, sales and marketing costs, general and administrative expenses, and other costs associated with an early stage, publicly traded technology company. We currently have 16 full-time employees. Because using third party expertise and resources is more efficient than maintaining full time resources, we also expect to incur ongoing consulting expenses related to technology development and some administrative, sales and legal functions commensurate with our current level of activities.

The amount that we spend for any specific purpose may vary significantly, and could depend on a number of factors including, but not limited to, the pace of progress of our commercialization and development efforts, actual needs with respect to product testing, development and research, market conditions, and changes in or revisions to our sales and marketing strategies.

Research, development, and commercial acceptance of new technologies are, by their nature, unpredictable. Although we undertake development and commercialization efforts with reasonable diligence, there can be no assurance that the net proceeds from our securities offerings will be sufficient to enable us to develop our technology to the extent needed to create sufficient future sales to sustain operations. If the net proceeds from these offerings are insufficient for this purpose, we will consider other options to continue our path to commercialization, including, but not limited to, additional financing through follow-on equity offerings, debt financing, co-development agreements, sale or licensing of developed intellectual or other property, or other alternatives.

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We cannot assure that our technologies will be accepted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, we have no committed source of financing, and we cannot assure that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to scale back our development by reducing expenditures for employees, consultants, business development and marketing efforts or to otherwise severely curtail, or even to cease, our operations.

Recent Developments

Public Offering

On May 28, 2026, we entered into an underwriting agreement (the “Underwriting Agreement”) with Newbridge Securities Corporation (the “Underwriter”), relating to a firm-commitment underwritten public offering (the “Public Offering”), for the issuance and sale to primarily existing stockholders of the Company of 777,780 shares of common stock at a public offering price of $4.33 per share, less underwriting discounts and commissions, pursuant to our effective Form S-3, including the prospectus forming a part of the Registration Statement, as supplemented by a preliminary prospectus supplement, dated May 28, 2026, and a final prospectus supplement, dated May 28, 2026, each filed with the SEC. The Public Offering closed on June 1, 2026.

Subsequently, on June 18, 2026, the Underwriter, pursuant to the full exercise of its over-allotment option, purchased 116,667 additional shares of common stock at a public offering price of $4.33 per share, less underwriting discounts and commissions.

We received gross proceeds of approximately $3.9 million, and net proceeds of approximately $3.4 million, as a result of the Public Offering and related over-allotment option exercise.

ATM Recommencement

On July 6, 2026, we filed a prospectus supplement to recommence our ATM program with Wainwright to sell up to $6,875,000 in shares of our common stock (the “Placement Shares”), pursuant to the Sales Agreement between us and Wainwright, dated July 17, 2025. The issuance and sale of the Placement Shares by us under the Sales Agreement will be made pursuant to our Form S-3, as supplemented from time to time.

Private Placement

Newbridge Securities Waiver

On July 21, 2026, we received a waiver (the “Waiver”) from the Underwriter for certain restrictions on the sale of our capital stock as set forth in the Underwriting Agreement. The Waiver became effective on July 21, 2026, and remained effective until the earlier of (i) the consummation of the Private Sale (as defined below) or (ii) July 31, 2026. As a result of the consummation of the Private Sale, as described below, the Waiver terminated by its own terms.

Stock Purchase Agreement

On July 21, 2026, in connection with the receipt of the Waiver, we entered into the Private Purchase Agreement with the Investor, pursuant to which we sold and the Investor purchased 500,000 shares of common stock at a price per share of $3.54, for aggregate gross proceeds of $1,770,000 (the “Private Sale”).

Critical Accounting Policies

The following discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations. These policies and estimates require the application of significant judgment by management. These estimates can be materially affected by changes from period to period as

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economic factors and conditions outside of our control change. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. We believe the current assumptions and other considerations used to estimate amounts reflected in the unaudited condensed consolidated financial statements included in this Form 10-Q are appropriate.

This Form 10-Q and our most recent Annual Report on Form 10-K include discussions of our accounting policies, as well as methods and estimates used in the preparation of our audited consolidated financial statements. For further information on our critical accounting policies and estimates, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K, the notes to our audited consolidated financial statements included in the Form 10-K and “Note 2 – Summary of Significant Accounting Policies” of our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q. Since our most recent Annual Report on Form 10-K, we have not experienced a material change to our critical accounting policies or the methods and applications used to develop our accounting estimates.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Highlights of our quarter financial performance are as follows:



	For the Three Months Ended
(in thousands, except per share data)	June 30,
	2026			2025			$ Change			% Change
Revenues	$	560		$	133		$	427		321.1	%
Cost of goods sold		332			78		$	254		325.6	%
Gross profit		228			55		$	173		314.5	%
Research and development		448			247		$	201		81.4	%
General and administrative		1,278			1,646		$	(368)		(22.4)	%
Operating expenses		1,726			1,893		$	(167)		(8.8)	%
Other income, net		191			158		$	33		20.9	%
Net loss	$	(1,307)		$	(1,680)		$	373		22.2	%
Basic and diluted net loss per common share	$	(0.22)		$	(0.30)		$	0.08		26.7	%


		For the Six Months Ended
(in thousands, except per share data)		June 30,
		2026			2025			$ Change			% Change
Revenues		$	751		$	534		$	217		40.6	%
Cost of goods sold			916			283		$	633		223.7	%
Gross profit (loss)			(165)			251		$	(416)		(165.7)	%
Research and development			697			694		$	3		0.4	%
General and administrative			2,915			3,652		$	(737)		(20.2)	%
Operating expenses			3,612			4,346		$	(734)		(16.9)	%
Other income, net			280			339		$	(59)		(17.4)	%
Net loss		$	(3,497)		$	(3,756)		$	259		6.9	%
Basic and diluted net loss per common share		$	(0.61)		$	(0.70)		$	0.09		12.9	%

Revenues and Gross Profit (Loss)

Consolidated revenues for the three months ended June 30, 2026 were $560 thousand compared to $133 thousand for the same period in 2025. During the three months ended June 30, 2026 revenues were predominantly generated by delivering a portion of our flare system equipment order, fulfilling multiple spare parts orders and finalizing process burner CFD studies. Revenues for the three months ended June 30, 2025 were predominantly generated by delivering spare parts orders to multiple customers and a boiler burner order.

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Consolidated revenues for the six months ended June 30, 2026 were $751 thousand compared to $534 thousand for the same period in 2025. During the six months ended June 30, 2026 revenues were predominantly generated by delivering a portion of our flare system equipment order, fulfilling multiple spare parts orders, finalizing process burner CFD studies, completing a boiler burner order and delivering midstream burners. Revenues for the six months ended June 30, 2025 were predominantly generated by delivering spare parts orders to multiple customers, delivering a boiler burner, and successfully completing multiple CFD analyses.

Gross profit increased by $173 thousand, or 314.5%, for the three months ended June 30, 2026, compared to the same period in 2025. Gross profit increased primarily due to higher revenues. Our gross profit margin, for the three months ended June 30, 2026, experienced a modest 0.6% decrease compared to the same period in 2025, which was predominantly driven by a change in product mix.

Gross profit decreased by $416 thousand for the six months ended June 30, 2026, compared to the same period in 2025. Gross profit decreased primarily due to a $410 thousand increase in cost of goods sold expenses for a warranty accrual estimate adjusted during the three months ended March 31, 2026. The adjusted warranty accrual estimate related to process burners installed during the third quarter of 2025. These burners are operational and have met applicable emissions requirements up to 80% of the specified normal firing rates. However, a temporary adjustment to these burners was required to enable operational performance up to the maximum specified firing rate, which in turn affected burner compliance with our emission guarantees. To establish our technology and customer service reputation within the market, we have established a warranty accrual estimate, that we believe, will provide for us to meet both our product guarantees and maintain our good standing with our affected customer. Furthermore, gross profit also decreased by a change in product mix year-over-year driven by a decrease in spare parts revenue.

Operating Expenses

Operating expenses consist of research and development (“R&D”) and general and administrative (“G&A”) expenses. These are addressed separately below.

Research and Development

R&D expenses increased $201 thousand, or 81.4%, for the three months ended June 30, 2026, compared to the same period in 2025. The increase was predominantly due to $100 thousand in subcontractor costs related to our DOE project. As noted in “Note 11 – Government Assistance,” above, monies received from the DOE grant are recorded as other income under government assistance.

R&D expenses increased $3 thousand, or 0.4%, for the six months ended June 30, 2026, compared to the same period in 2025. The increase was predominantly due to $100 thousand in subcontractor costs related to our DOE project described above, which were partially offset by $115 thousand receipt of funds for cost-sharing expenses associated with a collaborative R&D project.

General and Administrative

G&A expenses decreased $368 thousand, or 22.4%, for the three months ended June 30, 2026, compared to the same period in 2025. The decrease was predominantly due to $300 thousand in accrued legal fees during the prior period that were not present during the current period, which legal fees related to work performed by the former Special Committee to respond, manage and otherwise address attempts by several stockholders to submit director nomination notices in connection with our 2025 annual meeting of stockholders.

G&A expenses decreased $737 thousand, or 20.2% for the six months ended June 30, 2026, compared to the same period in 2025. The decrease was predominantly due to $750 thousand in year-over-year legal fees related to work performed by the former Special Committee. The decrease in year-over-year legal fees was partially offset by an increase of $139 thousand in legal fees associated with an advancement claim by the Former Directors (see “Note 10 – Commitments and Contingencies – Litigation” for more information).

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Other Income, Net

Other income, net, for the three and six months ended June 30, 2026 remained relatively consistent compared to the respective prior periods in 2025.

Liquidity and Capital Resources

At June 30, 2026, our cash and cash equivalents balance totaled $9,889 thousand compared to $9,178 thousand at December 31, 2025, an increase of $711 thousand. The increase in the cash and cash equivalents balance is primarily attributable to $3,413 thousand in net proceeds from the issuance of common stock in connection with the Public Offering (see “Recent Developments – Public Offering” for more information), an increase of $315 thousand in contract liabilities driven by customer receipts and non-cash expenses of $327 thousand, which was partially offset by net cash used in operations. Further, subsequent to June 30, 2026, we received an additional $1,749 thousand in net proceeds in connection with the Private Sale, which was consummated on July 22, 2026 (see “Recent Developments – Private Placement – Stock Purchase Agreement” for more information).

At June 30, 2026, our current assets were in excess of current liabilities resulting in working capital of $8,846 thousand compared to $8,642 thousand at December 31, 2025. We believe we have sufficient cash and expected cash collections to fund current operating expenses for over twelve months. We have no contractual debt obligations and to the extent we may require additional funds beyond twelve months from the date hereof, and customer cash collections cannot fund our needs, we may utilize equity offerings. Historically, we have funded operations predominantly through equity offerings. Until the growth of revenue increases to a level that covers our operating expenses, we intend to continue to fund operations in this manner, although the volatility in the capital markets may negatively affect our ability to do so. As of June 30, 2026, approximately 2.1 million shares of our common stock are issuable upon exercise of our outstanding warrants, which number excludes the shares of common stock issuable upon exercise of our outstanding pre-funded warrants, and we may receive up to $22.4 million in aggregate gross proceeds from the cash exercises thereof, subject to certain beneficial ownership limitations set forth therein. These warrants require the warrant holder to tender cash upon exercise, with the exception of the warrants issued to Public Ventures LLC as compensation for their services in connection with our public offering and concurrent private placement in April 2024, which allow the holder to exercise cashless if they so desire. These equity financial instruments may from time to time fund future cash needs, but the volatility of our common stock price and the risk tolerance of warrant holders will determine the extent to which we will be able to raise funds in this manner.

Operating activities for the six months ended June 30, 2026, resulted in cash outflows of $2,584 thousand, primarily due to the net loss of $3,497 thousand, which was partially offset by an increase in accounts receivable of $986 thousand driven by customer billings, an increase in contract liabilities of $315 thousand driven by customer cash collections and non-cash expenses of $327 thousand during such period.

Operating activities for the six months ended June 30, 2025, resulted in cash outflows of $1,622 thousand, primarily due to the net loss of $3,756 thousand and a decrease of $967 thousand in deferred costs, which was partially offset by non-cash expenses of $245 thousand and an increase in contract liabilities of $2,495 thousand during such period.

Investing activities for the six months ended June 30, 2026, resulted in cash outflows of $89 thousand, which is primarily attributable to disbursements for patents and other intangible assets.

Investing activities for the six months ended June 30, 2025, resulted in cash outflows of $57 thousand, which is primarily attributable to disbursements for patents and other intangible assets.

Financing activities for the six months ended June 30, 2026, resulted in cash inflows of $3,381 thousand, which is primarily attributable $3,413 thousand in net proceeds from the issuance of common stock in connection with the Public Offering.

Financing activities for the six months ended June 30, 2025, resulted in cash outflows of $17 thousand, which is primarily attributable to $41 thousand of disbursements related to taxes paid for the vesting of certain employee restricted stock units, partially offset by $24 thousand in net proceeds received from the exercise of certain warrants.

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Off-Balance Sheet Transactions

We do not have any off-balance sheet transactions.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide this information.

ITEM 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal accounting and financial officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2026, the end of the period covered by this Form 10-Q. Based upon the evaluation of our disclosure controls and procedures as of June 30, 2026, our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer) concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal accounting and financial officer), does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.


PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2026 and 2025	2

	Condensed Consolidated Statements of Stockholders’ Equity for the Three Month Periods During the Six Months Ended June 30, 2026 and 2025	3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II	OTHER INFORMATION	26

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3.	Defaults Upon Senior Securities	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	27

	SIGNATURES	29

Item 6. Exhibit	EXHIBITS
Number	Document

3.1	Certificate of Incorporation of ClearSign Technologies Corporation, a Delaware corporation (incorporated by reference to Exhibit 3.3 of the Company’s Form 8-K filed with the Securities and Exchange Commission on June 15, 2023).

3.2	Certificate of Amendment, as filed with the Secretary of the State of Delaware on June 25, 2024 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on June 26, 2024).

3.3	Certificate of Amendment to Certificate of Incorporation, as amended, of ClearSign Technologies Corporation, filed with the Secretary of State of the State of Delaware on March 6, 2026 (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on March 10, 2026).

3.4	Amended and Restated Bylaws of ClearSign Technologies Corporation, a Delaware corporation (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on November 17, 2025).

4.1	Form of Common Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).

4.2	Form of Underwriter’s Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).

4.3	Form of Private Warrant (incorporated by reference to Exhibit 4.3 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).

4.4	Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 23, 2024).

4.5	Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 of the Company’s Form 8-K filed with the Securities and Exchange Commission on April 19, 2024).

10.1	Underwriting Agreement, dated as of May 28, 2026, by and between the Company and Newbridge Securities Corporation (incorporated by reference to Exhibit 1.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission on June 1, 2026)

10.2+	Amended and Restated ClearSign Technologies Corporation 2021 Equity Incentive Plan (incorporated by reference to Annex A of the Company’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on April 28, 2026).

31.1*	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

31.2*	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.

32.1**	Section 1350 Certification of Principal Executive Officer and Principal Financial Officer.

101.INS*	Inline XBRL Instance Document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

		CLEARSIGN TECHNOLOGIES CORPORATION


Date: August 14, 2026	By:	/s/ Colin James Deller
		Colin James Deller
		Chief Executive Officer
		(Principal Executive Officer)




Date: August 14, 2026	By:	/s/ Brent Hinds
		Brent Hinds
		Chief Financial Officer (Principal Financial and Accounting Officer)