Birchtech Corp.

Previous wording

The market for mercury removal from power plant emissions in the United States have largely been driven by federal regulations. The Mercury and Air Toxics Standards (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 mercury (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 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.

Current wording

We provide mercury capture solutions for coal-fired power plants driven by our patented two-part 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 have 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 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.

Previous wording

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, strengthens emissions monitoring and compliance and tightens 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.

Current wording

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, strengthens and updates MATS for coal-fired power plants and tightens 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.

Previous wording

On June 11, 2025, the EPA proposed to repeal certain amendments made to the MATS Rule published in May 2024, and return compliance obligations to the MATS standards which existed prior to the 2024 update. Such proposal is currently open for public comment, with the comment period scheduled to close in August 2025.

Current wording

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. The EPA intends to finalize action on this proposal by December 2025.

Previous wording

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 per-and polyfluoroalkyl substances (“PFAS”), also known as “forever chemicals”. The Rule established legally enforceable levels, called 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. Under the Rule, public water systems must monitor these PFAS and will have three years to complete initial monitoring (by 2027), followed by ongoing compliance monitoring. Water systems must also provide the public with information on the levels of these PFAS in their drinking water beginning in 2027.

Current wording

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”. The Rule established legally enforceable 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. Under the Rule, public water systems must monitor these PFAS and must complete initial monitoring by 2027, followed by ongoing compliance monitoring. Water systems must also provide the public with information on the levels of these PFAS in their drinking water beginning in 2027.

Previous wording

As part of this strategic pivot, we have invested in the commissioning of two state-of-the-art laboratory facilities, one located in Pennsylvania and the other in North Dakota, that are referred to and serve as our Design Centers for water treatment innovation. Together, we believe these facilities represent the only known facilities that have integrated capability in North America to thermally reactivate spent granular activated carbon (“GAC”) under controlled conditions and subsequently conduct rapid small-scale column tests (“RSSCTs”) to directly compare reactivated GAC performance against virgin carbon counterpart. 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.

Current wording

As part of this strategic pivot, we have invested in the commissioning of two state-of-the-art laboratory facilities—one in Pennsylvania and one in North Dakota—referred to as our “Design Centers.” The Design Centers are dedicated sites for water treatment innovation and development. 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 counterpart. 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.

Previous wording

On May 14, 2025, the EPA under the new Trump Administration announced the agency will keep the regulations for PFOA and PFOS. As part of this action, EPA also announced its intent to extend the PFOA and PFOS Maximum Contaminant Level compliance deadlines 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 (commonly known as GenX), and the Hazard Index mixture of these three PFAS plus PFBS to ensure the determinations and any resulting drinking water regulation follow the Safe Drinking Water Act process.

Current wording

On May 14, 2025, the EPA under the 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 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 (commonly known as GenX), and the Hazard Index mixture of these three PFAS plus PFBS to ensure the determinations and any resulting drinking water regulation follow the Safe Drinking Water Act process.

Previous wording

In May 2024, we announced the appointment of David Mazyck to head our new business line to address the potable (drinking) water market with new sorbent technologies under development. In June 2025, he was appointed our Executive Director of Innovation and Commercialization. In addition, in May 2024, we announced the appointment of Dennis Baranik as Director of National Sales. Mr. Baranik will oversee product sales and IP licensing in the Company’s core business for mercury emissions capture as well as support both product and business development for the water market. Also, in June 2025, we announced the appointment of Christopher Rinaldi as Director of Strategic Operations, with a focus on our water treatment business.

Current wording

In May 2024, we announced the appointment of David Mazyck to head our new business line to address the potable (drinking) water market with new sorbent technologies under development. In June 2025, he was appointed our Executive Director of Innovation and Commercialization. In addition, in May 2024, we announced the appointment of Dennis Baranik as Director of National Sales. Mr. Baranik oversees product sales and IP licensing in the Company’s core business for mercury emissions capture as well as support both product and business development for the water market. Also, in June 2025, we announced the appointment of Christopher Rinaldi as Director of Strategic Operations, with a focus on our water treatment business.

Previous wording

On October 9, 2024, we received conditional approval to list our shares of common stock on the Toronto Stock Exchange (“TSX”) and graduate from the TSX Venture Exchange (“TSXV”) to the TSX. On November 12, 2024, our shares commenced trading on the TSX under the ticker symbol “BCHT”.

Current wording

On October 9, 2024, we received conditional approval to list our shares of common stock on the TSX and graduate from the TSXV to the TSX. On November 12, 2024, our shares commenced trading on the TSX under the ticker symbol “BCHT”.

Previous wording

On February 27, 2024, and pursuant to a Debt Restructuring Agreement entered into on such date with AC Midwest Energy LLC (“AC Midwest”), we made an approximate $9.0 million principal payment against an approximate $13.2 million unsecured note held by AC Midwest Energy LLC (“AC Midwest”) and repaid in full the remaining principal balance of approximately $272,000 due on a secured note held by AC Midwest. As part of the restructuring, we negotiated a reduction in the profit participation preference held by AC Midwest from approximately $17.7 million to $7.9 million (the “Restructured Profit Share”). Such Restructured Profit Share is “non-recourse” and shall only be paid from net litigation proceeds from claims relating to our intellectual property. In addition, pursuant to the Debt Restructuring Agreement, in March 2024, we were able to facilitate the private sale of certain shares of common stock held by AC Midwest and received a $960,000 credit toward the remaining balance due on the unsecured note. In August 2024, we repaid in full the remaining principal balance of approximately $3.2 million due on the unsecured note held by AC Midwest. As a result, the only remaining debt obligation to AC Midwest is the “non-recourse” Restructured Profit Share.

Current wording

On February 27, 2024, and pursuant to a Debt Restructuring Agreement entered into on such date with AC Midwest Energy LLC (“AC Midwest”), we made an approximate $9.0 million principal payment against an approximate $13.2 million unsecured note held by AC Midwest and repaid in full the remaining principal balance of approximately $272,000 due on a secured note held by AC Midwest. As part of the restructuring, we negotiated a reduction in the profit participation preference held by AC Midwest from approximately $17.7 million to $7.9 million (the “Restructured Profit Share”). Such Restructured Profit Share is “non-recourse” and shall only be paid from net litigation proceeds from claims relating to our intellectual property. In addition, pursuant to the Debt Restructuring Agreement, in March 2024, we were able to facilitate the private sale of certain shares of common stock held by AC Midwest and received a $960,000 credit toward the remaining balance due on the unsecured note. In August 2024, we repaid in full the remaining principal balance of approximately $3.2 million due on the unsecured note held by AC Midwest. As a result, the only remaining debt obligation to AC Midwest is the “non-recourse” Restructured Profit Share.

Previous wording

Following a five-day trial, on March 1, 2024, we were awarded a $57.1 million patent infringement verdict by a federal jury in the U.S. District Court for the District of Delaware against a remaining group of defendants in the lawsuit commenced by us in 2019. Such group of affiliated defendants included multiple limited liability companies with refined coal industry operations, including CERT Operations II LLC, CERT Operations IV LLC, CERT Operations V LLC, and CERT Operations RCB LLC. The jury determined that these defendants infringed our patented technologies for mercury emissions and were liable for willful infringement, along with inducing and contributory infringement. Following the trial, the Court entered non-final judgments on the verdict against the CERT defendants and the parties submitted post-trial motions relating to the jury trial. The CERT defendants also asserted that the Company’s claims were barred due to their defense that they had an implied license to the asserted patents. A bench trial was held on such issue. On June 10, 2025, the Court ruled that the CERT defendants failed to prove that they had such an implied license and denied their motion to alter or amend the non-final judgment. We are awaiting the Court’s determination as to the final judgment.

Current wording

Following a five-day trial, on March 1, 2024, we were awarded a $57.1 million patent infringement verdict by a federal jury in the U.S. District Court for the District of Delaware against a remaining group of defendants in the lawsuit commenced by us in 2019. Such group of affiliated defendants included multiple limited liability companies with refined coal industry operations, including CERT Operations II LLC, CERT Operations IV LLC, CERT Operations V LLC, and CERT Operations RCB LLC. The jury determined that these defendants infringed our patented technologies for mercury emissions and were liable for willful infringement, along with inducing and contributory infringement. Following the trial, the Court entered non-final judgments on the verdict against the CERT defendants and the parties submitted post-trial motions relating to the jury trial. The CERT defendants also asserted that the Company’s claims were barred due to their defense that they had an implied license to the asserted patents. A bench trial was held on such issue. On June 10, 2025, the Court ruled that the CERT defendants failed to prove that they had such an implied license and denied their motion to alter or amend the non-final judgment. In addition, on September 25, 2025, the Court issued a Memorandum Opinion and Order that denied the CERT defendants’ post-trial motion that they should not be held liable as a matter of law for induced infringement, contributory infringement or willful infringement. We are awaiting the Court’s determination as to the final judgment.

Previous wording

In July 2024, we commenced three additional patent infringement lawsuits in U.S. District Courts in Arizona, Iowa and Missouri against multiple utilities and related entities. These actions allege willful infringement of our patents related to mercury emissions control. In October 2024, we entered into an agreement with one of the utility defendants and an affiliated entity in the Arizona action, and in January 2025, we entered into an agreement with another utility named in the Arizona action. Such agreements provide such parties and their affiliates with a non-exclusive license to certain Company patents related to our two-part Sorbent Enhancement Additive (SEA®) process for use in connection with a certain designated coal-fired power plant operated by them. The agreements include one-time license fees which have been received by us. One agreement provides us with a right of first refusal for certain of such utility’s product supply for mercury emissions capture at such designated power plant and the other agreement provides us 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.

Current wording

In July 2024, we commenced three additional patent infringement lawsuits in U.S. District Courts in Arizona, Iowa and Missouri against multiple utilities and related entities. These actions allege willful infringement of our patents related to mercury emissions control. In October 2024, we entered into an agreement with one of the utility defendants and an affiliated entity in the Arizona action, and in January 2025, we entered into an agreement with another utility named in the Arizona action. Such agreements provide such parties and their affiliates with a non-exclusive license to certain Company patents related to our two-part SEA® process for use in connection with a certain designated coal-fired power plant operated by them. The agreements include one-time license fees which have been received by us. One agreement provides us with a right of first refusal for certain of such utility’s product supply for mercury emissions capture at such designated power plant and the other agreement provides us 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.

Previous wording

On December 17, 2024, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation of the three lawsuits in the U.S. District Court for the Southern District of Iowa for coordinated pretrial proceedings. In January 2025, we initiated an additional infringement suit in the Western District of Missouri against several Evergy-affiliated entities, which was transferred to the Iowa court in February 2025 pursuant to the existing transfer order.

Current wording

On December 17, 2024, the U.S. Judicial Panel on Multidistrict Litigation ordered the consolidation of the three lawsuits in the U.S. District Court for the Southern District of Iowa for coordinated pretrial proceedings. In January 2025, we initiated an additional infringement suit in the Western District of Missouri against several Evergy-affiliated entities. One of such defendants was dismissed from the Western District of Missouri action and named as a defendant in a separate case commenced in the U.S. District Court for the District of Kansas. Such cases were transferred to the Iowa court pursuant to the existing transfer order.

Previous wording

In January and February 2025, certain defendants in the consolidated Iowa actions filed Inter Partes Review petitions with the U.S. Patent and Trademark Office seeking to invalidate various asserted claims. Such matter remains pending.

Current wording

Between January and July 2025, certain defendants in the consolidated Iowa actions filed IPR petitions with the U.S. Patent and Trademark Office seeking to invalidate various asserted claims.

Previous wording

On March 19, 2025, we announced that our Board of Directors authorized a share repurchase program under which the Company may purchase up to $5.0 million of its common stock. Purchases under the share repurchase program may be made from time to time, in such amounts as management deems appropriate, through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, purchases through 10b5-1 trading plans, or by any combination of such methods. The timing and amount of any repurchases pursuant to the share repurchase program will be determined based upon a variety of factors, including general market conditions, share price, corporate and regulatory requirements and limitations, corporate liquidity requirements and priorities, and other factors. The share repurchase program does not have an expiration date, does not require the Company to repurchase any specific number of shares of its common stock, if any, and may be modified, suspended or terminated at any time without notice. During the three and six months ended June 30, 2025, there were no repurchases made under the program. Repurchases are not expected to occur until the second half of 2025 at the earliest, or until 2026, if at all.

Current wording

On March 19, 2025, we announced that our Board of Directors authorized a share repurchase program under which the Company may purchase up to $5.0 million of its common stock. Purchases under the share repurchase program may be made from time to time, in such amounts as management deems appropriate, through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, purchases through 10b5-1 trading plans, or by any combination of such methods. The timing and amount of any repurchases pursuant to the share repurchase program will be determined based upon a variety of factors, including general market conditions, share price, corporate and regulatory requirements and limitations, corporate liquidity requirements and priorities, and other factors. The share repurchase program does not have an expiration date, does not require the Company to repurchase any specific number of shares of its common stock, if any, and may be modified, suspended or terminated at any time without notice. During the three and nine months ended September 30, 2025, there were no repurchases made under the program.

Previous wording

Effective as of August 5, 2025, we entered into separate agreements with two utilities, which are affiliated with each other, and named as defendants in the Southern District of Iowa action. Such agreements provide such parties and their affiliates with a non-exclusive license to certain Company patents related to our two-part Sorbent Enhancement Additive (SEA®) process for use in connection with certain designated coal-fired power plants operated by them. Each agreement includes a one-time license fee which is to be paid within 30 days of signing of the agreement. Such agreements provide us with the right to be included in each utility’s bidding process for certain product supply for mercury emissions capture at such party’s operated power plants. Such lawsuit will continue against the other non-affiliated defendants named in the Southern District of Iowa action.

Current wording

Effective as of August 5, 2025, we entered into separate agreements with two utilities, which are affiliated with each other, and named as defendants in the Southern District of Iowa action. In addition, as of September 9, 2025, we entered into an agreement with a utility and its affiliated entities, named as defendants in the Western District of Missouri and District of Kansas actions. Such agreements provide such parties and their affiliates with a non-exclusive license to certain Company patents related to our two-part Sorbent Enhancement Additive (SEA®) process for use in connection with certain designated coal-fired power plants operated by them. Each agreement includes a one-time license fee. The agreements effective as of August 5, 2025 entered into with the two utilities, provide us with the right to be included in each utility’s bidding process for certain product supply for mercury emissions capture at such party’s operated power plants. Such utilities have also agreed to withdraw from the IPR petitions.

Previous wording

We generated revenues of approximately $3,254,000 and $3,361,000 for the three months ended June 30, 2025 and 2024, respectively, and approximately $6,475,000 and $6,603,000 for the six months ended June 30, 2025 and 2024, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $3,244,000 and $3,303,000 for the three months ended June 30, 2025 and 2024, respectively and approximately $5,921,000 and $6,387,000 for the six months ended June 30, 2025 and 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 from the prior year was primarily due to the mix of plants running, unexpected customer forced outages and products sold in the first six months of 2025 resulting in decreased product revenues for the six months ended June 30, 2025 compared to the prior year period. This decrease was offset by an increase in licensing revenues for the six months ended June 30, 2025 compared to June 30, 2024.

Current wording

We generated revenues of approximately $7,362,000 and $5,237,000 for the three months ended September 30, 2025 and 2024, respectively, and approximately $13,837,000 and $11,840,000 for the nine months ended September 30, 2025 and 2024, respectively. Such revenues were primarily derived from sorbent product sales which were approximately $4,716,000 and $5,092,000 for the three months ended September 30, 2025 and 2024, respectively and approximately $10,637,000 and $11,479,000 for the nine months ended September 30, 2025 and 2024, respectively. Revenues from product sales can be dependent on natural gas prices, extreme weather, and the maintenance and downtime requirements of customer plants. The decrease in product sales from the prior year was primarily due to the mix of plants running, unexpected customer forced outages and products sold in the first nine months of 2025 resulting in decreased product revenues for the nine months ended September 30, 2025 compared to the prior year period. This decrease was offset by an increase in licensing revenues for the nine months ended September 30, 2025 compared to September 30, 2024, resulting in an overall increase in the revenues for the nine months ended September 30, 2025 compared to the prior year period.

Previous wording

Licensing revenues were approximately $0 and $0 for the three months ended June 30, 2025 and 2024, respectively and approximately $525,000 and $141,000 for the six months ended June 30, 2025 and 2024, respectively. Such increase was primarily due to a new licensing agreement which was entered into during the three months ended March 31, 2025 with a utility.

Current wording

Licensing revenues were approximately $2,600,000 and $133,000 for the three months ended September 30, 2025 and 2024, respectively and approximately $3,125,000 and $274,000 for the nine months ended September 30, 2025 and 2024, respectively. Such increase was primarily due to new licensing agreements which were entered into during the nine months ended September 30, 2025 with primarily utility defendants.

Previous wording

Cost of sales were approximately $2,286,000 and $2,301,000 for the three months ended June 30, 2025 and 2024, respectively, and approximately $4,272,000 and $4,414,000 for the six months ended June 30, 2025 and 2024, respectively. This decrease in cost of sales of approximately $142,000 for the six months ended June 30, 2025 was primarily attributable to decreased product sales in the first six months of 2025 compared to the prior year period, together with a change in the mix of products sold in the first six months of 2025 compared to the first six months of 2024.

Current wording

Cost of sales were approximately $3,330,000 and $3,642,000 for the three months ended September 30, 2025 and 2024, respectively, and approximately $7,602,000 and $8,056,000 for the nine months ended September 30, 2025 and 2024, respectively. This decrease in cost of sales of approximately $454,000 for the nine months ended September 30, 2025 was primarily attributable to decreased product sales in the first nine months of 2025 compared to the prior year period, together with a change in the mix of products sold in the first nine months of 2025 compared to the first nine months of 2024.

Previous wording

Gross profit was approximately $968,000 and $1,061,000 for the three months ended June 30, 2025 and 2024, respectively, and approximately $2,202,000 and $2,189,000 for the six months ended June 30, 2025 and 2024. The decrease in gross profit for the three months ended 2025 was primarily due to a decrease in sales. The increase in gross profit for the six months ended June 30, 2025 was primarily due to higher licensing revenues in 2025 compared to 2024, which typically carry higher margins than product sales, thus contributing to the overall improvement in gross profit.

Current wording

Gross profit was approximately $4,032,000 and $1,595,000 for the three months ended September 30, 2025 and 2024, respectively, and approximately $6,235,000 and $3,784,000 for the nine months ended September 30, 2025 and 2024. The increase in gross profit for the three and nine months ended September 30, 2025 was primarily due to significantly higher licensing revenues in 2025 compared to 2024, which typically carry higher margins than product sales, thus contributing to the overall improvement in gross profit.

Previous wording

Operating expenses consisted of selling, general and administrative expenses (“SG&A”) and research and development expenses (“R&D”) in 2025 and SG&A and in 2024. Operating expenses decreased significantly in 2025 compared to 2024, despite incurring costs related to the development of the Company’s water treatment business. SG&A expenses were approximately $1,698,000 and $4,634,000 for the three months ended June 30, 2025 and 2024, respectively, and approximately $3,869,000 and $8,161,000 for the six months ended June 30, 2025 and 2024, respectively. Total SG&A expenses decreased in the first six months of 2025 compared to the prior year period, as a result of variances in individual categories. Decreases in salaries and wages, and professional fees were partially offset by increases in consulting fees. The decrease in salaries and wages was primarily due to the payment of bonus compensation in the first six months of 2024 for which there were no comparable expenses in the first six months of 2025, along with greater stock-based compensation in the first six months of 2024 compared to the comparable period in 2025. The decrease in professional fees was primarily due to lower legal fees in the first six months of 2025 in connection with the Company’s patent litigation compared to the prior year period which had greater legal fees due to trial preparation and the jury trial in the U.S. District Court for the District of Delaware.

Current wording

Operating expenses consisted of selling, general and administrative expenses (“SG&A”) and research and development expenses (“R&D”) in 2025 and SG&A and in 2024. Operating expenses decreased significantly in the nine months ended September 30, 2025 compared to the prior year period, despite incurring costs related to the development of the Company’s water treatment business. SG&A expenses were approximately $2,748,000 and $2,702,000 for the three months ended September 30, 2025 and 2024, respectively, and approximately $6,617,000 and $10,863,000 for the nine months ended September 30, 2025 and 2024, respectively. Total SG&A expenses decreased in the first nine months of 2025 compared to the prior year period, as a result of variances in individual categories. This included decreases in salaries and wages, professional fees and consulting fees. The decrease in salaries and wages was primarily due to the payment of bonus compensation in the first nine months of 2024 for which there were no comparable expenses in the first nine months of 2025, along with greater stock-based compensation in the first nine months of 2024 compared to the comparable period in 2025. The decrease in professional fees was primarily due to lower legal fees in the first nine months of 2025 in connection with the Company’s patent litigation compared to the prior year period which had greater legal fees due to trial preparation and the jury trial in the U.S. District Court for the District of Delaware.

Previous wording

Total R&D expenses were approximately $455,000 and $0 for the three months ended June 30, 2025 and 2024, respectively, and $862,000 and $0 for the six months ended June 30, 2025 and 2024, respectively. R&D expenses relate to research conducted to develop water treatment products utilizing new sorbent technologies, and increased in the first six months of 2025 compared to the prior year period as the Company had not incurred any research related costs during the first six months of 2024. The Company began incurring research and development costs when the lab equipment at the Company’s labs was placed into service.

Current wording

Total R&D expenses were approximately $473,000 and $0 for the three months ended September 30, 2025 and 2024, respectively, and $1,335,000 and $0 for the nine months ended September 30, 2025 and 2024, respectively. R&D expenses relate to research conducted to develop water treatment products utilizing new sorbent technologies, and increased in the first nine months of 2025 compared to the prior year period as the Company had not incurred any research related costs during the first nine months of 2024. The Company began incurring research and development costs when the lab equipment at the Company’s labs was placed into service.

Previous wording

Operating loss decreased significantly in 2025 compared to 2024. Our operating loss was approximately $1,185,000 and $3,574,000 for the three months ended June 30, 2025 and 2024, respectively, and approximately $2,528,000 and $5,972,000 for the six months ended June 30, 2025 and 2024, respectively. Such decrease in operating loss was primarily due to our increased license fee revenue in 2025 compared to 2024 coupled with a decrease in total operating expenses during the first six months of 2025 as discussed above.

Current wording

Our operating income was approximately $811,000 for the three months ended September 30, 2025 compared to a loss of $1,107,000 for the three months ended September 30, 2024. For the nine months ended September 30, 2025 and 2024, we had an operating loss of approximately $1,717,000 and $7,079,000, respectively. Such decrease in operating loss was primarily due to our increased license fee revenue in 2025 compared to 2024 coupled with a decrease in total operating expenses during the first nine months of 2025 as discussed above.

Previous wording

Interest expense related to the financing of capital was approximately $0 and $6,000 for the three months ended June 30, 2025 and 2024, respectively, and $54 and $252,000 for the six months ended June 30, 2025 and 2024, respectively. The approximate breakdown of interest expense for the three and six months ended June 30, 2025 and 2024 is as follows:

Current wording

Interest expense related to the financing of capital was approximately $Nil and $7,000 for the three months ended September 30, 2025 and 2024, respectively, and $54 and $259,000 for the nine months ended September 30, 2025 and 2024, respectively. The approximate breakdown of interest expense for the three and nine months ended September 30, 2025 and 2024 is as follows:

Previous wording

Loss on change in fair value of profit share liability and unsecured note was approximately $376,000 and $2,689,000 for the three months ended June 30, 2025 and 2024, respectively, and $729,000 and $2,955,000 for the six months ended June 30, 2025 and 2024, respectively. The change is primarily attributed to the modification of the terms of the profit share liability (see Note 7 to the unaudited condensed consolidated financial statements).

Current wording

Gain (Loss) on change in fair value of profit share liability and unsecured note was approximately $(38,000) and $282,000 for the three months ended September 30, 2025 and 2024, respectively, and $(767,000) and $(2,672,000) for the nine months ended September 30, 2025 and 2024, respectively. The change is primarily attributed to the modification of the terms of the profit share liability (see Note 7 to the unaudited condensed consolidated financial statements).

Previous wording

Net loss decreased significantly in 2025 compared to 2024. For the three months ended June 30, 2025, we had a net loss of approximately $1,542,000 compared to a net loss of approximately $6,147,000 for the three months ended June 30, 2024. For the six months ended June 30, 2025, we had a net loss of approximately $3,221,000 compared to a net loss of approximately $9,002,000 for the six months ended June 30, 2024. Such change was primarily due an increase in license fee revenues in 2025 compared to 2024, and a decrease in SG&A.

Current wording

For the three months ended September 30, 2025, we had a net income of approximately $788,000 compared to a net loss of approximately $458,000 for the three months ended September 30, 2024. For the nine months ended September 30, 2025, we had a net loss of approximately $2,433,000, an improvement from a net loss of approximately $9,459,000 for the nine months ended September 30, 2024. This improvement was primarily due an increase in license fee revenues in 2025 compared to 2024, and a decrease in SG&A.

Previous wording

We had approximately $1,454,000 in cash on our balance sheet at June 30, 2025 compared to approximately $3,456,000 at December 31, 2024. Total current assets were approximately $4,572,000 and total current liabilities were approximately $10,284,000 at June 30, 2025, resulting in a working capital deficiency of approximately $5,712,000. This compares to total current assets of approximately $6,099,000 and total current liabilities of approximately $8,806,000 at December 31, 2024, resulting in a working capital deficiency of approximately $2,707,000. Our accumulated deficit was approximately $76.0 million at June 30, 2025 compared to $72.8 million at December 31, 2024. Additionally, we had a net loss in the amount of approximately $3,221,000 and cash used in operating activities of approximately $1,986,000 for the six months ended June 30, 2025.

Current wording

We had approximately $1,768,000 in cash on our balance sheet at September 30, 2025 compared to approximately $3,456,000 at December 31, 2024. Total current assets were approximately $6,027,000 and total current liabilities were approximately $11,054,000 at September 30, 2025, resulting in a working capital deficiency of approximately $5,027,000. This compares to total current assets of approximately $6,099,000 and total current liabilities of approximately $8,806,000 at December 31, 2024, resulting in a working capital deficiency of approximately $2,707,000. Our accumulated deficit was approximately $75,186,000 at September 30, 2025 compared to $72,753,000 at December 31, 2024. Additionally, we had a net loss in the amount of approximately $2,433,000 and cash used in operating activities of approximately $1,664,000 for the nine months ended September 30, 2025.

Previous wording

Total assets were approximately $8,574,000 at June 30, 2025 versus approximately $10,261,000 at December 31, 2024. The change in total assets is primarily attributable to an approximate $2,002,000 decrease in cash, offset by an approximate $337,000 increase in accounts receivable.

Current wording

Total assets were approximately $10,138,000 at September 30, 2025 versus approximately $10,261,000 at December 31, 2024. The change in total assets is primarily attributable to an approximate $1,688,000 decrease in cash, a $153,000 decrease in intellectual property, offset by an approximate $1,808,000 increase in accounts receivable.

Previous wording

Total liabilities were approximately $10,523,000 at June 30, 2025 versus approximately $9,069,000 at December 31, 2024. The increase is primarily attributable to an increase in accounts payable and accrued liabilities and an increase in the fair value of the non-recourse profit share liability.

Current wording

Total liabilities were approximately $11,280,000 at September 30, 2025 versus approximately $9,069,000 at December 31, 2024. The increase is primarily attributable to an increase in accounts payable and accrued liabilities and an increase in the fair value of the non-recourse profit share liability.

Previous wording

Net cash used by operating activities was approximately $1,986,000 for the six months ended June 30, 2025 compared to net cash used by operating activities of approximately $3,123,000 for the six months ended June 30, 2024. The decrease in net cash provided by operating activities was primarily due to the following: (i) a net loss of $3.2 million for the six months ended June 30, 2025 compared to net loss of $9.0 million for the six months ended June 30, 2024; and (ii) certain other changes in operating assets and liabilities including accounts receivable, inventory, prepaid expenses and other assets, accrued salaries, and accounts payable and accrued liabilities.

Current wording

Net cash used by operating activities was approximately $1,664,000 for the nine months ended September 30, 2025 compared to net cash used by operating activities of approximately $3,275,000 for the nine months ended September 30, 2024. The decrease in net cash provided by operating activities was primarily due to the following: (i) a net loss of $2.4 million for the nine months ended September 30, 2025 compared to net loss of $9.5 million for the nine months ended September 30, 2024; and (ii) certain other changes in operating assets and liabilities including accounts receivable, inventory, prepaid expenses and other assets, accrued salaries, and accounts payable and accrued liabilities.

Previous wording

The Company had net cash used in investing activities of approximately $16,000 for the six months ended June 30, 2025 for the purchase of lab equipment compared to net cash used in investing activities of approximately $66,000 for the six months ended June 30, 2024. During the six months ended June 30, 2024, we paid $66,274 to purchase a truck.

Current wording

The Company had net cash used in investing activities of approximately $23,000 for the nine months ended September 30, 2025 for the purchase of lab equipment compared to net cash used in investing activities of approximately $702,000 for the nine months ended September 30, 2024 for the purchase of a truck and lab equipment.

Previous wording

Net cash used in financing activities was approximately $0 for the six months ended June 30, 2025 compared to approximately $9,312,000 used in financing activities for the six months ended June 30, 2024. During the six months ended June 30, 2024, we repaid the remaining principal of approximately $272,000 on the AC Midwest secured note and approximately $9,040,000 of the principal remaining on the AC Midwest unsecured note.

Current wording

Net cash used in financing activities was approximately $Nil for the nine months ended September 30, 2025 compared to approximately $12,569,000 used in financing activities for the nine months ended September 30, 2024. During the nine months ended September 30, 2024, we repaid the remaining principal of approximately $272,000 on the AC Midwest secured note and approximately $12,195,000 of the principal remaining on the AC Midwest unsecured note.

Previous wording

Our critical accounting policies and estimated are discussed in our Annual Report on Form 10-K for the year ended December 31, 2024, and there have been no material changes to such policies or estimates during the six months ended June 30, 2025.

Current wording

Our critical accounting policies and estimated are discussed in our Annual Report on Form 10-K for the year ended December 31, 2024, and there have been no material changes to such policies or estimates during the nine months ended September 30, 2025.

Previous wording

The following table shows our reconciliation of net income (loss) to adjusted EBITDA for the three and six months ended June 30, 2025 and 2024, respectively:

Current wording

The following table shows our reconciliation of net income (loss) to adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024, respectively: