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.

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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

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 

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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.  

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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.

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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.

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

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Stock Options

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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.

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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.

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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:

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

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Equity Incentive Plan Options

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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.

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

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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.

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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

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

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Inducement Options

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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.

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

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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.

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

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A summary of the Company’s RSU compensation expense is as follows:

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Stock Awards

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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.

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Consultant Stock Plan

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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:

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The Consultant Plan compensation expense is summarized as follows:

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