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.

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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.

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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.

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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.

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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.