ClearSign Technologies Corp Commitments Disclosure
Note 12 – Commitments and Contingencies
Litigation
From time to time the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in any such matter may harm the Company’s business.
On January 16, 2026, Judith Schrecker, David Maley, and Catharine M. de Lacy (collectively, the “Former Directors”), filed a petition for advancement in the Delaware Court of Chancery for an advancement of legal fees relating to a request by the Company for the Former Directors to return material of the Board and the former Special Committee of the Board. The advancement proceedings will effectuate an advancement of monies to the Former Directors counsel for monies incurred to represent the Former Directors in this matter. The advancement proceeding will follow a prescribed court process where the legal fees will be reviewed with the goal of concluding reasonable amount payable to the Former Directors’ counsel for representation in this matter. At the date of this report, we do not believe this proceeding will have a material adverse effect on the future operations of the Company. To account for this matter, we have accrued $180 thousand as an estimate for legal services rendered during 2025. Subsequent to December 31, 2025, the total advancement request amounted to $319 thousand, which includes expenses for legal services rendered during 2026.
Indemnification Agreements
The Company maintains indemnification agreements with our directors and officers that may require the Company to indemnify these individuals against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by law.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Apr 1, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 31, 2021 | |
| 2019 | Mar 30, 2020 | |
| 2018 | Mar 12, 2019 | |
| 2017 | Mar 27, 2018 | |
| 2016 | Feb 14, 2017 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.