374Water Inc.

Note 1 – Nature of Business and Presentation of Consolidated Financial Statements

Description of the Company

374Water Inc. is a cleantech and environmental services company developing SCWO for the destruction of organic waste streams within the municipal, federal, and industrial markets. 374Water offers our proprietary AirSCWO technology, which is designed to efficiently destroy and mineralize a broad spectrum of non-hazardous and hazardous organic wastes producing safe dischargeable water streams, safe mineral effluent, safe vent gas, and recoverable heat energy. Importantly, our AirSCWO system is designed to eliminate recalcitrant organic wastes without creating waste byproducts, as well as to simplify existing, complex waste processing and disposal practices. Our AirSCWO technology is designed to effectively convert solid and liquid wastes such as sewage sludge, biosolids, food waste, hazardous and non-hazardous waste, including ‘forever chemicals’ (e.g., “per-and polyfluoroalkyl substances” or “PFAS”) into inert and recoverable resources including water, minerals, and heat energy.

On January 15, 2025, the Company received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days, the closing bid price for the Company’s common stock has been below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had been given 180 calendar days, or until July 14, 2025, to regain compliance with the Minimum Bid Price Requirement. On July 8, 2025, the Company submitted a request to Nasdaq for a 180-day extension to regain compliance with the Minimum Bid Price Requirement pursuant to Nasdaq Listing Rule 5810(c)(3)(A)(ii). On July 15, 2025, the Company received a letter from the Staff advising that the Company had been granted a 180-day extension, or until January 12, 2026, to regain compliance with the Minimum Bid Price Requirement, in accordance with Nasdaq Listing Rule 5810(c)(3)(A)(ii).

As disclosed in Note 13, on January 12, 2026, the Company received written notification from Nasdaq that the Company has regained compliance with the $1.00 minimum closing bid price requirement for continued listing on the Nasdaq Capital Market pursuant to the Minimum Bid Price Requirement and that the matter is now closed.

At a special meeting of stockholders held on December 15, 2025, the stockholders of 374Water, approved an amendment to the Company’s Amended and Restated Certificate of Incorporation, to, at the discretion of the Company’s Board of Directors, effect a reverse stock split with respect to the Company’s issued and outstanding common stock, at a ratio of 1-for-8 to 1-for-20, with the ratio within such range to be determined at the discretion of the Company’s Board of Directors (or any of its delegated authorized persons) without further approval or authorization of our stockholders.

On December 15, 2025, after the approval from the stockholders, the Company filed a Certificate of Amendment of the Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split (the “Reverse Stock Split”) of the issued and outstanding shares of the Company’s common stock . The Certificate of Amendment took effect on December 26, 2025. All share and per share amounts have been retrospectively adjusted for the effect of the Reverse Stock Split.

Note 2 – Summary of Significant Accounting Policies

Presentation of Consolidated Financial Statements and Principles of Consolidation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the accounts and operations of the Company and all adjustments which are necessary for a fair presentation of the results of its operations, financial position, and cash flows. The consolidated financial statements include the accounts of 374Water Inc., 374Water Systems Inc., and 374Water Sustainability Israel LTD (currently inactive), each a wholly-owned subsidiary of 374Water. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the fair value of equity-based compensation, revenue recognition and the evaluation of the collectability of variable consideration and accrued loss provisions on onerous contracts, useful lives of long-lived assets, and the valuation allowance against deferred tax assets.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company held $3,198,682 and $10,651,644 in cash and cash equivalents as of December 31, 2025 and 2024, respectively.

Fair Value Measurements

Accounting Standards Codification (ASC) Topic 820 “Fair Value Measurements” establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy is as follows:

Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

Level 2 Inputs - Fair value estimates are based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

The categorization of a financial instrument within the fair value hierarchy is based upon the lowest level of input that is significant to its fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the assets or liabilities.

As of December 31, 2025 and 2024, the Company did not have any assets or liabilities carried at fair value.

The carrying value of the Company’s accounts and unbilled receivables, accounts payable, the secured promissory note and other current assets and liabilities approximates fair value due to their short-term nature. The carrying value of the Company’s note payable approximates fair value due to the prevailing interest rate.

Inventory, Net

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out basis. The majority of our inventory is raw materials. Net realizable value is the value of an asset that can be realized upon the sale of the asset, less a reasonable estimate of the costs associated with either the eventual sale or the disposal of the asset in question. Costs associated with fabrication, and other costs associated with the manufacturing of products, are recorded as inventory. We periodically evaluate the carrying value of our inventories in relation to estimated forecasts of product demand, which takes into consideration the life cycle of product releases. When quantities on hand exceed estimated sales or usage forecasts, we perform an analysis to determine if a write-down for such excess inventories is required. Once inventory has been written down, it creates a new cost basis for inventory. Inventories are classified as current assets in accordance with recognized industry practice. Based on our evaluation, we estimated an inventory allowance of $50,000 at December 31, 2025 and 2024.

Receivables, Net

Accounts Receivable, Net

Accounts receivable due from customers are uncollateralized customer obligations due under normal and customary trade terms. Account receivables are stated at the amount billed to the customer, less an allowance for estimated credit losses.

Unbilled Accounts Receivable

Unbilled accounts receivable consists of costs in excess of billings related to one customer contract for an equipment sale. As discussed below in subheadingChange in Accounting Estimate, we anticipated delivering the completed equipment to our customer during the year ended December 31, 2025. Due to the delays we have encountered in delivering the equipment, we reassessed variable consideration embedded within the contract at December 31, 2025. The changes in facts and circumstances have resulted in us fully constraining the variable consideration at December 31, 2025. This resulted in the reduction of unbilled accounts receivable and reduction in equipment revenue in the amount of approximately $1.9 million.

Other Receivables

Other receivables consist of accrued interest income from the cash held in an interest-bearing money market account with a financial institution. We typically receive payment for accrued interest one month in arrears.

Accounts receivable allowance for credit loss

We establish allowances for credit losses on our outstanding accounts receivable, unbilled receivables and other receivables pursuant to ASC 326-20-55-37. The Company monitors, on a quarterly basis, all receivables and provides a credit loss allowance when considered necessary based on historical loss patterns, the number of days that billings are past due, an evaluation of the potential risk of loss associated with delinquent accounts, and current market conditions. We have elected to apply the practical expedient provisions eligible to public entities that are included in ASU 2025-05,Financial Instruments - Credit Losses(Topic 326) in our December 31, 2025 credit loss assessment. Under ASC 2025-05, entities can assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. Therefore, an entity will no longer need to develop reasonable and supportable forecasts of future economic conditions. The practical expedient applies only to current accounts receivable (due in less than twelve months from the balance sheet).

The activity related to the accounts receivable allowance for credit losses during the years ended December 31, 2025 and 2024 was as follows:

Property and Equipment, Net

Property and Equipment is recorded at cost. Depreciation is computed using the straight-line method and an estimated useful life of three to five years. Expenses for maintenance and repairs are charged to expenses as incurred.

The following table presents property and equipment as of December 31, 2025 and 2024:

We completed the manufacturing and fabrication of one of our AirSCWO systems that we will be using for water treatment demonstration purposes (“Demo System”). We have capitalized the material and labor costs incurred to develop this Demo System, which had previously been classified within inventory until the last quarter of 2024. In the first quarter of 2024, we executed a contract with the City of Orlando, Florida to deploy the Demo System as part of a full-scale demonstration. We began the set up and commissioning process of this Demo System in the third quarter of 2024 which was completed in October 2024. We started depreciating the Demo System over an estimated life of five years during the last calendar quarter of 2024. We expect to continue to develop and enhance this unit as we perform our demonstrations and continue progressing towards commercialization. Upgrades and enhancements that will improve the operational efficiency of the unit itself will be capitalized.

We are in the process of manufacturing an AirSCWO 1 (“AS1”) model that is expected to process approximately 1 wet ton of waste per day. The AS1 is highly mobile and can be deployed quickly to provide on-site waste destruction services. As of December 31, 2025, these manufacturing costs have been classified as equipment in-progress until the AS1 is completed and placed in service which is expected to occur during the 2026 fiscal year.

Depreciation expense for the years ended December 31, 2025 and 2024 was $678,656 and $156,002, respectively.

Intangible Assets, Net

Intangible assets are subject to amortization, and any impairment is determined in accordance with ASC 350,Intangibles - Goodwill and Other. Intangible assets are stated at historical cost and amortized over their estimated useful lives. The Company uses a straight-line method of amortization, unless a method that better reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up can be reliably determined. At December 31, 2025 and 2024, there was no impairment.

Long-Lived Assets

The Company reviews long-lived assets, including property and equipment and intangible assets with finite lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. Recoverability of assets held and used is measured by a comparison of the carrying amount to the future undiscounted expected net cash flows to be generated by the asset. At December 31, 2025 and 2024, there were no impairments.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, and marketable securities. Deposits with financial institutions are insured, up to certain limits, by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s cash deposits often exceed the FDIC insurance limit; however, all deposits are maintained with high credit quality institutions and the Company has not experienced any losses in such accounts. The financial condition of financial institutions is periodically reassessed, and the Company believes the risk of any loss is minimal. Furthermore, we perform ongoing credit evaluations of our customers and generally do not require collateral.

Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues, purchases, accounts receivable and accounts payable.

During the years ended December 31, 2025 and 2024, we generated revenues from the following significant service revenue customers:

*Customers B, C and D were not customers during the year ended December 31, 2024.

During the years ended December 31, 2025 and 2024, our equipment revenue was ($1,653,007) and $227,956, respectively, and was generated from one customer contract. Further, we also had a change in accounting estimate (see below) during the year ended December 31, 2025, that resulted in a reduction of our equipment revenue of approximately $1.9 million.

The percentage of accounts receivable due from the major customers compared to our total outstanding accounts receivable at December 31, 2025 and 2024 is as follows:

At December 31, 2025, one other customer, who is not a major customer, had accounts receivable outstanding that exceeded 10% of the total accounts receivable outstanding.

Revenue Recognition

The Company follows the revenue standards of Codification (ASC) Topic 606: “Revenue from Contracts with Customers (Topic 606).” The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized in accordance with that core principle by applying the following five steps: 1) identify the contracts with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation using the input method.

The Company generates revenue from providing waste destruction services, including the completion of full-scale demonstrations and treatability studies, and the sale of equipment (AirSCWO units) to customers. In the case of equipment revenues, the Company’s performance obligations are satisfied over time as the equipment is being manufactured and are typically long-term fixed price contracts. Revenue is recognized over time by measuring the progress toward complete satisfaction of the performance obligation based on an input method. Equipment sale-related revenues are recognized in the proportion that contract costs incurred bear to total estimated costs to be incurred to complete the equipment contract. The estimated completed percentage is applied to the total transaction price of the fixed price contract. This method is used because management considers the input method to be the best available measure of progress on these contracts.

Changes in our overall expected cost estimates are recognized as a cumulative adjustment for the inception-to-date effective of such change. If these changes in estimates result in a possible loss being incurred on the contract, we accrue for such a loss in the period such an outcome becomes probable.

Services revenues related to bench-scale treatability studies are recognized when all five revenue recognition criteria have been completed which is generally when we deliver a completed treatability study report to the customer.

Service revenues related to our full demonstrations, using our owned AS6, may include multiple performance obligations, typically the demonstration itself and a technical report that summarizes the analysis of materials processed. Management estimates are required in allocating the transaction price between the performance obligations. However, other full-scale demonstrations may include one performance obligation, the demonstration itself. Revenues from such contracts are recognized over time as the demonstration is being completed.

Orlando Contract

In late 2024, we deployed our Demo System to the City of Orlando’s Iron Bridge Regional Water Reclamation Facility pursuant to a contract executed in March 2024 as part of a full-scale demonstration (the “Demo Contract”). Pursuant to the Demo Contract, the Company is responsible for system design, installation, commissioning and the start-up of the AirSCWO unit at the facility. Further, the Company will operate and maintain the AirSCWO unit for the demonstration period. Lastly, the Company will decommission, disassemble and demobilize the AirSCWO unit after the contract period. The Company will receive $812,000 as consideration for the full-scale demonstration.

In accordance with ASC 606-10-25-21, we have concluded that the Demo Contract includes one performance obligation related to the full-scale demonstration. The system design, site preparation, installation, commissioning and decommissioning represent fulfillment activities versus separate performance obligations. At December 31, 2025 and December 31, 2024, we have accounted for such costs as contract costs under ASC 340-40 (see below). We will recognize revenue on this Demo Contract based upon the agreed upon performance milestones, which is the point in time that the City of Orlando receives the benefit simultaneously to the Company’s performance. We completed our first milestone during the year ended December 31, 2025 and we recognized $270,667 of service revenue representing one-third of the total contract price. Further, we expensed one-third of the contract costs of $45,550 that had been deferred which have been included in cost of revenues. We anticipate completing the remaining two milestones of the demonstration during the 2026 fiscal year.

We invoice the City of Orlando in accordance with the contract terms. Invoices are due within thirty days of receipt. Any amounts invoiced or paid prior to the completion of our performance obligation are recognized as unearned revenue. The City of Orlando has the right to cancel the Demo Contract for convenience with a twenty-day written notice but is responsible for paying the Company all amounts owed and outstanding for work performed prior to the effective termination date and costs and expenses incurred by the Company to uninstall, remove, relocate and deliver the AirSCWO system up to a maximum amount of $68,000. At December 31, 2025 and 2024, our deferred revenue consists of $90,666 and $170,000, for amounts invoiced and collected on this contract that exceed the demonstration revenue earned.

Full-Scale Demonstrations

During the year ended December 31, 2025, we completed two full-scale demonstrations for two unrelated customers. One customer contract included three performance obligations: i) treatability studies, ii) the full-scale demonstration and iii) an analysis and technical report summarizing the results of the full-scale demonstration while the other customer contract included one performance obligation the full-scale demonstration itself.

For the contract with multiple performance obligations, we allocated the transaction price of approximately $498,000 among the performance obligations using stand-alone selling price (“SASP”) for the treatability study, cost-plus-margin for the technical report and the residual approach in the case of the full-scale demonstration. Under the residual approach, the stand-alone selling price was estimated after subtracting the sum of the observable SASP allocated to the other performance obligations within the contract as we do not have a history of selling full-scale demonstrations and a technical report separately to our customers.

At December 31, 2025, no performance obligations remain on either of the full-scale demonstration contracts. During the years ended December 31, 2025 and 2024, we recognized approximately $953,000 and $25,000, respectively, of services revenues related to these full-scale demonstrations.

During the years ended December 31, 2025 and 2024, we completed bench-scale treatability services revenues of approximately $645,000 and $217,000, respectively.

Cost of revenues include all direct material, labor and subcontractor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. General, selling, and administrative costs are charged to expenses as incurred. At December 31, 2025, we have capitalized an aggregate of $91,100 of costs incurred to date for fulfillment related activities for the Demo Contract with the City of Orlando, which will be expensed once we complete our performance obligations.

Change in Accounting Estimate

Our equipment revenue contract with the Orange County Sanitation District (“OC San”) is a fixed price contract that includes billings based on the achievement of deliverables or milestones. We have experienced delays in completing the equipment due to design changes and upgrades preventing us from meeting the next contractual milestone. Due to these delays, we have not been contractually able to bill for certain costs incurred related to the OC San contract. At December 31, 2025, we have incurred costs in excess of billings of approximately $1.9 million in connection with completing this contract. Pursuant to the contract terms with OC San, we will be able to invoice and resume billing once the manufactured equipment passes a factory acceptance test which is based on a continuous run time of the equipment and volume of materials processed. The equipment recently met the continuous run time requirement but was not yet able to process the volume required. At contract inception, the variable consideration included in the contract price was not deemed to be constrained. We had anticipated delivering the equipment to OC San during the year ended December 31, 2025. Due to the unexpected delays we have encountered in delivering the equipment, we reassessed the variable consideration at December 31, 2025. The changes in facts and circumstances have resulted in us fully constraining the variable consideration at December 31, 2025. This resulted in the reduction of unbilled accounts receivable and reduction in equipment revenue in the amount of approximately $1.9 million.

See further revenue-related disclosures in Note 6.

Accrued Contract Loss Provision and Onerous Contracts

Onerous contracts are those where the costs to fulfill a contract exceed the consideration expected to be received under the contract. The revenue standard does not provide guidance on the accounting for onerous contracts or onerous performance obligations. US GAAP contains other applicable guidance on accounting for onerous contracts, and those requirements should be used to identify and measure onerous contracts.

Our equipment manufacturing contract is a fixed price contract. Due to the nature of the contract, including customer specific equipment design, we applied ASC 605-35,*Revenue Recognition—Provision for Losses on Construction-Type and Production-Type Contract (ASC 605-35).*ASC 605-35 requires the recognition of a liability for anticipated losses on contracts prior to those losses being incurred when a loss is probable and can be estimated.

As of December 31, 2025 and 2024, we evaluated the total costs incurred on this contract to date and the estimated costs we anticipate incurring to complete the contract compared to the fixed-price contract. Based on this analysis as of December 31, 2025 and 2024, we have an accrued contract loss provision of $1,600,000 and $1,000,000, respectively, which has been presented on the accompanying consolidated balance sheets and is recorded within cost of revenues on the accompanying consolidated statements of operations. The increased loss on this contract during 2025 and 2024 is due to system design changes and upgrades that required unexpected material and labor costs to complete.

Stock-based Compensation

The Company accounts for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on a weighting of historical volatilities of peer companies and the Company’s own volatility over the expected term of the stock options. The expected term of options are derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

Leases

The Company accounts for leases under ASC Topic 842, Leases. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheets. The Company leases an office and warehouse to conduct business. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.

Operating lease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Operating lease expense is recognized on a straight-line basis over the lease term. During the year ended December 31, 2024, we executed a lease agreement within the scope of Topic 842.

The Company elected to account for non-lease components when incurred and are therefore not included in operating lease assets and liabilities. The non-lease components typically represent additional services transferred to the Company, such as common area maintenance for real estate related leases.

Income Tax Policy

The Company accounts for income taxes using the liability method prescribed by ASC 740 - Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

Accounting for Uncertainty in Income Taxes

The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There were no uncertain tax positions as of December 31, 2025 and 2024.

Research and Development Costs

The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $2,524,519 and $2,143,471 for the years ended December 31, 2025 and 2024, respectively.

Earnings (Loss) Per Share

Earnings (loss) per share is computed in accordance with ASC Topic 260, “Earnings per Share” Basic weighted-average number of shares of common stock outstanding for the years ended December 31, 2025 and 2024 include the shares of the Company issued and outstanding during such periods, each on a weighted average basis. The basic weighted average number of shares of common stock outstanding excludes common stock equivalent incremental shares, while diluted weighted average number of shares outstanding includes such incremental shares. However, as the Company was in a loss position for all periods presented, basic and diluted weighted average shares outstanding are the same, as the inclusion of the incremental shares would be anti-dilutive.

At December 31, 2025, there were the following potentially dilutive securities that were excluded from diluted net loss per share because their effect would be antidilutive: options for 1,708,637 shares of common stock,877,524 warrants, and unvested restricted stock awards of 865,296. At December 31, 2024, there were the following potentially dilutive securities that were excluded from diluted net loss per share because their effect would be antidilutive: options for 1,584,312 shares of common stock,1,467,524 warrants, and unvested restricted stock awards of 354,929.

Reclassifications

We have made certain reclassifications to prior period amounts presented on our consolidated statements of operations to conform to the current period presentation with no impact to net loss or loss per share. These reclassifications consisted of reclassifying $1,046,546 of stock-based compensation expense from general and administrative expenses to compensation and related expenses for the year ended December 31, 2024.

Recent Accounting Pronouncements

In December 2023 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures(ASU 2023-09). The ASU focuses on income tax disclosures around effective tax rates and cash income taxes paid. ASU 2023-09 requires public business entities to disclose, on an annual basis, a rate reconciliation presented in both dollars and percentages. The guidance requires the rate reconciliation to include specific categories and provides further guidance on disaggregation of those categories based on a quantitative threshold equal to 5% or more of the amount determined by multiplying pretax income (loss) from continuing operations by the applicable statutory rate. For entities reconciling to the US statutory rate of 21%, this would generally require disclosing any reconciling items that impact the rate by 1.05% or more. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 (generally, calendar year 2025) and effective for all other business entities one year later. Effective January 1, 2025, we adopted ASU 2023-09 on a prospective basis. The adoption of ASU 2023-09 did not have a material impact on these consolidated financial statements (see Note 11).

ASU 2024-03,Disaggregation of Income Statement Expenses (“DISE*”)*. In November 2024, the FASB issued a new accounting standard to improve the disclosures about an entity’s expenses and address requests from investors for more detailed information about the types of expenses included in commonly presented expense captions. The new standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with retrospective application permitted. The Company is evaluating the disclosure requirements related to the new standard and its impact on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05,*Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-5). The ASU 2025 -05 relates to estimating credit losses under the calculation of current expected credit losses (CECL) for current accounts receivable and current contract assets arising from revenue transactions accounted for under ASC 606,Revenue from Contracts with Customers. For all entities, ASU provides a practical expedient to assume that current conditions as of the balance sheet date will persist through the reasonable and supportable forecast period for eligible assets. Entities will still be required to adjust historical data used in the estimation to reflect current conditions. This policy election is available only if the entity elects the practical expedient. The date selected must be when or before financial statements are available to be issued. Under this accounting policy election, no credit loss would be recorded on balances that have been collected through subsequent receipts. Remaining uncollected amounts would be evaluated for credit losses using the practical expedient. The provisions of ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company has elected to *apply the practical expedient in its assessment of an allowance for credit losses as of December 31, 2025, which did not have a material impact on these consolidated financial statements.

The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.

Note 3 – Liquidity, Capital Resources and Going Concern

In accordance with ASU No. 2014-15 Presentation of Financial Statements – Going Concern (subtopic 205-40), the Company’s management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As of December 31, 2025, the Company had working capital and an accumulated deficit of $1,669,083 and $49,936,598, respectively. During the year ended December 31, 2025, the Company had a net loss of $20,975,052 and used cash in operations of $14,326,205.

These conditions raise substantial doubt regarding our ability to continue as a going concern as the Company will need additional debt or equity financing or a combination of both to continue its operations and meet its financial obligations for twelve months from the date these consolidated financial statements were issued.

Presently, the Company will need additional debt or equity financing or a combination of both to continue its operations and meet its financial obligations for at least the next twelve months from the date these consolidated financial statements were issued and beyond. We may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. We expect to incur continuing losses and negative cash flows from operations for the foreseeable future.

Since inception, we have financed our operations principally through the sale of debt and equity securities and operating cash flows. During the years ended December 31, 2025 and 2024, we raised approximately $8,909,000 and $0 respectively, of net proceeds under our at-the-market (“ATM”) offerings (see Note 8). During the year end December 31, 2025, the costs incurred associated with the ATM offerings exceeded proceeds by approximately $3,100 (see Note 8). The Company is evaluating strategies to obtain the required additional funding for future operations.

In November 2024, we closed on an offering of shares of common stock and common stock warrants resulting in net proceeds of approximately $11,393,000 (see Note 8 for additional information).

As of the date of this Annual Report, the aggregate market value of our outstanding common stock held by non-affiliates, or the public float, was approximately $39,144,000, which was calculated based on 11,184,116 outstanding shares of the Company’s common stock held by non-affiliates at a price of $3.50 per share, the closing price of our common stock on March 25, 2026, as reported on Nasdaq. Pursuant to General Instruction I.B.6 of Form S-3, or the “baby shelf” rules, in no event will we sell securities registered on our Form S-3 registration statement, including under our at-the-market equity offering, with a value of more than one-third ofthe aggregate market value of shares of our common stock held by non-affiliates in any 12-month period, so long as the aggregate market value of shares of our common stock held by non-affiliates is less than $75 million. After giving effect to the approximate $13,000,000 offering limit imposed by General Instruction I.B.6 of Form S-3 and deducting the shares sold within the preceding 12 months, as of the date of filing this Annual Report, approximately $3,700,000 shares of common stock remain available at this time for sale under our Form S-3, including through our at-the-market equity offering.

Any additional debt or equity financing that the Company obtains may substantially dilute the ownership held by our existing stockholders. The economic dilution to our shareholders will be significant if our stock price does not materially increase, or if the effective price of any sale is below the price paid by a particular investor. The Company may be unable to access further equity or debt financing when needed or obtain additional financing under acceptable terms, if at all.

We may decide to raise additional capital through a variety of sources in the short-term and in the long-term, including but not limited to:

If the Company is unable to raise additional capital, there is a risk that the Company could be required to discontinue or significantly reduce the scope of its operations. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 – Inventory

Inventory consists of:

At December 31, 2025 and 2024, the Company has a $50,000 reserve against its inventory for estimated write downs.

Note 5 – Intangible Assets

Intangible assets are comprised of the following as of December 31, 2025 and 2024:

Amortization expense for the year ended December 31, 2025 and 2024 was $73,370 and $70,037, respectively.

Estimated future amortization expense as of December 31, 2025:

Note 6 – Revenue, Unearned Revenue and Unbilled Accounts Receivable

Revenue

The following is a summary of our revenues by type for the years ended December 31, 2025 and 2024:

Unearned Revenue

The following is a summary of our unearned revenue activity for the years ended December 31, 2025 and 2024:

At December 31, 2025, we anticipate recognizing approximately $313,000 of unearned revenue in the following fiscal year which has been presented as a current liability at December 31, 2025. The remaining balance of $30,000 has been classified as a long-term liability as the timing of revenue recognition is unknown.

Unbilled Accounts Receivable

The following is a summary of our unbilled accounts receivable activity during the years ended December 31, 2025 and 2024:

As discussed in Note 2, we anticipated delivering the AirSCWO equipment to OC San during the year ended December 31, 2025. Due to the delays we have encountered in delivering the equipment, we reassessed the variable consideration at December 31, 2025. The changes in facts and circumstances have resulted in us fully constraining the variable consideration at December 31, 2025. This resulted in the reduction of unbilled accounts receivable and reduction in equipment revenue in the amount of approximately $1.9 million.

Note 7 – Debt Obligations

Note Payable

During the year ended December 31, 2025, we purchased approximately $48,200 of equipment with a note payable. The note bears interest at 10.75% and requires fixed payments of principal and interest of $1,042 for sixty months. At December 31, 2025, the outstanding principal balance was $43,149.

At December 31, 2025, future principal payments on the note payable for the years ending December 31, will be as follows:

Secured Promissory Note

On September 30, 2025, the Company executed a $600,000 short-term secured promissory note (the “Short-Term Note”). The Short-Term Note requires repayment of $630,000 on the maturity date of January 2, 2026. The Short- Term Note is secured by certain outstanding receivables of the Company. The lender of the Short-Term Note also received a warrant to purchase 10,000 shares of common stock at $11.25 for a period of four years. We computed the fair value of the warrant using a Black-Scholes option pricing model and the following inputs: stock price $2.90, expected term of 4 years, volatility 96.00%, risk-free rate of 3.68%, and dividend rate of 0.00%. The value of the warrant upon issuance was not significant. The outstanding principal balance and the accrued interest of $630,000 has been presented within current liabilities on the accompanying consolidated balance sheets. The Short-Term note was repaid in its entirety upon maturity.

Financing Liability

During the year ended December 31, 2025, we entered into a financing agreement to finance $265,505 of insurance premiums due on various policies. The financed amount is due in fixed monthly payments of $19,808 for a period of eleven months and bear interest at 9.85%. The balance of $159,342 remaining on this financing liability has been

presented within current liabilities on the accompanying consolidated balance sheets.

Note 8 – Stockholder’ Equity

The Company is authorized to issue 50,000,000 preferred stock shares and 1,000,000,000 common stock shares both with a par value of $0.0001.

Preferred Stock

On October 30, 2020, the Company designated 1,000,000 shares of preferred stock as Series D Convertible Preferred Stock with a par value of $0.0001.

As of December 31, 2025 and 2024, there were no shares of preferred stock issued and outstanding.

Common Stock

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of shareholders, including the directors’ election. There is no right to cumulative voting in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available for payment of dividends, subject to the prior rights of holders of preferred stock and any contractual restrictions the Company has against the payment of dividends on common stock. In the event of liquidation or dissolution of the Company, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no pre-emptive rights and have no right to convert their common stock into any other securities. At December 31, 2025, there were 17,143,771 shares of common stock issued and outstanding.

Common Stock Issued for Cash

On June 6, 2025, the Company entered into an at-the-market issuance sales agreement (the "Prior 2025 Sales Agreement") with Lake Street Capital Markets, LLC (“Lake Street”) as sales agent, pursuant to which the Company could offer and sell, from time to time, shares of the Company's common stock having an aggregate offering price of up to $15.1 million . The Prior 2025 Sales Agreement replaces the prior sales agreement entered into between the Company and Jefferies LLC dated as of December 21, 2022 (the “2022 Sales Agreement”).

On December 23, 2025, the Company entered into a new at-the-market issuance sales agreement (the “2025 Sales Agreement”) with Lake Street as sales agent, pursuant to which the Company could offer and sell, from time to time, shares of the Company’s common stock having an aggregate offering price of up to $50 million. The 2025 Sales Agreement replaces the Prior 2025 Sales Agreement, and sales under the Prior 2025 Sales Agreement have terminated.

Sales of common stock under the 2025 Sales Agreement, if any, will be made at market prices by any method permitted by law deemed to be an “at-the-market” (“ATM”) offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company has no obligation to sell any shares of common stock under the open market sale agreement and may at any time suspend offers under the 2025 Sales Agreement, in whole or in part, or terminate the 2025 Sales Agreement.

As of the date of this Annual Report, the aggregate market value of our outstanding common stock held by non-affiliates, or the public float, was approximately $39,144,000, which was calculated based on 11,184,116 outstanding shares of the Company’s common stock held by non-affiliates at a price of $3.50 per share , the closing price of our common stock on March 25, 2026, as reported on Nasdaq. Pursuant to General Instruction I.B.6 of Form S-3, or the “baby shelf” rules, in no event will we sell securities registered on our Form S-3 registration statement, including under our at-the-market equity offering, with a value of more than one-third ofthe aggregate market value of shares of our common stock held by non-affiliates in any 12-month period, so long as the aggregate market value of shares of our common stock held by non-affiliates is less than $75 million. After giving effect to the approximate $13,000,000 offering limit imposed by General Instruction I.B.6 of Form S-3 and deducting the shares sold within the preceding 12 months, as of the date of filing this Annual Report, approximately $3,700,000 shares of common stock remain available at this time for sale under our Form S-3, including through our at-the-market equity offering.

During the year ended December 31, 2025, no shares were sold under the 2025 Sales Agreement and a total of 2,279,180 shares of common stock were sold pursuant to the Prior 2025 Sales Agreement offering resulting in gross proceeds of approximately $9,313,000 and net proceeds of approximately $8,909,000 after equity issuance costs of approximately $404,000 for accounting, legal, commissions and sale agent fees.

During the year ended December 31, 2024, a total of 5,051 shares of common stock were sold pursuant to the 2022 Sales Agreement resulting in gross proceeds of approximately $63,100, and net issuance costs of $3,100 after equity issuance costs of $65,500 for accounting, legal, commissions and fees which exceeded the gross proceeds received under the 2022 Sales Agreement.

On November 14, 2024, we entered into a Securities Purchase Agreement with certain investors, pursuant to which the Company agreed to issue and sell (i) an aggregate of 978,350 shares of common stock, and (ii) one and a half warrants to purchase up to an aggregate of 1,467,524 shares of common stock in a registered direct offering (the “Offering”). The purchase price for one share and the accompanying 1.5 warrants was $11.25. The warrants are immediately exercisable for a period of five years from the date of the Offering at $11.25, subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization, or similar transactions (“Share Combination Event”) and include anti-dilution protection provisions in the event subsequent sales or equity-linked financial instruments are issued at a price below the $11.25. See below for the impact of the Share Combination Event that resulted from the Reverse Stock Split resulting in a reduction in the warrant’s exercise price issued in the Offering.

The aggregate gross proceeds to the Company from the Offering, which closed on November 18, 2024, was approximately $12,229,000 with net proceeds of approximately $11,393,000, net of issuance costs of approximately $836,000 for accounting, legal, commissions and fees. The net proceeds were allocated between the common stock and warrants based on their relative fair values of approximately $8,118,000 and $3,275,000 with the net proceeds, respectively, presented in additional paid-in capital within stockholders’ equity.

The Company’s Board of Directors and executive team participated in the Offering and invested a total of $696,000 and received shares of common stock totaling 55,680 and the accompanying warrants totaling 83,520.

The fair value of the warrants for purposes of the relative fair value allocation was estimated using a Black-scholes model and the following assumptions: expected term of 5 years, volatility of 24.8%, dividend rate of 0.00%, and risk-free rate of 4.28%.

The Offering was made pursuant to the Company’s registration statement on Form S-3 (File No. 333-268942), which was filed with the Securities and Exchange Commission (the “Commission”) on December 22, 2022 and declared effective by the Commission on December 30, 2022, and a prospectus supplement dated November 14, 2024 filed by the Company with the Commission.

Common Stock for Services

During the year ended December 31, 2025, we issued an aggregate of 82,985 of fully vested shares of restricted common stock to service providers and directors with an aggregate fair value of $290,872 based on the market price of our common stock on date of grant which is included in general and administrative expense on the consolidated statements of operations.

During the year ended December 31, 2024, we issued an aggregate of 30,121 of fully vested shares of restricted common stock to service providers and directors with an aggregate fair value of $383,879 based on the market price of our common stock on date of grant which is included in general and administrative expense on the consolidated statements of operations.

Common Stock for Stock Option Exercises

During the year ended December 31, 2025, we issued an aggregate of 131,176 shares of common stock for cash and cashless stock option exercises that resulted in cash proceeds of $24,000.

During the year ended December 31, 2024, we issued an aggregate of 149,965 shares of common stock for cash and cashless stock option exercises that resulted in cash proceeds of $60,000.

Common Stock Issued for Settlement of Accrued Expense

During the year ended December 31, 2025, we issued an aggregate of 22,105 shares of common stock to a service provider for the settlement of $105,000 accounts payable balance for certain milestones meet pursuant to contract terms. The fair value of the shares was estimated to be $105,000 based on the closing price of the Company’s stock at time the milestone was achieved; therefore, no gain or loss was recognized.

Stock-Based Compensation

2021 Plan

The Company has reserved 3,615,000 (increased from 2,400,000 as approved by the shareholders at the Company’s Annual Shareholder Meeting on June 11, 2025) shares of common stock or common stock equivalents to be issued under our 2021 Equity Incentive Plan (the “2021 Plan”) to the Company’s employees and non-employee services providers. Stock options granted under the 2021 Plan typically have a contractual term of ten years.

Stock-based compensation expense related to the stock options and restricted stock units expected to vest is presented as follows on the consolidated statements of operations:

See below for detailed disclosures of our issued and outstanding stock options and restricted stock units.

Stock Options

Stock option activity for the year ended December 31, 2025 is summarized as follows:

(i) As of December 31, 2025 and 2024, the options outstanding and exercisable include 327,500 and 617,500, respectively, options granted outside of the 2021 Plan.

Intrinsic value is based on the difference between the option exercise price and the quoted market price as of December 31, 2025 or the date of option exercise.

During the year ended December 31, 2025, the options granted were primarily to our interim Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Technology Officer (“CTO”) and other non-executive key employees. The weighted average grant-date fair value of the granted options was $4.38. Stock options typically vest over a service period of approximately 4 years. During the year ended December 31, 2024, the options granted were primarily to executives, key employees and a legal settlement discussed. The average grant-date fair value of the granted options was $4.60.

Of the total options outstanding as of December 31, 2025,146,809 of the options include performance conditions. The performance-based options vest as follows:50% vest upon the achievement of operating profit, as defined in the employment agreements, and 50% upon the achievement of a revenue target of $100 million by the end of fiscal year 2028. The performance-based options with the revenue target begin vesting once the Company achieves $15 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of options that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million,20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027. During the year ended December 31, 2025,299,778 performance-based options were forfeited with the separation of our CEO and in-house counsel in October 2025 (see Note 10).

During the years ended December 31, 2025 and 2024, we recognized stock-based compensation of $1,834,648 and $907,225, respectively. As of December 31, 2025, total unrecognized compensation expense for service based and performance-based options was $2,637,204 and $585,303, respectively. The unrecognized service-based expense will be recognized over a weighted-average period of 1.51 years. The unrecognized expense associated with the performance-based options will be expensed when it becomes probable that the performance obligations will be met.

The fair value of these options granted were estimated on the date of grant, using the Black-Scholes option-pricing model with the following assumptions:

Restricted Stock Units

During the year ended December 31, 2025, the Company granted an aggregate of 1,193,076 unvested restricted stock units under the 2021 Plan pursuant to employment agreements with our CFO and CTO, our board of directors and other non-executive key employees of the Company. RSUs granted to our CFO , CTO and other executives include both time-based and performance-based vesting. All other granted RSUs vest based over a specified service period that ranges from 1-4 years.

The unvested restricted stock units granted to our CFO and CTO on January 15, 2025 and April 30, 2025, pursuant to employment agreements, consist of an aggregate of 106,622 units with time-based vesting provisions over four years and 106,622 units with performance-based vesting provisions. The performance-based units vest as follows: 50% vest upon the achievement of Operating Profit, as defined in the employment agreements, and 50% upon the achievement of revenue targets between $15 and $100 million by the end of fiscal year 2028. The restricted stock units with the revenue target begin vesting once the Company achieves $15.0 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of restricted stock units that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027. At December 31, 2025, total unvested outstanding restricted stock units granted to our executive team with these performance conditions totaled 146,809. During the year ended December 31, 2025,149,778 and 64,583 performance based and timed-based RSUs were forfeited with the separation of our CEO and in-house counsel in October 2025 (see Note 10).

On January 15, 2025,176,500 unvested RSUs were granted to non-executive key employees. The RSUs vest as follows: 50% on the one-year grant-date anniversary with the remaining vesting ratably over a period of thirty-six months. At December 31, 2025,169,500 of these RSUs remain outstanding as 7,000 RSUs were forfeited during the year ended December 31, 2025.

On August 28, 2025, an aggregate of 287,500 time-based RSUs and 287,500 performance-based RSUs were granted to our executive team. The time-based RSUs vest over a service period of thirty-six months with a commencement date of March 31, 2025. At December 31, 2025,694,444 of these time-based RSUs had vested. During the year ended December 31, 2025,162,500 of the performance-based RSUs and 100,694 time-based RSUs were forfeited with the separation of our CEO and in-house counsel in October 2025 (see Note 10).

The performance-based RSUs have a three-year vesting period contingent on the achievement of milestones tied to the commissioning and operation of five different AirSCWO units to promote the development of the Company’s waste destruction services strategy. The 287,500 RSUs represent the vesting target amount; however, each vesting tranche includes a target delivery date. More RSUs can be earned by the executive team for delivery dates met prior to the target date. Conversely, fewer or no RSUs will vest if delays occur and units are commissioned and operating after the tranche target date. The range of RSUs that can vest is 143,750 to 546,250. Each tranche earned requires the approval and certification of the compensation committee. The total RSUs earned will be aggregated and issued after the three-year vesting period. At December 31, 2025, total unvested outstanding restricted stock units granted to our executive team with these performance conditions totaled 125,000. At December 31, 2025, the probability of the performance-based RSUs vesting was not deemed probable; therefore, no compensation expense has been recognized on the performance-based RSUs.

On August 28, 2025, our board of directors was granted 228,332 RSUs that will fully vest on the one-year grant-date anniversary. Effective, December 15, 2025, one of our board of directors resigned from the Company and 61,697 RSUs granted to the director on August 28, 2025 became fully vested. During the year ended December 31, 2025, we recognized stock-based compensation of $438,160 in connection with these RSU grants to our board of directors which has been classified with general and administrative expenses on the consolidated statements of operations.

During the years ended December 31, 2025 and 2024, the grant-date fair value of the restricted stock units was determined using the market price of our common stock on the date of grant which ranged from $3.70 to $6.30 and $10.30 and $13.00, respectively.

As of December 31, 2025, we have $1,419,744 of unrecognized stock-based compensation associated with the restricted stock units with a performance condition which will be recognized when the performance conditions are probable of being met. As of December 31, 2025, the Company had $2,227,374 of unrecognized stock-based compensation associated with the time vesting restricted stock units which will be recognized over a weighted-average period of approximately 2.33 years. During the years ended December 31, 2025 and 2024, we recognized an aggregate of $1,711,998 and $308,399, respectively, of stock-based compensation associated with the time-based restricted stock units.

A summary of our outstanding nonvested restricted stock units is as follows:

Stock Warrants

At December 31, 2025, there were 877,524 common stock warrants outstanding which primarily relate to an Offering completed in November 2024, where investors were offered one and a half warrants for everyone one common share purchased in the Offering at an exercise price of $11.25 per share.

A summary of warrant activity for the year ended December 31, 2025, is as follows:

*The weighted average exercise price reflects the reduction that occurred in December 2025 due to the Share Combination Event (see below).

The 10,000 warrants were granted in connection with a short-term secured promissory note executed during the year ended December 31, 2025 (see Note 7).

On July 18, 2025, the Company executed a warrant purchase agreement with the largest investor in the November 2024 offering of common stock and warrants. The 600,000 warrants held by the investor were repurchased by the Company at a price of $1.08 for total cash consideration of $649,980. The repurchase amount has been reflected as a reduction of additional-paid in capital on the consolidated statements of stockholders’ equity.

In connection with the effective date of the Reverse Stock Split, a Share Combination Event was triggered on the warrants issued in the Offering. Pursuant to the terms of the warrants, if a Share Combination Event occurred the warrant’s exercise price would be adjusted to the lowest volume weighted average price for the five trading days immediately following the Share Combination Event. The Share Combination Event resulted in the warrant’s exercise price being reduced from $11.25 (post-split) to $1.9352. We determined the incremental value received by the warrant holders for the exercise price modification using a Black-scholes model pre and post modification and the following inputs: expected term 3.90 years, volatility 107.10%, risk free rate of 3.62%, dividend rate of 0.00% and exercise price of $11.25 (pre modification) and $1.9352 (post modification).

We have reflected the incremental value from this exercise price reduction as a deemed dividend within stockholders’ equity which amounted to $573,928.

Note 9 – Related Party Transactions

On July 7, 2021, we entered into a manufacturing and services agreement (the “M&S Agreement”) to fabricate and manufacture the AirSCWO systems with Merrell Bros. Fabrication, LLC (“Merrell Bros.”). As part of the agreement, the Company appointed Terry Merrell, one of the owners of Merrell Bros., to its board of directors. On December 18, 2024, Mr. Merrell notified the Company of his intention to resign from the Company's Board of Directors effective December 31, 2024, to allow him to focus more on his core business responsibilities at Merrell Bros. The M&S Agreement terminated on its original expiration date of July 7, 2024.

In March 27, 2024, we executed a supplemental manufacturing and services agreement (the “Supplemental M&S Agreement”) with Merrell Bros. as Merrell Bros. indicated to us their intent to not renew the Original M&S Agreement and we indicated our desire to relocate to a larger manufacturer facility with more square footage dedicated to expanding our manufacturing operations. The Supplemental M&S Agreement became effective on July 7, 2024 and replaced the Original M&S Agreement. Under the Supplemental M&S Agreement, our relationship and the manufacturing services provided by Merrell Bros. would continue an as needed basis based on statements of work to be agreed upon by both parties to fulfill future and current manufacturing orders. The Supplemental M&S Agreement terminated during the year ended December 31, 2024. Merrell Bros. is no longer considered a related party.

During the years ended December 31, 2025 and 2024, the Company incurred $0 and $241,917, respectively, in expenses with Merrell Bros. related to the manufacturing of the AirSCWO systems. At December 31, 2025 and 2024, there are no amounts owed to Merrell Bros. for the manufacturing services provided.

See also Note 8 for related parties that invested in the Offering that occurred in November 2024.

Note 10 – Commitments and Contingencies

Operating Leases

On October 15, 2024, a lease for our new laboratory space located in North Carolina commenced upon substantial completion of all improvements by the landlord. Pursuant to the terms of the lease, the Company reimbursed the landlord approximately $59,000 of these improvements. The term of the lease began September 1, 2024 and ends in sixty-one months or October 1, 2029 with one five-year extension period. The extension period was not included in our initial present value of the right-of-use asset or operating lease liability as it was not reasonably certain the option would be exercised. Monthly rental payments required under the lease are subject to annual increases and range from $14,235 - $16,503 over the initial term of the lease.

Upon the lease commencing on October 15, 2024, the Company recognized an operating right-of-use asset and operating lease liabilities of approximately $726,000 for the present value of the lease payments required over the term of the lease, including the reimbursement for lessor improvements, using a weighted average incremental borrowing rate of 12%.

Right-of-use assets are summarized below:

Operating lease liabilities are summarized below:

Future payments required on the operating lease liabilities, over a remaining lease term of approximately 3.75 years, are as follows:

The following table summarizes the supplemental cash flow information for the years ended December 31, 2025 and 2024:

During the year ended December 31, 2025, we incurred rent expense of approximately $210,000 in connection with this operating lease which is included within general and administrative expenses on the consolidated statement of operations. During the year ended December 31, 2024, we incurred rent expense of approximately $63,000 in connection with this operating lease which is included within general and administrative expenses on the consolidated statement of operations.

License Agreement

The patented technology underlying 374Water’s supercritical water oxidation (SCWO) units, which was developed principally through the efforts of Messrs. Nagar and Deshusses at the facilities of Duke University, Durham, North Carolina (“Duke”), where Dr. Deshusses is a professor. The SCWO technology is licensed to 374Water pursuant to a worldwide license agreement with Duke executed on April 16, 2021 (the “License Agreement”). Under the terms of the License Agreement, the Company is required to make royalty payments based on a percentage of licensed product sales, as defined in the License Agreement which is triggered by the sale of licensed products. Further, the Company is also required to pay royalties on a percentage of sublicensing fees. The Company will reimburse Duke for any ongoing patent expenses incurred. As of December 31, 2025 and 2024, the Company has not incurred any expenses in connection with this License Agreement. The Company may terminate the license agreement anytime by providing Duke 60 days’ written notice.

Legal Matters

The Company may be involved in various legal proceedings arising in the ordinary course of business, including, but not limited to commercial disputes. The Company believes that such litigation, claims, and administrative proceedings will not have a material adverse impact on its financial position or its results of operations. The Company records a liability when it considers the loss probable, and the amount can be reasonably estimated. In addition, the below legal proceedings are in process or have been resolved.

On November 4, 2024, our former Chief Executive Officer and Chairman of the Board filed a complaint against the Company alleging unpaid wages and a bonus. At December 31, 2024, we established an accrual of $335,000 for this legal settlement as presented on the consolidated balance sheet. This legal matter was officially settled on April 2, 2025 for the amount accrued. We paid $110,000 of the settlement within ten calendar days of certain conditions being met by the plaintiff, as defined in the settlement agreement, with the remaining settlement being paid in equal payments through December 31, 2025. As of December 31, 2025, we have remitted all payments required on the settlement.

On March 18, 2026, a stockholder class action complaint was filed with Delaware Court of Chancery. The plaintiff seeks declaratory relief invalidating an exculpation provision contained in the Company’s amended and restated certification of incorporation filed with State of Delaware that purports to eliminate or limit the personal liability of the Company’s directors and officers beyond what is permitted under Delaware law. We believe this complaint has no merit and are consulting with our attorneys on the matter. At this time, the outcome of the litigation is uncertain.

Employment Agreements

Former CEO

On April 19, 2024, the Company entered into an employment agreement with Christian Gannon (the “Employment Agreement”), for Mr. Gannon to serve as President and Chief Executive Officer (“CEO”) of the Company effective April 22, 2024 (the “Start Date”). The Employment Agreement provided for an initial annual salary for Mr. Gannon of $450,000. Mr. Gannon is also eligible to earn an annual fiscal year performance bonus for each whole or partial fiscal year of his employment period with the Company; for the initial year under the Employment Agreement in accordance with certain milestones set forth by the Company, and thereafter as determined by the compensation Committee of the Company and the Board of Directors of the Company. Mr. Gannon was eligible to earn a performance bonus up to 125% of Mr. Gannon’s then-current base salary (the “Annual Bonus”) if certain milestones were met as defined in the Employment Agreement.

Under the Employment Agreement and subject to the terms of the Company’s 2021 Plan, Mr. Gannon was granted up to 225,000 Restricted Stock Units (as defined in the Plan) under the Plan, vesting as follows: (a) 25,000, on the first annual anniversary of the Start Date; (b) 75,000, in equal increments on the last day of every month thereafter over the following 36 months, subject to Mr. Gannon’s continued employment with the Company on each vesting date; and (c) 125,000, pursuant to certain performance related milestones set forth by the Company and defined in the Employment Agreement (collectively, the “Gannon Restricted Stock Units”). Additionally, pursuant to the Employment Agreement and the terms of the 2021 Plan, Mr. Gannon was granted 525,000 Options (as defined in the 2021 Plan) under the 2021 Plan vesting as follows: (a) 62,500, on the first annual anniversary of the Start Date; (b) 187,500, in equal installments on the last day of every month thereafter over the following 36 months subject to Mr. Gannon’s continued employment with the Company on each vesting date; and (c) 275,000, pursuant to certain performance related milestones set forth by the Company and defined in the Employment Agreement (collectively, the “Gannon Options”, and together with the Gannon Restricted Stock Units, the “Gannon Equity Awards”). See Note 8 for further disclosures on the vesting performance related milestones.

If the Employment Agreement is terminated by the Company without “Cause” or by Mr. Gannon for “Good Reason” (each as defined in the Employment Agreement, subject to the Company’s right to cure), he will be entitled to termination benefits, pursuant to which the Company will be obligated to (i) pay Mr. Gannon 100% of his then-current annual base salary in 12 equal installments; (ii) any earned but unpaid Annual Bonus; (iii) coverage to Mr. Gannon and his dependents under the Company’s then current medical, health, and vision insurance plans for 12 months; and (iv) if such separation occurs on or after the first anniversary of the Start Date, (x) a pro-rated Annual Bonus for the fiscal year in which the employment is terminated equal to the pro-rated Annual Bonus that Mr. Gannon would have received based on actual performance for such fiscal year if Mr. Gannon was employed by the Company, and (y) accelerated vesting with respect to the Gannon Equity Awards as if Mr. Gannon had remained employed by the Company through the first anniversary of the date of such separation. The termination benefits are subject to Mr. Gannon executing a separation and release agreement with the Company, within forty-five days of termination.

The Employment Agreement contains covenants for the benefit of the Company relating to the protection of the Company’s confidential information and standard Company indemnification obligations.

Mr. Gannon stepped down from his position as CEO effective October 7, 2025 and has not executed a separation and release agreement. Therefore, at December 31, 2025, we did not accrue for any of the termination benefits discussed above and Mr. Gannon stopped vesting in the Gannon Equity Awards upon the effective date of the separation.

Interim CEO

On October 7, 2025, the Company executed an employment agreement with Stephen Jones, interim CEO and President, for a period of the earlier of twelve months or the placement of a full-time CEO. While interim CEO, Mr. Jones received a $1 salary and 450,000 non-qualified stock options with an exercise price of $3.70 and the following vesting conditions: 25% date of grant, 25% 90 days after grant, 25% 180 days after grant, 25% 270 days after grant; or immediate vesting upon the following: (i) if termination of employment for any reason other than Cause (as defined in the 2021 374Water Equity Incentive Plan) (provided, however, this shall not apply in the event of a termination of employment made at the sole election of Mr. Jones); (ii) upon hiring of full-time CEO for 374Water and (iii) Change of Control of 374Water (as defined in the 2021 Equity Incentive Plan). The option immediately vested on February 23, 2026 when the Company hired a full-time CEO (see Note 13).

COO

On May 16, 2024 (the “Meyers Effective Date”), we entered into an employment agreement with Brad Meyers (the “COO Employment Agreement”), for Mr. Meyers to continue to serve as Chief Operating Officer (“COO”) of the Company, a position he has held since November 6, 2023. The COO Employment Agreement provides for an initial annual base salary for Mr. Meyers of $300,000. Mr. Meyers is also eligible to earn an annual fiscal year performance bonus with a target amount equal to 50% of Mr. Meyers’ then base-salary (the “Meyers Annual Bonus”).

Under the COO Employment Agreement and subject to the terms of the 2021 Plan , Mr. Meyers was granted 23,100 Restricted Stock (as defined in the 2021 Plan) and stock options for 23,100 (collectively, the “Meyers Equity Awards”), vesting as follows: (a) with respect to 11,550 Restricted Stock and 11,550 shares subject to stock options (“Options”), 25% vest on the first anniversary of the Effective Date, and the remaining 75% vest in equal increments on the last day of every month thereafter over the following 36 months, subject to Mr. Meyer’s continued employment with the Company on each vesting date: and (b) with respect to the remaining 11,550 Restricted Stock and 11,500 Options, each vest in accordance with a performance based milestone set forth by the Company and defined in the COO Employment Agreement. See Note 8 for further disclosures on the performance-related milestones.

If the COO Employment Agreement is terminated by the Company without “Cause” or by Mr. Meyers for “Good Reason” (each as defined in the COO Employment Agreement, subject to the Company’s right to cure), he will be entitled to termination benefits, pursuant to which the Company will be obligated to (i) pay Mr. Meyers six months of his then-current annual base salary in six equal installments; (ii) any earned but unpaid Meyers’ Annual Bonus; (iii) coverage to Mr. Meyers and his dependents under the Company’s then current medical, health, and vision insurance plans for six months; and (iv) if such separation occurs on the day or after the first year anniversary of employment of the Meyers Effective Date, (x) a pro-rated Annual Bonus for the fiscal year in which the employment is terminated equal to the pro-rated Annual Bonus that Mr. Meyers would have received based on actual performance for such fiscal year if Mr. Meyers was employed by the Company, and (y) accelerated vesting with respect to the Meyers Equity Awards as if Mr. Meyers had remained employed by the Company through the six-month anniversary of the date of such separation. The termination benefits are subject to Mr. Meyers executing a separation and release agreement with the Company, within forty-five days of termination.

The Employment Agreement contains covenants for the benefit of the Company relating to protection of the Company’s confidential information and standard Company indemnification obligations.

CFO

On December 16, 2024 (the “Kline Effective Date”), we entered into an employment agreement with Russell Kline (the “CFO Employment Agreement”), for Mr. Kline to serve as Chief Financial Officer (“CFO”) of the Company. The CFO Employment Agreement provided for an initial annual base salary of $300,000. Mr. Kline was also eligible to earn an annual fiscal year performance bonus with a target amount equal to 50% of Mr. Klines’ then base-salary (the “Kline Annual Bonus”).

Under the CFO Employment Agreement and subject to the terms of the 2021 Plan, Mr. Kline was eligible for a grant of 61,728 Restricted Stock (as defined in the 2021 Plan) and stock options for 61,728 (collectively, the “Kline Equity Awards”), vesting as follows: (a) with respect to 30,864 Restricted Stock and 30,864 shares subject to stock options (“Options”), 25% vested on the first anniversary of the Effective Date, and the remaining 75% were to vest in equal increments on the last day of every month thereafter over the following 36 months, subject to Mr. Kline’s continued employment with the Company on each vesting date: and (b) with respect to the remaining 30,864 Restricted Stock and 30,864 Options, each vest in accordance with a performance based milestone set forth by the Company and defined in the CFO Employment Agreement. See Note 8 for further disclosures on the performance-related milestones.

If the CFO Employment Agreement is terminated by the Company without “Cause” or by Mr. Kline for “Good Reason” (each as defined in the CFO Employment Agreement, subject to the Company’s right to cure), he will be entitled to termination benefits, pursuant to which the Company will be obligated to (i) pay Mr. Kline six months of his then-current annual base salary in six equal installments; (ii) any earned but unpaid Kline Annual Bonus; (iii) coverage to Mr. Kline and his dependents under the Company’s then current medical, health, and vision insurance plans for six months; and (iv) if such separation occurs on the day or after the first year anniversary of employment of the Kline Effective Date, (x) a pro-rated Annual Bonus for the fiscal year in which the employment is terminated equal to the pro-rated Annual Bonus that Mr. Kline would have received based on actual performance for such fiscal year if Mr. Kline was employed by the Company, and (y) accelerated vesting with respect to the Kline Equity Awards as if Mr. Kline had remained employed by the Company through the six-month anniversary of the date of such separation. The termination benefits are subject to Mr. Kline executing a separation and release agreement with the Company within forty-five days of termination.

The Employment Agreement contains covenants for the benefit of the Company relating to protection of the Company’s confidential information and standard Company indemnification obligations.

Effective March 2, 2026, Mr. Kline was terminated without Cause from the Company. We have not yet finalized a separation and release agreement with Mr. Kline .

Other Employee Matters

On October 8, 2025, our General Counsel, Peter Mandel, stepped down from his position with the Company. On October 20, 2025, the Company and Mr. Mandel entered into a Separation and Release of Claims Agreement (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Mandel will receive certain severance benefits in connection with his stepping down from the General Counsel role and will have a new consulting arrangement with the Company to continue providing strategic consulting services and transition support to the Company for a specified period, and in consideration of such benefits, Mr. Mandel agrees to release all claims against the Company and certain parties affiliated with the Company arising out of or related to Mr. Mandel’s employment with the Company by reason of any actual or alleged act, omission, transaction, practice, conduct, occurrence, or other matter at any time up to and including October 20, 2025. The Separation Agreement became effective on October 28, 2025. At December 31, 2025, the Company has an accrual of approximately $89,000 for the severance wages remaining to be paid and an $80,000 bonus accrual that is owed to Mandel pursuant to the terms of the Separation Agreement. Mandel’s consulting agreement and services terminated on February 27, 2026.

Effective March 2, 2026, the Company’s Chief Administrative Officer (“CAO”) separated from the Company. We have not yet finalized a separation and release agreement with the former CAO. However, the former CAO’s employment agreement included separation benefits of up to six months of the then-current annual base salary in six equal installments; coverage to the former CAO and any dependents under the Company’s then current medical, health, and vision insurance plans for six months; and accelerated vesting with respect to certain unvested equity awards at the time of separation.

We have yet to enter into separation and release agreements with our former CEO, CFO and CAO. However, the Company could be contractually obligated to remit severance payments and provide for benefits coverage to the CEO for twelve months and CFO and CAO for six months. Further, certain unvested equity awards at time of separation could be subject to acceleration. Any contractual obligations will not be known and settled until separation and release agreements are finalized.

Note 11 – Income Taxes

Effective January 1, 2025, the Company adopted ASU 2023-09,Income Taxes: Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 enhance the transparency and decision usefulness of income tax disclosures by requiring, among other things, (i) expanded rate reconciliation disclosures with specified categories presented both in dollar amounts and as a percentage of pretax loss, and (ii) disaggregation of income taxes paid (net of refunds) by federal, state and foreign jurisdictions, including separate disclosure of material jurisdictions.

The disclosures for the year ended December 31, 2024 were prepared in accordance with the income tax disclosure requirements of ASC 740-50 prior to the adoption of ASU 2023-09, and are presented in the format previously required. Accordingly, the 2024 rate reconciliation and related disclosures reflect the previously required categories and disclosure objectives under the prior guidance and are not required to be reformatted under the new standard.

Deferred income taxes are provided based on the provisions of ASC Topic 740, “Accounting for Income Taxes”, to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Significant components of the Company’s net deferred income taxes are as follows:

Pretax loss from continuing operations is disaggregated between U.S. domestic and foreign jurisdictions in accordance with ASU 2023-09 and is presented in the table below for the year ended December 31, 2025.

The provision for income taxes charged to income for the years ended December 31, 2025 and 2024, consists of the following:

No deferred tax expenses or benefits have been recorded due to a full valuation allowance as of December 31, 2025 and 2024.

The effective income tax rate reconciliation for the year ended December 31, 2025 presented below is in accordance with ASU 2023-09 and includes reconciling items required to be separately disclosed if they meet a quantitative threshold of 5% or more of the amount computed by multiplying pretax loss by the applicable U.S. federal statutory income tax rate. Reconciling items below the disclosure threshold are aggregated within “Other”. The Company’s effective tax rate for the year ended December 31, 2025 differs from U.S. federal statutory rate primarily due to changes in valuation allowances recorded against deferred tax assets and non-deductible expenses. The Company continues to maintain a full valuation allowance against certain deferred tax assets as realization is more likely than not based on current evidence.

A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate (benefit), prior to the adoption of ASU 2023-09 is as follows for the year ended December 31, 2024:

The Company has gross net operating loss carryforwards for federal tax purposes totaling approximately $40.0 million and $23.1 million at December 31, 2025 and 2024 respectively, which will carry forward indefinitely. The Company has gross net operating loss carryforwards for state tax purposes totaling approximately $29.7 million and $18.3 million at December 31, 2025 and 2024 respectively, which will carry forward indefinitely.

NOLs that were acquired with the acquisition of businesses are excluded from the amount of available NOLs to the extent their use is limited by the provisions of Section 382 of the Internal Revenue Code. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company's ownership may result in further limitation on the amount of net operating loss carryforwards which can be utilized in future years.

In evaluating the amount of the valuation allowance against its deferred tax assets as of December 31, 2025 and 2024, the Company considered all available positive and negative evidence and concluded that it is more likely than not that a portion of its deferred tax assets would not be realized. Accordingly, the Company has recorded a valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets.

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted, which extends most expiring TCJA provisions and reforms certain tax rules. The key corporate provision for the Company is the immediate expensing for domestic research and experimental expenditures. The decreased deferred tax asset for capitalized research and experimental expenses and the increased deferred tax asset for net operating losses is related to this new legislation.

The Company had no unrecognized tax benefits as of December 31, 2025 and 2024. The Company does not anticipate a significant change in total unrecognized tax benefits within the next 12 months. Tax years 2022-2024 remain open to examination by the major taxing jurisdictions to which the Company is subject.

Note 12 – Segment Reporting

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly provided to the Chief Operating Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer, Chief Operating Officer and Chief Financial Officer comprise the Company’s CODMs. The CODMs review financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The CODMs use consolidated net income (loss) to assess performance, evaluate cost optimization, and allocate resources, including personnel-related and financial or capital resources, in the annual budget and forecasting process, as well as budget-to-actual variances on a monthly basis. As such, the Company has determined that it operates as one operating and reportable segment.

The significant expenses regularly reviewed by the CODMs are consistent with those reported on the Company's consolidated statement of operations and expenses are not regularly reviewed on a more disaggregated basis for assessing segment performance and deciding how to allocate resources. The CODMs do not regularly review total assets for our single reportable segment as total assets are not used to assess performance or allocate resources.

Note 13 – Subsequent Events

Executive Team Transitions

On February 23, 2026, the Board of Directors appointed Daniel (Danny) Bogar as President and Chief Executive Officer to replace the Company’s interim CEO, Stephen Jones, who had been appointed the role on October 8, 2025 upon the separation of our former CEO, Chris Gannon. On March 2, 2026, the Company appointed Adrienne Anderson as its Interim Chief Financial Officer to replace Russell Kline, whose employment as the Company’s Chief Financial Officer was terminated effective as of March 2, 2026.

See Note 10 for information on recent employee separations.

Nasdaq Compliance

On January 12, 2026, the Company received written notification from The Nasdaq Stock Market Listing Qualifications Staff indicating that the Company has regained compliance with the $1.00 minimum closing bid price requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) and that the matter is now closed.

License Agreement

On January 26, 2026, the Company executed a license agreement with the City of Orlando for use of their space at Iron Bridge Water Reclamation (the “License Agreement”). The License Agreement grants the Company a temporary, revocable, nonexclusive license to use approximately 15,000 square feet of the facility for the following (i) installation and operation of AirSCWO units to process city wastewater sludge, (ii), processing of certain approved third-party materials under a WDS program, subject to approval by the City of Orlando, and maintenance of equipment , manufacturing of AirSCWO units and inventory storage. The initial term of the License Agreement commences February 1, 2026 for five years with two optional five-year renewal terms. The initial monthly licensee fee is $8,000 for the first two years, with annual increases of 2.5% thereafter. The License Agreement includes provisions for the termination for convenience with 180 days’ written notice by either party.

The City of Orlando will also receive a WDS fee for any approved third-party materials that are processed at the facility based on the type of third-party materials processed which will be charged at a per pound or gallon rate depending on the type of material.

Purchase Order

On March 3, 2026, we received a purchase order from a construction company tied to a municipal project in Olathe, Kansas for the manufacturing of an AirSCWO 6 unit. The execution of the purchase order triggered a $2,300,000 invoice that has been submitted to the customer.

Issuance of Convertible Notes

In March 2026, we issued three separate convertible notes and received cash proceeds of $800,000. The convertible notes bear interest at 10%, mature three years from the issue date and are convertible into shares of common stock at conversion rate of $5.00. Semi-annual interest payments are required on March 31, and September 30, each year commencing September 30, 2026. The convertible notes include warrant coverage equal to the shares that the issued convertible notes are convertible into. Therefore, a total of 160,000 common stock warrants were issued to the convertible note holders. The common stock warrants are exercisable immediately for a period of three years at an exercise price of $7.50 per warrant share.

Common**Stock Issuances

On January 7, 2026, we issued 60,000 shares of common stock in a cashless option exercise of 100,000 option shares with $1 exercise price to our current Chief Executive Officer.

On February 2, 2026, we issued 124,051 shares of common stock in a cashless option exercise of 200,000 option shares with an exercise price of $1.20.

On January 21, 2026, we issued 38,796 shares of common stock to a former non-employee director who resigned from the board of directors on January 5, 2026. The former non-employee director had previously received a restricted stock unit grant on August 28, 2025 with vesting on the grant date anniversary or August 28, 2026. Upon the non-employee director’s resignation, the board approved an acceleration of vesting.

On February 13, 2026, we issued 74,750 shares of common stock to certain employees for vested restricted stock units.

EXHIBIT INDEX

• Filed herewith.

** Furnished herewith.

• Indicates a management contract, compensatory plan, or arrangement.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel Bogar and Adrienne Anderson , and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and either of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.