Q3 2020 Clearsign Technologies Corp Earnings Call

Pardon me, ladies and gentlemen, the clearest try and technologies call will be beginning shortly so please continue to hold again the call will begin shortly so please continue to hole.

[music].

Good afternoon, and welcome to the cliffs on technologies third quarter Conference call, all participants will be and listen only mode cause you need assistance. Please signal to conference specialist by pressing the Starkey followed by zero.

After today's presentation and there will be an opportunity to ask questions to ask a question. You May press start then one on your touch tones on to withdraw. Your question. Please press Star then too. Please note. This event just being recorded I would now like to turn the conference Oberst and Matthew Salinger Investor Relations. Please go ahead.

And.

Good afternoon, and thank you operator welcome everyone to be clarified Technologies Corporation Third Corps 2020 results Conference call. During this conference call. The company will make forward looking statements and.

And he Steve and there's not a steam and historical fact is a forward looking statements. This includes remarks about the company's projections expectations plans beliefs and prospects.

These statements are based on judgment and analysis as the date of this conference call and our subject numerous important risks and uncertainties that could cause actual results to differ materially from those described and the forward looking statements and.

<unk> and uncertainties associated with a forward looking statements made and his conference call include but are not limited to with a few testing and sales and products will be successfully completed.

With a clear sign will be successful and expanding the market for its products and other risks that are describing clear sides.

Hello, and periodic filings with the SEC, including the discussion and the risk factor section of the 2019 annual report on the form 10-K.

Except as required by law crucified assumes no responsibility to update these forward looking statements to affect future events or actual outcomes and it's non tend to do so.

So on the call with me today are Jim Deller, curtains, President and Chief Executive Officer, and Brian and fight Christians, Chief Financial Officer.

So at this point I would like to turn the call over to bryophyte from.

Ryan. Please go ahead.

Thank you Mathew and thank you to everyone for joining us today.

Our financial results were included on the form and 10-Q the company filed with the SEC on November 13th.

The cash Burger from the order and it is September 30th 2021.

$1.1 million compared to $1.6 million and the same period of 2019.

This decoy reflects the reductions made two operating expenses and is representative of the changes made and the company's operations since the first quarter of last year.

This increased efficiency is mainly attributable to the systematic focus on prioritize project selective use of outsource consultants and a more rigorous project planning and budgeting approval processes.

Our cash and investment resources or about $2.6 million at the end of the third quarter of 2020 compared to five $7 million at the end of the second 2020.

Chairs outstanding on September 30th of 2020, or 30 million 43186.

On August 24 of 2020, we closed a public offering pursuant to which we issued approximately 2.587 million shares of color and stock or growth proceeds of approximately $5.175 million or $2 per share.

This bolsters the company's cash position, which we believe will enable us to bring our current product development to market.

On September.

30th of 2020 clear S. P. B L. L. C. R larger shareholder executed it's right to purchase approximately 654000 shares of the companies unregistered on the stock also at the same price of $2 per share.

This resulted and further cash inflow, oh $1.3 million to bolster our balance sheet.

And is important to note that with our order ending balance is we now have sufficient working capital available to curious comfortably into 2022 and that is without revenue from any other sources.

Before turning the call over to Jim and I wanted to take a moment to address and Idaho and the 10-Q and we've already received a few questions about.

We are showing cost of goods sold without revenue because that is required under the accounting standard for revenue AFC 606.

And this case, we have had some first out of the gate project that we anticipate will go over budget for on site man hours.

I was such potential losses are reflected now and cost of goods sold as the cost items. On these projects are mainly parasite employee labor, which is already and included and all of our cash projections. These have minimal impact on our projected cash flows or other projections with.

That I would like to turn on the call over to our Chief Executive Officer, Jim Delaware.

Please go ahead and <unk>.

Thank you Brian for that financial overview.

Hello, everyone and welcome to the glass on technologies and I'd go with the conference call.

Price of Law School had just announced the signing of ex operative aligns with Zico age.

It would lady bed and manufactured based and broken Arrow City boring Tulsa, Oklahoma.

At that time, we were just about her and bog on the execution about fish, but in order to X on level.

Which is also to be on first joined the executed projects and the ZIP code facility and with the involvement on the Z O T.

For anyone not familiar with this project the scope of supply and included.

The fabrication of tests that as per cent optimization and demonstration on the bed is and the industrial full-scale testbed and says at <unk>.

The testing for this project is extensive and includes the set up a full bed is exactly his name will be and the Exxon Mobil Pizza and.

And the demonstration of the bed and operation and extensive range of operating conditions and with a wide range of fuel gas is covering the needs of force the heaters and ex one leg was large and complex baytown refinery.

As we have previously mentioned.

The requested operating branches are above and beyond the normal or average ordered.

A while this adds additional demands on our technology and the extended clean and sign Zico testing team. This is because we believe.

Excellent mobile are using this opportunity to validate the clear sign core technology from wide ranging applications across the refineries and not just for this one particular and eat it.

The bill and as a currently installed and the Zico test business, and we're making steady progress with the testing protocol.

At the completion of this testing program, we anticipate that we will have greatly expanded the operating range and develop the knowledge and <unk>. It's fine please and <unk> suitable for installation and successful operation and almost every outwards five round each configuration.

This is by far the most common type and all I did call from processing plants.

In other words and it is pertinent to emphasize that because the breath of the goals. This project far exceed normal operating preferences on completion of the testing protocol, we expect ex unbelievable and we believe the interest you at large.

Bright confidence in the future selection of please on call technology will safe and reliable operationally efficient emissions reduction projects.

While the testing on both a demonstration continues that has been one change tour anticipated timeline for this project.

Planned installation of these business. The Baytown refinery has now been rescheduled for the whole of 2021.

This is a little later that and we originally anticipated.

But given the complex planning and scheduling and resources and equipment that goes into preparing frame and finally shut down these things can happen.

Well, we are obviously looking forward to having these bugs and stolen and proven and the field.

Very much focused on completing the testing and demonstration and the ZIP code facility as soon as possible.

And reality the test will be the most demand and the demonstration of it please on call beds capabilities.

It's a complete and it will provide a very significant statement.

That's all the place and cool and able better technology.

And on the side, we're also able to take the opportunity to demonstrate the business and there's multiple better installation or other customer projects. During this testing process.

So we are truly making the most of this testing program.

Given that I have discussed the ongoing but on the testing and hopefully also give him some insight into the Extensiveness ultimate ultimate on a testing required as part of on and somebody will on it I want to comment on and say thank you to as he got on this.

This project was the first real interaction, we have had with zico operations team and 10.

<unk>.

Until this point and engagement has been with the ZIP code ownership and senior management.

From the very first engagement and our team started working with the Zico technical staff. There excuse you have some for a new collaboration and technology.

And it will get sick and can do attitude has been and presses.

I also want to thank the management and <unk>.

Because to present and you collaboration and very normal technology to a team extremely and rightly proud all of our existing product line and is very conservative industry and such a way as to resolve and engagement and reception. We received is equally as and precious.

Well our collaboration to stop this way makes it very enthusiastic about the future.

Of course, the Exxon Mobil project is not the only projects, we have and the execution process.

On October 13th we announced on additional multi but in order for a major north American and infrastructure company.

This is another multibillion installation going into the California market and there's also a huge market for us.

This was also sold as part of a huge emissions reduction project being undertaken by a channel apartment, California boiler.

There are a few especially gratifying features on this older. So let's just add before the class on core technology was presented this project was already initiated and plans to proceed with an S. C O to reduce the emissions.

Secondly, the infrastructure burst cool, which includes gas processing and transportation is and you and potentially large physical force.

And finally decided was made through a channel on and California boiler, which proved to be on incredible on it and it was expanding and sales and process this and place.

Is compounding success at least range of a best dressed you to leave reach sales channels, we remain asset lives.

These bennys or of course being manufactured by Z code and will shipped California, four installation and <unk>.

21.

We are also continuing to work with.

And happy and and continuous and ongoing contact with them and the California, and South coast and quality management District.

And you don't have anything further to confirm we got and this project today.

Look forward to being able to announce progress and the future.

On a more general sales and marketing notes relates to our process better technology, we do have other sales and <unk> and the funnel, including repeat customers and the other major international Recliners and look forward to making announcements relates to these and the coming months.

The players fine and Zico teams have been and continue to work together on branding and publicity.

We have joined and you decided on a name for the ZIP code. Please sign cool, but on a product line and.

This will be announced shortly followed him to completion that legal review.

We are also collaborating and coordinating with zico as we create proposals and schedules and your opportunities.

Being able to do this for the ability to include full scale beta testing and the project scope is already being received positively by our customers as we expected.

We anticipate being able to provide the project specific performance validation that are fine, but on a test provides and which is a normal expectation and the industry will ultimately lead to increased opportunities for clear sign and increase sales and the future.

Before moving on to a sensing and boiler bed and technologies and and activities and China I want to give a quick update on that plane technology.

Since the last call all of the full fledged sold into California has announced bike and may have been delivered installed and stuff it up.

This project provided on initial opportunity to put into action attended will designs and procedures with both ashville and California boiler.

Aside from fulfilling the order is provided us the opportunity to ensure I joined the delivered product needs customer expectations and while the project does he experienced and execution related issues. These have been identified resolved and used to improve I joined delivery process going forward.

These players on a working as expected.

And unofficial measurements of the emissions taken and drank commissioning indicate the on running on average of a half open you target and knocks level required by the local California regulatory body.

Officials said party source testing is expected within the next few months.

Which we anticipate will satisfy compliance with local regulations.

As part of my drive to create and deliver a simple to use simple to install technology with a robust and pull those capability. We have conducted project post completion reviews to capture and act.

And what lessons, we can learn to make our products and procedures Betsy going forwards.

This is a standard best practice, and we will continue to implement as a company and business growth.

Using this information we have this designed improved please sign call flag components will enhance performance capabilities that we believe will resolved and and then be even more easily included partners equivalents.

As mentioned and I lost cool, we have completed the design publicly aside and I and the pilot Simpson.

Is products has been through rigorous and durability testing and is being promoted to customers and the adoption and demonstration and then the refining and petrochemical industry.

We have low meat items manufactured and ready to combine in the sense of packages to send out process customers. In addition, we also have sales demonstration models for that sales team to name our customers to get their hands on the technology is part of the adoption and ultimately sales process.

This new technology and what's presented at the American plane Research Committee Conference and I'll tell you that and.

And was very well received.

The market for the place on on his global and essentially includes every installed and you'll be all the better and incorporates a pilot with claim detection.

We have also discovered that there is an interest and fishing us and so on the pilots currently without playing detection do to enhance fidelity. Please I'm on it per months and the potential of this capability to indicate possible precursors of future problems within a part of the operating system.

This is very exciting and potentially meaningful for the expansion of the market for this product and as another drive the force adoption.

We also continue to work on and develop aerospace applications and play assign hi.

At this time and plan is that this application of our technology won't be developed through partnerships.

And to be working on this but did not have anything substantial pronounce. It this time.

This has always been recognized as and potentially great Mafia opportunity.

However.

Because of the nature of the aerospace industry and the regulations and bowl. It is also a complex and the path to commercialization is longer than from the products.

While we are making progress on a partnership approach to developing this mafia and technology is just taking some time as I focus remains on minimizing capital outlay, while maximizing potential income when it pulled up on to choose.

And give them the timeline and complexity of this opportunity and this will likely with Y a different on.

Collaboration agreements and ultimately Brian this place on.

On it to market on the agreements bold and salt and products.

And we will keep informed the development related to this photo on.

We mentioned on my last call without precedent and place on Asia Manny Menendez.

Has been able to obtain these special visa to return to China.

I'm pleased to announce that he was able to complete and all the other requirements and has and Jude and passed his 40 day quarantine on arriving in China and has acted on what you're getting on the ground there.

Since arriving we have selected and moved into a small publication facility and I'm very close to complete and the assembly by demonstration <unk> all of that and and control technology.

We have gone on the extra step alright, and to get around and space, rather than us and Linda button on a woman about bench facilities or the facility a one on one on Monday Patras, because we plan to conduct a formal testing to enable us to better control and has access to the details on that technology and designs.

As mentioned on my last call.

We have continued to work on a boulevard and products throughout the year.

One of the results of this is that we have developed up on the bed the technology and do a single component then they can be easily installed and either you boil is ultra replace existing one and the bed is with minimal if any modification.

Initial feedback has been that this new configuration will be much better received and the market and what not need any special input from the board the manufacturer before the place on <unk> Ah selected and install.

The new design maintains the same functionality and performance and the same day central geometry, and positioned on the credits components on the previous fish and all these business.

Oh provides for a bed that can be installed and a single piece and will be supported totally by the from face overboard on it.

All indications on that and this whole affordable and a technology is named much more easily adult format for our customers and boil on manufacturers.

Is this new format could be on now assembling and preparing for installation.

And was testing and a <unk> or the in China.

Is it appropriate to remind everyone the boulevard and there's all standardized.

And and all that.

And the technology, we develop will make up a range of standard that <unk> that will will be utilized repeatedly as I find your boyfriend and the technology is sold and delivered into this expensive market.

And at the same time is complete and the Assembly test and we will also finalizing details and dates for a test for this would be available.

We do not have an exact date, yet and anticipate a test for that will be ready for us to install and you've been into by the end of this year.

Technical team is ready.

To assist with the installation and any dialing in all the new design and that is required.

Due to the travel restrictions and this will be done through a combination of remote support from USA on.

On the China would've scheduled.

And that team of contract engineers on <unk> and <unk>.

Dolphins and China.

When the butter setup and authorization is done and we will make arrangements for the Chinese authorities.

And one more performance testing and certification of happens.

Based on what we have learned from a development on a five G boiler, but and we have taken the same concepts and apply due to a legacy what did she bought and the button on the on line.

You may recall that we have a what did you all of that and installed and a Chinese heating district boiler and Beijing and.

And price of having to leave choose the on sale. The COVID-19 pandemic. The this year, we had to run that border up to 97 per cent of alright with single digit Nox emissions exceeding the local government appointments.

Due to travel restrictions, resulting from the coronavirus pandemic, we have not been able to get our technical team back into China. Since then and consequently, while being very close we have more complete and the tech will finalization the control system and the plant and foremost testing and certification on this unit.

And mechanical design considerations of this much larger profit Ah more and bold and those always modify it you both of the product.

The last few months, we have completed the structure and engineering to create and won't peace. What did you bet and the design that has the potential to update the button and stolen in Beijing.

Ah next objective is to develop a collaboration department with whom we can progress this design to full commercialization and deployment and the heat and districts Northern China.

And also potentially and other worldwide medium to large more to stop on this.

I do caution that this is Eddie day yet.

And you design has to be validated either and like emotional unit or large scale test boiler and and.

A formal collaboration has to be formed and equipment manufacturer, who has the resources to support that product line development and deployment and ideally the engagement and the ball and market based on lies everybody channel to markets and a good reputation to facilitate a rapid adoption by a target customers.

Based on the house develops excellent relationships with a C and management on the Beijing day eating district and.

The most prominent and largest heating district.

And China.

So aside from groundbreaking technology. We believe we also have strong customer support to offer to whichever company or companies, we choose to align ourselves with reform collaboration agreements for the commercialization.

On the bed and technology.

Well there is clearly work to do before we can take a large what you boil the bed and technology and to mainstream production and.

And some P elements chop it panfuls and in progress on.

Encouraged by these recent developments and.

The opportunity to build on the program.

Redesign find you both of them on it.

Of course, we also anticipate building.

Building on the <unk> border buttons performance and China as soon as that demonstration and all that technology is completed.

The next few months that awesome P milestones and developments on on horizon.

One of the first will be the completion of a multibillion and demonstration being conducted for Exxon Mobil and October I should <unk> facility.

And this time frame and we wish we expect to complete and the manufacturer and deliberate <unk> infrastructure client and California.

Why does is uncertain, what will materialize and any predicted timeframe, we all signaled uptake inquiries related to not true that she needs and and California market and we anticipate that this will ultimately translate into and I've taken a business.

Especially when compounded by increased operational stole equipment. The completion of the on good performance test and the joint presentation of a place on cold process, but on a technology with a Zip code.

We are also planning to get a new lease market ready and out into the field and into our customers hands we.

We do not have a fully functioning demonstration please sign on line and the Texas Gulf Coast area with a local sales team for this purpose.

And we will of course provide updates of progress in this area at least faced and emitted by our customers.

Lastly.

Very importantly, fried near to them opportunities and growth and <unk>.

State and the successful completion installation demonstration and said the vacation and find you bought the bed and China and progress and the development of a commercial collaboration to property deploy <unk> on the bed and a business.

Before concluding my prepared remarks.

I want to again and knowledge and <unk>.

And that's unemployed from mainly focused and driven despite the whoopi restrictions that we have put in place to control the COVID-19 pandemic.

This includes the design consultants and affiliates, including the board of Directors, who have continued full net you tease and serves as to the company remotely.

So that concludes my prepared and amount today operated please open up the lines of questions.

And I will now began the question and answer session to ask a question and you may price style and one on your catch town fallen and if you are using a speaker phone. Please pick up your handset before pressing the keys to like try a question. Please press and start <unk> too.

Oh first question today comes from on file with H T Wainwright.

And thank you I appreciate you taking my questions Uhm with respect and will this change and timeline and.

With eggs on you know for the flow of 2021 and is there a concrete date or a concrete sort of you know and.

And I'm waiting for this and.

And what is driving the shift do you need more testing to be done or is it just diving in terms of being able to get promoted this and.

Any color on that would be helpful. Thank you.

Hi, and make it up there yes. Thank you for your.

Question.

The.

And so.

First question regarding timing the.

Well I think there's many people know the the shutdowns with it with refineries alright.

A very complicated process that takes him all the planning.

Oh.

And and Clark.

We were notified that the and installation day was being changed.

Ah regarding the testing and we all make.

Excellent is involved with that of course has all all day of being there.

The results of the seeing all.