BCHT 10-K & 10-Q changes, risk factors and insider trading

North American coal-fired electricity generating units comprise the basis of the market for our services and products. Regulations mandating or incentivizing the purchase of power from renewable energy sources (e.g., wind, solar, hydroelectric,hydroelectric and geothermal) and/or the phasing out of coal-fired power plants could lessen the demand for electricity from such plants and overall reduce the number of coal-fired electricity generating units and the amount of coal burned, thereby decreasing the demand for our services and products which could adversely affect our business. The phasing out of coal-fired plants has already had a negative effect on our results of operations. Continued promulgation of these regulations in North America is affected by, among other things, politics, perceived environmental impact, and public favor.

We operate in highly competitive industries that are characterized by a diverse range of participants, including companies that operate in both the mercury capture and water treatment industries. Our major competitors in the mercury capture and water treatment markets includesinclude companies such as Arq, Inc. (formerly Advanced Emissions Solutions, Inc.), Norit Activated Carbon, Calgon Carbon Corporation, and Nalco Company LLC (also known as Nalco Water, an Ecolab company). Many of our competitors employ larger sales staff and are well established in the market with greater financial and operational resources. Our ability to compete successfully depends in part upon our ability to offer superior technology, including a superior team of technical personnel. If we are unable to maintain our competitive position, we could lose market share to our competitorscompetitors, which is likely to adversely impact our financial results.

WeAs haveof aDecember 31, 2025, our patent portfolio relating to mercury removal ofincluded 3518 granted patents worldwide, consisting of 2713 U.S. patents and 85 foreign patents (Canada, GermanyEurope and China), with stated expiration dates ranging from AugustJanuary 20252026 to September 2034. Between August and October 2025, 13 U.S. Patents and 2 foreign patents relating to mercury removal expired. The patent data and expiration timelines cited above and elsewhere in this report are based on internal assessments and information currently available through third-party databases, including Google Patent Database. While we believe these sources to be generally reliable, they are subject to inherent data lags, indexing errors or incomplete coverage of foreign jurisdictions. Consequently, the actual status, enforceability or precise expiration dates of certain patents may differ from those stated. While we actively pursue new patents and technological advancements to replace expiring patents, there is no guarantee that future patents will be granted, or that they will be able to provide and/or allow us to maintain the same level of market protection. As a result, we may not be able to successfully protect proprietary aspects of our technology.

With regard to our water treatment technologies, we have to date filed two provisional patent applications in the U.S. relating to water treatment. We have also filed two Patent Cooperation Treaty (“PCT”) applications and one U.S. patent application. However, provisionalthese applications do not provide enforceable patent rights unless they are converted into non-provisional applications and successfully granted by the PCT and U.S. Patent and Trademark Office. There is no assurance that our pending provisional applications will result in issued patents, or that any patents granted will provide meaningful protection against competitors.

Patent litigation, like most types of commercial litigation, can be expensive, time-consuming, and unpredictable. Any such litigation may require us to spend a substantial amount of time and money and could distract management from our day-to-day operations. There is no assurance that we will be successful in any such litigation. Moreover, in an infringement proceeding, a court may decide that one or more of our patents are not valid or enforceable, or a court may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing.being approved.

We buy all the raw materials needed to implement our technologies and provide uniquely formulated products from third-party suppliers. Suppliers of our raw materials include large companies that have provided materials for decades and have an international presence. We believe that we have excellent relationships with our current suppliers. If any of our suppliers should become unavailable to us for any reason, there are a number of other suppliers that we believe can be contracted with to supply the raw materials that we need. However, the availability and price of those raw materials can be impacted by factors beyond our controlcontrol, including any price increases due to inflation. If such suppliers cannot meet our demand for such raw materials on a timely basis or at acceptable prices or if we are unable to offset any such increases that might occur with price adjustments to our customers, such could have a negative effect on our operations.

We are dependent on key customers.customers and suppliers. A significant adverse change in such relationships could adversely impact our results of operations and financial condition.

For the year ended December 31, 2025, three customers represented 29%, 11%, and 9% of the Company’s revenues, and for the year ended December 31, 2024, three customers represented 32%, 13%, and 10% of the Company’s revenues. At December 31, 2025, two customers represented 51%, and14% of the Company’s accounts receivable, and at December 31, 2024, three customers represented 32%, 26% and 9% of the Company’s accounts receivable. Our customers are concentrated, so the loss of one or more key customers or a material reduction in business performed for them could cause us to experience a decline in net sales, which could adversely affect our financial results. In addition, there can be no assurance that such customers will not experience financial difficulties or other problems which could delay such customers in paying for product and services on a timely basis or at all. Any problems with such customers can be expected to have an adverse impact on our results of operations and financial condition.

Our mercury-emissions control technologies are used by coal-fired power plants primarily in the United States. At such times that gas prices remain low for sustained periods of time or such prices drop substantially, power suppliers will likely rely more upon gas-fired units rather than coal plants in meeting their power needs. Historically, gas prices have been volatile and are likely to remain volatile in the future due to numerous factors beyond our control. Although market prices for natural gas have recently remained relatively high, we cannot predict when such prices may decline and remain low for an extended period of time which, in such event, will likely cause a weaker demand for our products. In addition, mild winter months in the U.S. will also result in less of a power demanddemand, which will also be expected to negatively impact our operations.

From time to time, we may be faced with disputes with our customers over the provisions of supply contracts relating to, among other things, pricing, quality, quantity, and the existence of specified conditions beyond our or our customers’ control that impact performance obligations under the particular contract. In the event such disputes occur, we may not be able to resolve those disputes in a satisfactory mannermanner, which could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to the requirements of the Exchange Act, including the requirements of the Sarbanes-Oxley Act of 2002. The requirements of these rules and regulations have increased in recent years, causing an increase in legal and financial compliance costs, and make some activities more difficult, time-consuming, or costly and may also place undue strain on our personnel, systems, and resources. Such rules and regulations require, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. This can be difficult to do. In this regard, our management concluded our internal control over financial reporting wasand disclosure controls were not effective as of December 31, 2024.2025. While we have completed certain remedial actions have been completed,actions, we continue to actively plan for and implement additional control procedures to improve our overall control environmentenvironment, and we expect these efforts to continue throughout the rest of 20252026 and beyond. As a result of this and similar activities, management’s attention may be diverted from other business concerns, which could have a material adverse effect on our business, financial condition, and results of operations. Further, investors could lose confidence in our financial reports, and our stock price may be adversely affected, if our internal controls over financial reporting continue to be found not to be effective by management or if we make disclosure of existing or potential significant deficiencies or material weaknesses in those controls in the future. Relatedly, if we fail to remediate any such material weakness in the future, we may not be able to accurately report our financial condition or results of operations.

DiscretionOur management has discretion in the use of our available fundsfunds.

Management has discretion concerning the use of our available funds, as well as the timing of their expenditure. As a result, investors will be relying on the judgment of management for the application of our available funds. The results and the effectiveness of the application of the available funds are uncertain. If the available funds are not applied effectively, the results of our operations may suffer. Stockholders may not agree with the manner in which management chooses to allocate and spend our available funds.

On March 28, 2025, our boardBoard of directors,Directors, along with our auditAudit committeeCommittee and with management and, following dialogue with our auditors, concluded that our previously issued financial statements for the periods ended December 31, 2023 and 2022 included in the Company’s Annual Reports ofon Form 10-K,10‑K, and the periods ended March 31, 2024, June 30, 2024, and September 30, 2024, March 31, 2023, June 30, 2023, and September 30, 2023, included in the Company’s Quarterly Reports ofon Form 10-Q,10‑Q, should no longer be relied upon as a result of the change in accounting for a certain license agreement. We concluded that the Company should have recognized the entire proceeds receivable pursuant to the agreement as revenue during the year ended December 31, 2022. The Company should also have recognized the financing component of the licensing agreement during the fiscal years ended December 31, 2023 and 2024. Such restatementrestatement, and any future restatements of our financial position, could cause uncertain sentiment in the investment community.

Our business relies heavily on environmental regulations governing emissions from coal-fired power plants and regulations related to water treatment. In the United States, the Mercury and Air Toxics Standards (MATS) rule, issued by the U.S. Environmental Protection Agency (EPA) in 2011, is intended to reduce air emissions of heavy metals, including mercury (“Hg”),Hg, from all major U.S. power plants burning coal or oil, which are the leading source of non-natural mercury emissions in the U.S. Potable water treatment is regulated primarily by the EPA under the Safe Drinking Water Act (“SDWA”),SDWA, which establishes standards to ensure that water is safe for human consumption. In April 2024, the EPA issued the first-ever national, enforceable drinking water standard to protect communities from exposure to harmful per-and polyfluoroalkyl substances (“PFAS”),PFAS, also known as “forever chemicals”.chemicals. The Rule sets limits for five individual PFAS: PFOA, PFOS, PFNA, PFHxS, and HFPO-DA (known as /GenX Chemicals). Any changes, rollbacks or delays in these regulations could significantly impact the Company’s financial performance and growth prospects. In this regard, on May 14, 2025, the EPA under the new Trump Administration announced the agency will keep the regulations for PFOA and PFOS, but also announced its intent to extend the PFOA and PFOS MCL compliance deadlines to 2031 and establish a federal exemption framework. Additionally, the EPA announced its intent to rescind the regulations and reconsider the regulatory determinations for PFHxS, PFNA, HFPO-DA, and the Hazard Index mixture of these three PFAS plus PFBS to ensure the determinations and any resulting drinking water regulation follow the SDWA process.

Since being enacted, the MATS Rule has been subject to legal challenges and modifications which may continue.

Since being enacted in 2011, the MATS regulation has been subject to legal challenge.challenge and modifications. In June 2015, the U.S. Supreme Court, in Michigan v. EPA, held that the EPA unreasonably failed to consider costs in determining whether it is "“appropriate and necessary"” to regulate hazardous air pollutants, including mercury, from power plants, but left the rule in place. In April 2016, the EPA issued a supplemental finding in response to the Michigan decision and found that, after a consideration of costs, it remained appropriate and necessary to regulate such emissions from coal- and oil-fired power plants. In May 2020, the EPA, then under the first Trump Administration, reversed the determination, finding that, after weighing the costs of compliance against certain benefits of the regulation, the 2016 supplemental finding was erroneouserroneous, but left the MATS rule in place. Upon taking office, the Biden Administration in January 2021 directed the EPA to review the previous Administration’s actions on various environmental mattersmatters, including the withdrawal of the May 2020 “appropriate and necessary” determination, for conformity with the Biden AdministrationAdministration’s environmental policy. On February 9, 2022, the EPA proposed to revoke the May 2020 finding and reaffirm the EPA’s 2016 finding. On February 15, 2023, the EPA reaffirmed that it remains appropriate and necessary to regulate hazardous air pollutants, including mercury, from power plants after considering cost, and revoked the May 2020 finding. OnIn April 3, 2023, the EPA issued a proposal to strengthen and update MATS. TheSuch newlyproposal inauguratedwas secondfinalized Trumpand Administration has indicated potential shiftspublished in environmentalMay policies,2024, whichwith mayan includeeffective revisitingdate of July 8, 2024, which, among other things, strengthens and updates MATS for coal-fired power plants and tightens the emission standard for mercury for existing regulationslignite-fired suchpower asplants to a level that is aligned with the mercury standard that other coal-fired power plants have been achieving under MATS. In this regard, onOn March 12, 2025, the newly appointed EPA administrator under the Trump Administration announced plans to roll back dozens of environmental regulationsregulations, including the reconsideration of the MATS regulation. On April 8, 2025, President Trump signed a Proclamation exempting certain stationary sources, identified in Annex 1 of the Proclamation, from compliance with the 2024 updated MATS Rule. As set out in the Proclamation, the President’s exemption lasts for a period of two years beyond the updated Rule’s compliance date (i.e., for the period beginning July 8, 2027 and concluding July 8, 2029). During the two-year period, these stationary sources identified in Annex 1 are subject to the compliance obligations that they are currently subject to under MATS as the MATS Rule existed prior to the 2024 update. Annex 1 identifies 47 plant owners and over 60 power plants provided such exemption. In June 2025, the EPA proposed to repeal certain amendments finalized in 2024 to the MATS Rule and return compliance obligations to the MATS standards which existed prior to the 2024 update. On December 23, 2025, the EPA submitted a draft of the final action to the OMB for interagency review under Executive Order 12866. On February 19, 2026, following completion of the OMB interagency review process, the EPA finalized the repeal of the 2024 amendments to the MATS Rule which returned compliance to the 2012 MATS Rule requirements.

Risks AssociatedRelated withto our Common Stock

Our common stock is currently traded in Canada on the Toronto Stock Exchange (“TSX”) under the symbol “BCHT” and isprior to February 26, 2026 was quoted in the United States on the OTCQB operated by OTC Markets Group Inc. under the symbol “BCHT”. Effective February 26, 2026, our common stock became listed and began trading on the NYSE American under the symbol “BCHT”, at which point our common stock ceased being traded on the OTCQB. Historically, the trading volume for our common stock has varied and, at times, been limited. Accordingly, if we are not able to maintain the listing of our shares of common stock on the NYSE American or the TSX and our common stock becomes quoted on the OTCQB again, investors may find it more difficult to buy and sell our shares. These factors may have an adverse impact on the trading and price of our common stock.

Any of these factors, as well as broader market and industry factors, may result in large and sudden changes in the trading volume of our common stock and could seriously harm the market price of our common stock, regardless of our operating performance. This may prevent you from being able to sell your shares of common stock at or above the price you paid for yoursuch shares of our common stock,shares, if at all. In addition, following periods of volatility in the market price of a company’s securities, stockholders often institute securities class action litigation against that company. Our involvement in any class action suit or other legal proceeding could divert our senior management’s attention and could adversely affect our business, financial condition, results of operations, and prospects.

Shares of common stock eligible for future sale may have adverse effects on our share price.

Sales of substantial amounts of shares of common stock or the perception that such sales could occur may adversely affect the prevailing market price for our shares. We may issue additional shares of common stock in subsequent public offerings or private placements to make new investments or for other purposes. We are not required to offer any such shares of common stock to existing shareholdersstockholders on a preemptive basis. Therefore, it may not be possible for existing shareholdersstockholders to participate in such future share issuances, which may dilute the existing shareholders’stockholders’ interests in us.

WeIn February 2026, we completed a financing transaction that strengthened our liquidity. However, we may need additional capital in the future, which may not be available on acceptable terms or at all, to among other things, continue investing in our business, pursue acquisitions and other strategic transactions. Future financings may involve the issuance of debt, equity, and/or securities convertible into or exercisable or exchangeable for our equity securities. These financings may not be available to us on commercially reasonable terms or at all if and when we require funding. If we are able to consummate such financings, the trading price of our common stock could be adversely affected and/or the terms of such financings may adversely affect the interests of our existing stockholders. Any failure to obtain additional working capital, if and when required, could have a material adverse effect on our business and financial condition and may result in a decline in our stock price.

Our officersindemnification obligations to directors and directors are entitled to indemnification from us for liabilities under our articles of incorporation, whichofficers could be costly to us and may discourage thelawsuits exerciseagainst ofthem, potentially limiting stockholder rights.rights and remedies.

Our articlesCertificate of incorporationIncorporation provideprovides that we possess and may exercise all powers of indemnification of our officers, directors, employees, agents, and other persons and our bylawssecond amended and restated by-laws (“Bylaws”) also require us to indemnify our officers and directors as permitted under the provisions of the Delaware General Corporate Law.Law of the State of Delaware (the “DGCL”). In addition, we have entered into agreements to indemnify our directors and executive officers. These agreements, among other things, require us to indemnify these individuals for certain expenses (including attorneys’ fees), judgments, fines, and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on behalf of our Company or that person’s status as a member of our Board of Directors to the maximum extent allowed under Delaware law. The foregoing indemnification obligations could result in our incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers. These provisions and resultant costs may also discourage us from bringing a lawsuit against directors, officers, and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our stockholders against our directors, officers, and employees even though such actions, if successful, might otherwise benefit the Company and stockholders.

OurIf our common stock is currentlybecomes characterized as a “penny stock” again under SEC rules.rules, Itit may be more difficult to resell securitiesour classified as “pennycommon stock.”

OurPrior to the recent listing of our common stock ison currentlythe characterizedNYSE asAmerican, our common stock was considered a “penny stock” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). TheseWhile we do not expect our common stock to be considered a “penny stock” following our listing, if we are later deemed a “penny stock”, certain rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.

For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock will notmay be classified as a "“penny stock"” in the future.

If we cannot continue to satisfy the continued listing requirements,requirements of the NYSE American and/or the TSX, our securitiescommon stock may be delisted from the NYSE American and/or the TSX, which could negatively impact the price of our securitiescommon stock and your ability to sell them.

On JulyFebruary 20,26, 2023,2026, our shares of common stock began to trade on the TSXNYSE VentureAmerican Exchangeunder (the symbol “TSXVBCHT”). On October 9, 2024, we received conditional approval to list our shares on the TSX and graduate from the TSXV to the TSX, and on November 12, 2024, our sharescommon stock commenced trading on the TSX. We cannot assure you that our securities will continue to be listed on the TSX. In order to maintain our listing on the NYSE American and TSX, we will be required to comply with certain rules of the NYSE American and TSX, respectively, including those regarding a minimum public float, and various additional requirements. We may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the NYSE American and/or TSX criteria for maintaining our listing, our securitiescommon stock could be subject to delisting from the NYSE American and/or TSX.

If the NYSE American and/or TSX subsequently delists our securitiescommon stock from trading, we could face significant consequences, including:

Potential future sales pursuant to Rule 144.144 may depress the price of our common stock.

Many of the shares of our common stock presently held by management and others are “restricted securities” as that term is defined in Rule 144, promulgated under the United States Securities Act of 1933, as amended.amended (the “Securities Act”). Under Rule 144,144 of the Securities Act, a person (or persons whose shares are aggregated) who has satisfied a certain holding period, may, under certain circumstances, sell such shares or a portion of such shares. Such holding periods have already been satisfied in many instances. Therefore, actual sales or the prospect of sales of such shares under Rule 144 in the future may depress the price of our common stock.

Except as required by the Federalfederal Securitiessecurities Law,laws, we do not undertake any obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this report or for any other reason.

Unless indicated otherwise, references in this discussion and analysis to the “Company,” “we,” “us,” or “our” refer collectively to Birchtech Corp. (formerly Midwest Energy Emissions Corp.) and its consolidated subsidiaries.

We provide mercury capture solutions for coal-fired power plants driven by our patented two-part Sorbent Enhancement Additive (SEA®) process using a powerful combination of science and engineering. Our leading-edge services have been shown to achieve mercury emissions removal at a significantly lower cost and with less operational impact to coal-fired power plants than other used methods, while maintaining and/or increasing power plant output and preserving the marketability of byproducts for beneficial use. We design systems and materials tailored and formulated specifically to each customer’s coal-fired units. North America is currently the largest market for our emissions technologies. The market for mercury removal from power plant emissions in the United States has largely been driven by federal regulations. The MATS rule, proposed by the EPA in May 2011 and which became effective in April 2012, is intended to reduce air emissions of heavy metals, including Hg, from all major U.S. power plants burning coal or oil, which are the leading source of non-natural mercury emissions in the U.S. Our mercury removal technologies and systems will achieve mercury removal levels which meet or exceed the 2012 Coal- and Oil-Fired Electric Utility Steam Generating Units National Emission Standards for Hazardous Air Pollutants, as revised, known as the MATS,MATS requirements with lower cost and plant systems impacts than typical PAC or BAC sorbent injection systems. Our products have been shown to be successful across a myriad of fuel and system types, tunable to any configuration, and environmentally friendly, allowing for the recycling of fly ash for beneficial use. North America is currently the largest market for our emissions technologies.

In April 2024, we announced the introduction of our new divisionwater treatment business to address the growing potable (drinking) water market with newnext-generation sorbent technologies under development.technologies. These new technologiessolutions involveare being designed to use significantly less use of activated carboncarbon, and areoffering a much more environmentally friendlysustainable approach to water treatment.treatment while maintaining or improving contaminant removal performance. Our products target not only compliance with emerging PFAS regulations, but also broader opportunities in water quality improvement positioning us to serve a large and expanding market.

Effective as of JanuarySeptember 7,30, 2025, we entered into an agreement with another oneutility of the utilitiesnot named as a defendant in our patent litigations, but a party to the ArizonaIPR action.petitions filed with the U.S. Patent and Trademark Office (“PTO”). Such agreement provides such partyutility and its affiliates with a with a non-exclusive license to certain Company patents related to the Company’s two-part SEA® process for use in connection with a certain designated coal-fired power plant operated by suchthem. utility. TheSuch agreement includes a one-time license fee and provides the Company with the right to be included in such party’s bidding process for certain product supply for mercury emissions capture at such party’s designated power plant. Such party has agreed to withdraw from IPR petitions.

We generated revenues of approximately $17,406,000$17,626,000 and $17,625,000 (as restated)$17,406,000 for the years ended December 31, 20242025 and 2023,2024, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $14,482,000$14,233,000 and $17,093,000$14,482,000 for the years ended December 31, 20242025 and 2023,2024, respectively. Revenues can be dependent on natural gas prices, extreme weather, and the maintenance and downtime requirements of customer plants. The decrease in revenues for product sales from the prior year was primarily due to the mix of plants runningrunning, unexpected customer forced outages and products sold in 20242025 resulting in decreased product revenues for 20242025 compared to the prior year, offset by an increase in licensing revenues for 2024 compared to 2023.year.

Licensing revenues were approximately $2,808,000$3,159,000 and $388,000 (as restated)$2,808,000 for the years ended 20242025 and 2023,2024, respectively. Such increase was primarily due to a new licensing agreementagreements which was entered into in 20242025 with aprimarily utility.utility defendants.

Cost of sales were approximately $10,305,000$10,225,000 and $12,172,000$10,305,000 for the years ended December 31, 20242025 and 2023,2024, respectively. The slight decrease in cost of sales of approximately $1,867,000$80,000 was primarily attributable to decreased product sales in 20242025 compared to the prior year, together with a decreasechange in the Company’s costmix of carbonproducts sold in 20242025 compared to 2023.2024.

Gross profit was approximately $7,101,000$7,402,000 and $5,453,000 (as restated)$7,101,000 for the years ended December 31, 20242025 and 2023,2024, respectively. ThisThe increase in gross profit of approximately $1,648,000$301,000 was primarily due to higher licensing revenues in 20242025 compared to 2023,2024, which typically carry higher margins than product sales, thus contributing to the overall improvement in gross profit.

Our operating loss was approximately $7,158,000$3,030,000 and $8,973,000 (as restated)$7,158,000 for the years ended December 31, 20242025 and 2023,2024, respectively. Such decrease in operating loss was primarily due to our increased grosslicense profitfee revenue in 20242025 compared to 20232024 coupled with a decrease in total operating expenses remainingduring relatively2025 unchangedas fromdiscussed year to year.above.

Interest expense related to the financing of capital was approximately $267,000$14,000 and $1,362,000$267,000 for the years ended December 31, 20242025 and 2023,2024, respectively. The approximate breakdown of interest expense for the years ended December 31, 20242025 and 20232024 is as follows:

LossGain or loss on change in fair value of profit share liability werewas a gain of approximately $6,000 and loss of approximately $3,959,000 and $11,210,000 for the years ended December 31, 20242025 and 2023,2024, respectively. The change is primarily attributed to the modification of the terms of the profit share liability (see Note 87 to the consolidated financial statements for the year ended December 31, 2025).

Net Income (Loss)

For the year ended December 31, 2024,2025, we had a net loss of approximately $10,802,000$3,026,000, comparedan toimprovement from a net incomeloss of approximately $5,668,000 (as restated)$10,802,000 for the year ended December 31, 2023.2024. SuchThis changeimprovement was primarily due to noany income from legal claimsincrease in 2024license fee revenue in 2025 compared to $27,608,000 in 2023, offset by an increase in gross profit in 2024 compared to 2023,2024, and a decrease in the loss on change in fair value of profit share recognized in 2024 compared to 2023.SG&A.

Liquidity and Capital ResourceResources

We had approximately $3,456,000$2,245,000 in cash on our balance sheet at December 31, 20242025 compared to approximately $20,940,000$3,456,000 at December 31, 2023.2024. Total current assets were approximately $5,004,000 and total current liabilities were approximately $10,740,000 at December 31, 2025, resulting in a working capital deficiency of approximately $5,737,000. This compares to total current assets of approximately $6,099,000 and total current liabilities wereof approximately $8,806,000 at December 31, 2024, resulting in a working capital deficiency of approximately $2,707,000. This compares to total current assets of approximately $24,995,000 (as restated) and total current liabilities of approximately $2,183,000 at December 31, 2023, resulting in working capital of approximately $21,812,000 (as restated). Our accumulated deficit was approximately $72.8 million at December 31, 2024 compared to $62.0 million (as restated) at December 31, 2023. Additionally, we had a net loss in the amount of approximately $10,802,000 and cash used in operating activities of approximately $4,105,000 for the year ended December 31, 2024.

We provide mercury capture solutions for coal-fired power plants driven by our patented two-part Sorbent Enhancement Additive (SEA®) process using a powerful combination of science and engineering. Our leading-edge services have been shown to achieve mercury emissions removal at a significantly lower cost and with less operational impact to coal-fired power plants than other used methods, while maintaining and/or increasing power plant output and preserving the marketability of byproducts for beneficial use. We design systems and materials tailored and formulated specifically to each customer’s coal-fired units. North America is currently the largest market for our emissions technologies. The market for mercury removal from power plant emissions in the United States has largely been driven by federal regulations. The MATS rule, proposed by the U.S. Environmental Protection Agency (“EPA”) in May 2011 and which became effective in April 2012, is intended to reduce air emissions of heavy metals, including Hg, from all major U.S. power plants burning coal or oil, which are the leading source of non-natural mercury emissions in the U.S. Our mercury removal technologies and systems achieve mercury removal levels which meet or exceed the MATS requirements with lower cost and plant systems impacts than typical PAC or BAC sorbent injection systems. Our products have been shown to be successful across a myriad of fuel and system types, tunable to any configuration, and environmentally friendly, allowing for the recycling of fly ash for beneficial use.

In April 2023, the EPA issued a proposal to strengthen and update MATS. Such proposal was finalized and published in May 2024 with an effective date of July 8, 2024 which, among other things, strengthensstrengthened and updatesupdated MATS for coal-fired power plants and tightenstightened the emission standard for mercury for existing lignite-fired power plants to a level that is aligned with the mercury standard that other coal-fired power plants have been achieving under MATS.

In April 2024, the EPA under the Biden Administration issued the first-ever national, enforceable drinking water standard to protect communities from exposure to harmful PFAS, also known as “forever chemicals”., under the Safe Water Drinking Act. The rule as enacted established legally enforceable MCLs (maximum contaminant levels (“MCLs”) for six PFAS in drinking water: PFOA, PFOS, PFHxS, PFNA, and HFPO-DA as contaminants with individual MCLs, and PFAS mixtures containing at least two or more of PFHxS, PFNA, HFPO-DA, and PFBS using a Hazard Index MCL to account for the combined and co-occurring levels of these PFAS in drinking water. UnderAs originally adopted, the Rulerule as enacted,required public water systems must monitor these PFAS and mustto complete initial monitoring for these PFAS by 2027, followed by ongoing compliance monitoring. Water systems must also provide the public with information onregarding thePFAS levels of these PFAS in their drinking water beginning in 2027.2027, Onand Mayachieve 14,compliance 2025,with the EPAapplicable underMCLs theby new Trump Administration announced the agency will keep the regulations for PFOA and PFOS. As part of this action, the EPA also announced its intent to extend the PFOA and PFOS MCL compliance deadlines to 2031 and establish a federal exemption framework. Additionally, the EPA announced its intent to rescind the regulations and reconsider the regulatory determinations for PFHxS, PFNA, HFPO-DA/GenX), and the Hazard Index mixture of these three PFAS plus PFBS to ensure the determinations and any resulting drinking water regulation follow the SDWA process.2029.

As part of this strategic pivot, we have invested in the commissioning of two state-of-the-art laboratory facilities—facilities, one in Pennsylvania and one in North Dakota—Dakota, referred to as our “Design Centers.” The Design Centers are dedicated sites for water treatment innovation and development.development, including but not limited to the development of a carbon reactivation process, referrred to as Carbon RejuvenationTM, focused on the thermal reactivation of spent granular activated carbon (GAC). Together, we believe these facilities represent the only known facilities that have integrated capability in North America to thermally reactivate spent GAC under controlled conditions and subsequently conduct RSSCTs to directly compare reactivated GAC performance against virgin carbon counterparts. This combination allows us to evaluate reactivated GAC as a sustainable and cost-effective alternative to virgin carbon and address key water utility questions including how to optimize media changeout schedules, strategies to reduce operational costs, and provide lab-based validation of treatment performance for PFAS and other contaminants.

We previouslyhave commenced multiple patent infringement lawsuits to enforce our proprietary two-part SEA® process for mercury removal from coal-fired power plants. TheseOne actions,action was filed in 2019, and additional actions were filed between 20192024 andto 2025,2025 targetedagainst various operators of coal-fired power plants and refined coal producers whom we allege have willfully infringed our patent rights. The actions filed between 2024 and 2025 have been consolidated in the U.S. District Court for the Southern District of Iowa.

InBetween addition,January and July 2025, certain defendants havein the consolidated Iowa actions filed inter partes review (“IPR”) petitions challenging asserted claims of the Company’sour patents. The U.S. Patent Trial and Appeal Board (“PTAB”) instituted review of certain petitions, and proceedingsin areOctober ongoing.2025 Thethe U.S. District Court for the Southern District of Iowa has stayed the consolidated litigation pending resolution of the IPR proceedings. Other IPR petitions have been denied institution and requests for reconsideration have also been denied.

We generated revenues of approximately $4,240,000$3,791,000 and $3,221,000$3,254,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately $8,031,000 and $6,475,000 for the six months ended June 30, 2026 and 2025, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $4,188,000$3,466,000 and $2,677,000$3,244,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively and approximately $7,654,000 and $5,921,000 for the six months ended June 30, 2026 and 2025, respectively. Revenues in the mercury emissions market can be dependent on natural gas prices, extreme weather, and the maintenance and downtime requirements of customer plants. The increase in revenues for product sales from the prior year was primarily due to the mix of plants running and an increased demand for coal in connection with our mercury emissions business driven by more extreme weather conditions and higher natural gas prices in the current year compared to the prior year period. Additionally, sales were recognized for the water treatment market in 2026 compared to none in the comparable period of 2025.

Licensing revenues were $0 and $0 for the three months ended June 30, 2026 and 2025, respectively and $0 and $525,000 for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Such decrease was primarily due to a new licensing agreement entered into in the first quarter of 2025 with a utility that provided for a one time up front license fee, for which there were no comparable transactions in the first quartersix months of 2026.

Other revenues, consisting of demonstrations, consulting and services revenue, and equipment sales, were approximately $52,000$324,000 and $19,000$9,000, respectively for the three months ended MarchJune 31,30, 2026 and 2025 and $376,000 and $28,000 for the six months ended June 30, 2026 and 2025, respectively. Other revenues have not been material in relation to total revenues.

Cost of sales were approximately $2,857,000$2,758,000 and $1,987,000$2,286,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately $5,615,000 and $4,272,000 for the six months ended June 30, 2026 and 2025, respectively. The increase in cost of sales of approximately $870,000$1,343,000 was primarily attributable to increased product sales in the first threesix months of 2026 compared to the prior year period, together with a change in the mix of products sold in the first threesix months of 2026 compared to the prior year period.

Gross profit was approximately $1,383,000$1,033,000 and $1,234,000$968,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.respectively, and approximately $2,415,000 and $2,202,000 for the six months ended June 30, 2026 and 2025. The increase in gross profit of approximately $149,000$213,000 was primarily driven by greater product sales in the first threesix months of 2026. This increase was partially offset by a shift in revenue mix as licensing revenues, which typically carry higher margins, were higher in the threesix months ended MarchJune 31,30, 2025.2025 compared to none in the six months ended June 30, 2026.

We continue to incur significant expenses as we invest in the expansion of the water division. Operating expenses consisted of selling, general and administrative expenses (“SG&A”) and research and development expenses (“R&D”) in 2026 and 2025. Operating expenses decreasedincreased in the threesix months ended MarchJune 31,202630,2026 compared to the prior year period. SG&A expenses were approximately $1,981,000$2,068,000 and $2,171,000$1,698,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately $4,049,000 and $3,869,000 for the six months ended June 30, 2026 and 2025, respectively. Total SG&A expenses decreasedincreased in the threesix months ended MarchJune 31,30, 2026 compared to the prior year period, as a result of variances in individual categories. This includes decreasesincreases in professional fees, along with greater stock-basedinvestor compensationrelations costs in the threesix months ended MarchJune 31,30, 20252026 compared to the comparable period of the currentprevious year. The decreaseincrease in professional fees was primarily due to lowerincreases legal fees in 2026 and the increase in investor relations fees was primarily due to increased costs associated with the Company’s NYSE American uplisting completed in the first quarter of 2026.

Total R&D expenses were approximately $551,000$587,000 and $407,000$455,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $1,138,000 and $862,000 for the six months ended June 30, 2026 and 2025, respectively. R&D expenses relate to research conducted to develop water treatment products utilizing new sorbent technologies, and increased in in the threesix months ended MarchJune 31,30, 2026 compared to the prior period as the Company did not have all of its R&D strategy implemented at the beginning of 2025. The Company began incurring research and development costs when the lab equipment at the Company’s labs was placed into service.

Our operating loss was approximately $1,149,000$1,623,000 and $1,343,000$1,185,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and approximately $2,772,000 and $2,528,000 for the six months ended June 30, 2026 and 2025, respectively. SuchThis decreaseincrease in operating loss was primarily dueattributable to ourhigher SG&A expenses and increased revenues in the first three months of 2026 compared to prior year period coupled with a decrease in total operatingR&D expenses during the first three months of 2026 asperiods, discussedwhich above.more than offset the increased revenues and higher gross profit compared to the prior year periods.

Interest income was approximately $50,000$116,000 and $31,000$20,000 for the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively, and $166,000 and $51,000 for the six months ended June 30, 2026 and 2025, respectively.

Loss on change in fair value of profit share liability was approximately $246,000$257,000 and loss of approximately $353,000$376,000 for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $503,000 and $729,000 for the six months ended June 30, 2026 and 2025, respectively.

We had approximately $14,748,000$11,836,000 in cash at MarchJune 31,30, 2026, compared to approximately $2,245,000 at December 31, 2025. Total current assets were approximately $17,749,000$15,755,000 and total current liabilities were approximately $10,029,000$11,080,000 at MarchJune 31,30, 2026, resulting in working capital of approximately $7,720,000.$4,675,000. This compares to total current assets of approximately $5,004,000 and total current liabilities of approximately $10,740,000 at December 31, 2025, resulting in a working capital deficiency of approximately $5,737,000. The increases in cash and working capital were primarily attributable to proceeds from the Company’s public offering completed in the first quarter of 2026, as described below. Our accumulated deficit was approximately $77,125,000$80,142,000 at MarchJune 31,30, 2026 compared to $75,779,000 at December 31, 2025.

Total assets were approximately $21,395,000$19,415,000 at MarchJune 31,30, 2026 versus approximately $9,238,000 at December 31, 2025. The change in total assets is primarily attributable to an approximate $12,503,000$10,177,000 increase in cash primarily due to the proceeds from the Company’s public offering completed in the first quarter of 2026, offset by deferred offering costs recognized in 2025 of $481,000 compared to no deferred offering costs in the first quarter of 2026, together with other changes in asset categories consisting of smaller increases and decreases that were not individually significant.

Total liabilities were approximately $10,227,000$11,264,000 at MarchJune 31,30, 2026 versus approximately $10,953,000 at December 31, 2025. The change in total liabilities is primarily attributable to an approximate $984,000$503,000 increase in the profit share liability offset by an approximate $179,000 decrease in accounts payable and accrued expenses.

Net cash used in operating activities was approximately $2,207,000$4,997,000 for the threesix months ended MarchJune 31,30, 2026 compared to approximately $254,000$1,986,000 for the threesix months ended MarchJune 31,30, 2025. The increase in net cash used in operating activities was primarily attributable to the following: (i) changes in accounts receivable, which used approximately $133,000$523,000 of cash in 2026 compared to providingusing approximately $558,000$318,000 in 2025; (iii) changes in accounts payable and accrued expenses, which used approximately $984,000$179,000 in cash in 2026 compared to providing approximately $304,000$743,000 of cash in 2025; (iv) changes in prepaid expenses which used approximately $618,000 in cash in 2026 compared to providing approximately $72,000 of cash in 2025 and (ivv) certain other changes in operating assets and liabilities, including accrued salaries, inventory, and prepaid expenses and other assets.

We had net cash used in investing activities of $0$122,000 for the threesix months ended MarchJune 31,30, 2026 compared to cash used in investing activities of approximately $14,000$16,000 for the threesix months ended MarchJune 31,30, 2025 for the purchase of lab equipment.

Net cash provided by financing activities was $14,710,000 for the threesix months ended MarchJune 31,30, 2026 compared to no cash provided or used in financing activities for the threesix months ended MarchJune 31,30, 2025. During the threesix months ended MarchJune 31,30, 2026, we completed a public offering of 6,850,000 shares of our common stock, generating net proceeds of approximately $14,229,000.

Our critical accounting policies and estimated are discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, and there have been no material changes to such policies or estimates during the threesix months ended MarchJune 31,30, 2026.

The following table shows our reconciliation of net loss to adjusted EBITDA for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively: