Q4 2021 Clearsign Technologies Corp Earnings Call

Ladies and gentlemen, thank you for standing by the conference will begin shortly please continue to hold and thank you for your patience.

[music].

Yeah.

Good day and welcome to the clear sign technologies fourth quarter and full year 2021 conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions to ask a question.

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To withdraw your question. Please press Star then two please.

Please note this event is being recorded.

And I'd like to turn the conference over to Matthew Selinger Affirm IR group. Please go ahead, Sir good afternoon, and thank you operator welcome everyone to the clear Fine Technology Corporation fourth quarter and full year 'twenty 'twenty. One results conference call. During this conference call. The company will make forward looking statements any statement that is not a statement of historical fact is a fee.

We're looking statement. This includes remarks about the company's projections expectations plans beliefs and prospects. These statements are based on judgments and analysis as of the date of this conference call.

Subject to numerous important risks and uncertainties that could cause actual results could differ materially from those described in the forward looking statements.

The risks and uncertainties associated with forward looking statements made in this conference call include but are not limited to whether field testing and sales of clear signs of products will be successfully completed.

Whether clarifying will be successful in expanding the market for its products and other risks that are described clear signs of public periodic filings with the SEC.

The discussion in the risk factors section of the 2021 annual report on Form 10-K .

As required by law clarifying assumes no responsibility to update these forward looking statements to reflect future events or actual outcomes and does not intend to do so.

So on the call with me today are Jim Deller, Christians, President and Chief Executive Officer, and Brent Heinz clear signs of Vice President of Finance and controller.

So at this point I would like to turn the call over to Brett Heinz. Please go ahead Brent.

You Matthew.

And thank you everyone for joining us here today.

Before I begin I would like to note that our 2021 annual report on Form 10-K was filed with the SEC last week, which includes our financial results for the year ended December 31 2021.

As noted on the last call my initial focus in joining clear sign was to continue to enhance and strengthen the financial reporting systems and to lay the groundwork for future growth.

I'm happy to report that we have successfully remediated the material weakness reported in Q2 2021.

We achieved this goal by focusing on the fundamentals reconciliations and checklist we.

We have also built system wide infrastructure to facilitate efficient and effective operations month to month.

Moving forward, our muscle memory will only improve our efficiency and scalability.

I must say, thank you to the accounting team and the whole clear signs family for pulling together to overcome this challenge.

And with that I would like to give an overview of the financials for the fourth quarter and full year 2021.

The company recognized $607000 of revenue during the 12 months ended December 31 2021.

The company reported zero revenues for the same period in 2020.

Our operating expenses for the year ended December 31, 2021 increased approximately $1 million compared to the same period in 2020.

The majority of this $1 million increase can be attributed to two key items.

One item was our Exxonmobil project, where we incurred approximately $712000 in year over year expenses to further develop and refine our clear Suncor burner.

The second item relates to a noncash impairment charge of approximately $385000 or impairment charges were the result of periodic reviews of our patent portfolio.

Over the past year. These reviews are focused on aligning product lines with key patents and right sizing our spin.

Profile to better focus our dollars strategically.

Yeah.

Our net cash used in operations for the year ended December 31, 2021 was approximately $6 $7 million compared to $6 million for the same period in 2020.

With $700000 year over year difference was attributable to our Exxonmobil project, which I discussed earlier.

At December 31, 2021, our cash balance totaled $7.6 million compared to $8 8 million for the same period in 2020.

We funded working capital in 2021 by issuing common stock.

The company issued common stock pursuant to a at the market offering sales agreement or ATM agreement.

The company entered into this ATM agreement in December 2020, with virtue Americas LLC.

As the sales agent.

Pardon me agreement virtue may sell shares of common stock with an aggregate offering price of up to $15 million.

As of December 31, 2021, the company issued approximately 1.093 million shares of common stock under the ATM program.

At an average price of $5 <unk> per share.

Gross gross proceeds totaled approximately $5 5 million and net cash proceeds were approximately $5 3 million.

Subsequent to year end, we issued an additional 500000 shares at an average price of $1 25 per share gross proceeds were 624000 and net proceeds were 611000.

Reissued these additional shares subsequent to year end as a proactive measure to avoid a going concern.

And doing this our primary objective was to maintaining healthy balance sheet as we develop our customer relationships and pursue sales with major international customers.

The monies raised were limited to limited and strategic as we wanted to be judicious in this current market.

The total shares outstanding as of March 29, 2022 were $32 million 150966.

We have confidence in our financial position and balance sheet and with our year ending balances and our current plans we have sufficient working capital available to continue operating our business at current levels well into 2023.

And that is without revenue from any other sources.

With that I'd like to turn the call over to Jim Deller Jim.

Yeah.

Thank you Brent for the financial overview.

Hello, everyone and thank you for joining our fourth quarter and full year 2021 conference call today.

I appreciate your interest in class I.

Today, I will start the call with an overview of the process burner business.

And discuss our boiler business starting with the domestic business then move on to our business in China.

Which encompasses both.

Our five cheap a water tube boiler burner products.

As always we will open up the call for questions at the end of my prepared remarks.

Yeah.

So now turning to process banners.

With our most recent use.

Just last week, we announced an initial engineering order for a major independent refiner for Juan I'll take California refineries, which we anticipate will result in the sale and delivery of 20 <unk>.

As with other orders. This is the first step in the process as is common in the refining industry.

As stated in our press release. This order is for the engineering drafting and CFT as computational fluid dynamics modeling about cliffs iron Colbert has to be installed and operated in two separate destination heaters 12 M. One eight in the other.

The following phases of this project are expected to include a physical first article four so that's been a demonstration.

Then the supply of the 'twenty banners, which based on current plans are expected to be shipped and installed in the California refinery in early 2023.

This project is significant for a few reasons.

The first being that this is the largest planned commercial project for the company to date, both in terms of expected revenue and the number of bed is included in the supply.

Secondly.

The customer refinery is located in the South coast Air quality management District of California.

Essentially the Los Angeles region, which for US is a priority market due to the five ppm Nox emissions requirement required by the recently issued road 11 O nine for most large heaters.

Also while our contract is directly with the end user. There are also a globally respected engineering companies engaged in this project and who have been involved in the planning and evaluation of potential solutions for our client.

Our interactions with these engineering companies have already opened doors for us.

We have received several requests to bid on other projects and technical studies being conducted by these engineering companies completely unrelated to this recent order.

We believe that the choice of the case I'm solution over alternative technologies, we assume selective catalytic reduction technologies was made at the board level and was based on an assessment that included the compelling financial benefits of our relatively simple solution to this refineries upcoming emissions reduction needs.

It is worthy of note that a delegation including representatives from my customer.

And the engineering companies involved visited our southern California infrastructure project to see our installed technology and operations and to get firsthand feedback from that customer.

We also announced a 16 banner projects back on November the 18th 2021, which was our largest order of record at that time.

This one for a major national refinery to go into one of the Midwestern refineries.

These two projects have similarities but very important differences.

In round numbers as planned the anticipated revenue is similar and both are for two multi burner heaters.

The difference is the objective all my customers as each project highlights the significant but distinctly different value propositions I've done is provide.

Well the Midwest projects actually assign core technology is configured to provide a flame of small volume to enable the business to deliver a high heat release in a relatively constrained space inside the customer heater.

This means the I've been as would allow more heat to be provided to a system without running into limitations due to the size or shape all the heater.

In comparison traditional low Nox burners create increasingly larger flames for a given he template and in some cases. This requires the total heat input to the heater to be reduced to avoid either damaging the heater or requiring frequent maintenance.

The end result, being that the productivity or throughput of the visa is ultimately reduced.

We believe that retrofitting such heaters with cliffs iron core banners can enable the heat to throughput to be increased allowing more barrels of oil to be processed per day.

Consequently increased profitability for our customers.

Okay.

By our calculations.

And I want to emphasize this point.

Based on what we know about the Midwest refinery projects, even if only half of the client expected productivity gains are realized we expect the increased profitability enabled by this project to provide a project payback period in the order of one months.

Anyone who has done commercial Capex return analysis will tell you that a one month payback is uncommon.

The second project, the one announced last week is being undertaken as part of an emissions reduction project. In this case the value to our customer is expected to be in the form of capital savings and savings in ongoing materials and maintenance.

Our estimate using data provided by the South coast Air quality Management District.

<unk> was based on numbers provided by the refiners in that district is that an SCR solution to meet the Nox reduction targets of the two customer heaters with cost in excess of $20 million upfront.

Then over 140000 per year in operating expenses.

We estimate the comparative install cost the place on solution to be in the region of $4 million with minimal ongoing costs.

As we have been discussing it and provide perspective on the order received last week and to highlight both the value and traction about two main standard configurations of our process burner cliffs on core technology I will give a quick update on the Midwest refining project.

The first phase of this order was for the engineering computer modeling and witnessed physical testing of our banners.

This work is almost complete and we are currently in the process of coordinating the formal customer witness all Bourbon is operating and the Zico test furnace.

This engineering design and testing work has proceeded well completing the scale up in size about burner technology. As these burn is at the very top of what might be called the normal size range will natural draft process badness.

In the interest of transparency I do want to pass on one note of caution related to this project, which stems from changes outside of our control.

Possibly as a result of our recent corporate combination there have been changes in the management structure and staff of Backline company.

As a result, some if not all significant ongoing capital projects.

Going to be subject to an internal review and reassessment and we believe that our projects will be included in this.

Preliminary information suggests the all the projects are subject to the risk of being delayed postponed or canceled and accordingly as of now the future later stages of our projects are uncertain.

At this time, we do not have anything more definitive to share but cannot make any assurance that this project will not be impacted by this review.

That said, we are encouraged by the performance of our banners in the test furnace and the aforementioned payback economics and look forward to conducting and completing.

The demonstration of these banners to our customer in the coming weeks.

Yeah.

Another project that continues to do well and our installation for the Super major in the European facility.

We have said all along that this operator was interested in our technology and wants to start using it to evaluate it for themselves with an eye towards broader deployment.

And that we believe that this was part of their objectives when initiating the European project.

This installation continues to perform well and we believe as a result, we have since becoming involved in several proposals and assessments for this client with the majority being for refinery heaters in the Los Angeles region.

Yes.

Now switching to boiler burners.

On our last call. We had just launched Apalachi boiler burner products by moving from design and engineering.

Two fabricating the first units.

On the heels of that we placed 125 for fiber and are enjoying rental fleet boiler without partner, California boiler.

And have product launch and demonstration days of a clear assigned 500 horsepower with California boiler at that facility in Visalia, California.

We were happy to report that we had over 50 inquiries at that time.

Since then interest has not waned, we have converted many of those inquiries into active quotes.

In General I'll say it was activity has increased and our vice president of sales and business development spending the majority of his time in California, working with the California boiler sales team and prospective boiler burner customers there.

This volume of activity gives us confidence this is going to be a meaningful product line for us.

Many of you might say well and why haven't we seen any orders yet.

It's a good and fair question, but one that has a very rational answer.

What we know is that as a result of the 2.5 P. P. M emission regulations that came into effect for boilers over 500 horsepower in the San Joaquin Valley region.

I just have until early may of this year via a district with their plans and then another year to be operational compliant.

To avoid repercussions.

So what does this mean for us.

We believe that customers will generally not choose to deploy capital well in advance of them.

Wait regulators require them to do so.

So while companies will not likely Russia hedge to make changes, we do expect them to take action when required to do so.

We believe that there are two parts of opportunities there.

Current clients with California, boiler, who know Amtrust, California boilers recommendation.

And the approximately 6% of the California market share held by other boiler service providers.

While the economics of a clear sign core solution versus an S. L obvious.

The board of service providers will point to the newness of our technology as a reason to go SCR says they don't want to lose the business to California boiler.

It is therefore incumbent upon us to place units with early adopters, often clients who need to upgrade multiple boilers overtime.

Naturally want to assess the class I core capabilities early in their planning cycle.

We believe that we will see the fruits of that labor on that front in the near future.

Okay.

I should point out another.

Another development of note related to the progression of our working relationship with California boiler.

California boiler recently created a subsidiary called road combustion formed with the singular purpose of growing and operating a joint business.

In addition, the director of road combustion is patently based in Tulsa, Oklahoma Office.

This device for efficient interaction between our two teams and of course with suppliers in the Tulsa region.

Joining the team and the establishment of the subsidiary is also part of the continued investment that California boiler is making in our business Alliance.

The broader California boiler sales team, including those focused on the clear fine technology remain based in California. As we agree is best close to our prospective customers.

It is noteworthy that being entire California boiler team as being behind airlines from the start.

And on the employee owned firm they have made substantial investments in terms of hours and dollars backing up their stated objective of growing our customer base and regional coverage through the provision of our unique technology.

Beyond that we are also in discussions with a nationally recognized boiler burner manufacturers, who have an interest in manufacturing class on coal boiler burners.

If we reach an agreement. This may also provide new promotional and sales channels. Our makeup and there's more traditional in the eyes of our customers.

So with that said.

I would like to turn the conversation to our China business.

Many of you saw the update release, we put out in the middle of February .

Some of the notable points, we highlighted with the cliffs on core 125.

Find cheap boiler burner, which received certification in April 2021 was sold so a customer who is planning to install the banner and a rental boiler for commercial deployment.

We anticipate that this deployment will provide further benefit to clear sign from the additional exposure of the company may receive from the demonstration of clear signs boiler burner technology to Chinese customers similar to what California boiler is doing in California.

More importantly in that same press release once the description of the strategic relationships that we maintain and continue to develop in China.

We anticipate that these are going to be meaningful for the growth of clay assigned in the future.

The first is the continuation of the relationship and update the collaboration agreement signed with the Beijing District heating group.

As a reminder, the including other smaller heating districts. The Beijing District heating group has acquired recently.

And just a heating group fives heat to nearly $5 5 billion that <unk> billion with a b square feet of housing business property.

This includes $3 four 3 million households, with multiple boilers, and 6202 district heating facilities to outlet operating footprint in northern China.

A significant portion of this region, including the massive city and sprawl of Beijing, a strict nox reduction goals in place.

We signed a new updated unexpected collaboration agreement with the patient to heating group.

This is not only a renewal.

But in expansion from the original collaboration agreement, which we entered into in May 2017, and updated in June 2019.

The Beijing district heating groups entry into this new collaboration agreement confirms that it will continue its investment in support and cliffs on technology.

Under the terms of the collaboration agreement the district degrees to work with clay assigned to both install and demonstrate the clear sign core innovative technology and its boilers following formal government certification.

The parties are focusing on specific classes of boilers for testing and demonstration of clear signs boiler burner technology. The project is a joint collaboration with cliffs I'm been responsible for the design and fabrication of the combustion technology and overseeing the installation.

Clear sign on the Beijing District heating group agreed that upon successful completion of the pilot demonstrations with resolve satisfying the agreed upon specifications. The parties will use their best efforts to negotiate initial purchases and plans to expand within the Beijing district heating group's operational footprint and to discuss other forms of collaborations.

Sure.

In addition to the installation opportunities within the heating infrastructure provided by the Beijing District heating group I joined intention is that the Beijing district heating group being the largest and most dominant heating district in China will provide a sales channel and operational support for the deployment of our technology into the <unk>.

Oil is about the heating districts in China.

The heating district, and just being a great partner for US. The fact that in past seasons. They have allowed us to test previous versions of our technology and operating boiler within that facility and continue to commit time and energy to our upgraded version gives us confidence that what we offer.

And technology.

They value and hope to broadly deploy.

Our new awards to parish and we should expect to have certified as a scaled up version of a fire tube design.

And unlike the previous version and this form it can be mass produced and does not require a custom retrofit installation.

The major difference is that the flame holder will no longer need to be installed separately inside the boiler as it is part of the benefit itself.

As background, the new water tube boiler burner with scaled up from the 500 horsepower Ben have demonstrated to our San Joaquin Valley customers with California boiler in Visalia.

And article one was tested at the Zika site in Oklahoma to validate the performance.

Improving the scaling capability all of that designed.

The sister or twin than it was then fabricated the zico Shanghai facility and is now awaiting installation for certification at strongly on for where we expect it to be the first installation in Beijing This coming heating season.

This brings me to the certification of said water tube boiler.

Our collaboration partner is China's top tier boiler company, John Chu strongly on boiler company limited or <unk>.

Which is a subsidiary of China's young Soo strongly on group Company limited, which is one of China's top 500 enterprises.

<unk> has the largest market share and ranked as China's number one boiler manufacturer and the industrial boiler district heating boiler and commercial and institutional boiler markets with over 700 active sales personnel and sales offices strategically located throughout China.

In the press release issued mid February we announced an updated collaboration framework agreement with CFA with strongly I'll divide in line of next generation Ultra low emission and high efficiency integrated boiler burner packages for the Chinese market.

C S a.

Has been expanded to include the class on coal.

2005 hundred horsepower water tube boiler burner.

Strongly on continues to invest in this alliance has agreed to fabricate boilers and the ancillary fuel supplies and calling infrastructures to enable the certification about 2500 horsepower once tube boiler burner.

<unk> been designed by the Beijing District heating group.

And shortly thereafter at 500 horsepower fire tube boiler burner.

The plan is to have the burden of installed and ready for full certification by late summer this year.

Upon successful completion of testing.

The 2500 horsepower was tube boiler burner will be available for sale throughout the Chinese market.

Yeah.

Our commercial rollout in China has been frustratingly slow, but for many valid reasons.

We have needed to move judiciously to make sure we have the right partners with whom we have aligned interests. Additionally, we have needed to be prudent as to protect our intellectual property.

This includes carefully controlling the information, we released to our vendors and partners to ensure that received more than just what is required to complete the work in their scope.

And finally, we are a small company and I wanted to use minimal cash burn and have limited human resources to manage these endeavors.

We do believe these strategic relationships will be key drivers to our success in the commercial deployment of our product lines in China and that they will be significant as we scale up our business as we expect to do.

Yeah.

One note of caution, while we have robust and great plans for our business in China, and we believe we have set ourselves up for success and great scalability. We do see continued headwinds as a result of the COVID-19, pandemic, which continues to cause significant disruption in China.

This includes the fabrication and setup of the equipment, we will utilize in the activities of the Chinese government officials, including that travel that will be required for certification of our business.

The COVID-19 pandemic is also causing delays in obtaining visas for our personnel trying to re enter China.

While we are doing all that we can to minimize the impact these potential complications we want to acknowledge the challenges. These unprecedented disruptions continue to present.

So looking back at the past year.

When I look back I'm encouraged by the progress we have made developing.

Our technologies for commercial deployment this.

This is particularly the case bioprocess banners and fire tube boiler burners.

Our process business and now develop.

Into two standard configurations to provide single digit Nox emissions as evidenced by the order announced last week for a California refinery.

<unk> provides still very low nox combined with compact flames to increase the throughput of heat is restricted by the enlarge flames of traditional low emissions burners is featured in the video and the Midwest refinery order announced last November .

We have also greatly expanded the operating capabilities of our process. Ben is to use fuel was containing up to 80% hydrogen type of extensive operating ranges and to perform in very tightly spaced arrangements.

For reference our World oil project is operating at twice the American Petroleum Institute maximum guideline.

Our <unk> boiler burners on our standardized and producing sub 2.5 ppm Nox.

Meeting the tightest Nox emission requirements of any new regulations affecting commercial boilers.

These were demonstrated in Visalia, California over the course of a two day customer events setup and hosted our alliance partner, California boiler and has been validated by a state recognized formal independent source test report.

2021 did have some setbacks.

In particular.

With the change in plans that led to the derailing of our initial flagship project, which we are still working to resolve and the challenges advancing our business in China with the very limiting travel restrictions in place due to COVID-19.

Countering this that wasn't successful installation at the European site of a of a refining supermajor that has enabled significant inquiries now from the California installations.

And at California infrastructure project that has continued to run well since commencement in early 2021 and with.

With thanks to our culminating customer has provided great in person viewings and references for other prospective customers, including both the major multi heat orders discussed earlier in this update.

I believe that one of the biggest challenges we face at present is that technology is new and even though the financial and environmental value. What we provide is substantial.

Easily quantified and recognizable in the eyes of our customers and newness is reason for caution.

We do expect that the orders will be the hardest to obtain.

And that is our installed base of reference list grows the barriers to acceptance will diminish in short success will breed success.

We do recognize a position honestly.

Evolutionary process and set our selling strategies accordingly.

I look forward to making future announcements as I say it was activities come to fruition.

Well looking back over this past year's advancements we should also include China.

Despite the restriction on travel into China, we have made strategic progress.

The key elements of this and confirming agreements with summarized in our press release issued in February of this year.

Our collaboration with strongly on one of China's top enterprises, and their investment and support enabling the expected certification of our business.

The intended development and promotion of our uniquely performing integrated boiler burner package provides what we believe will be the foundation for developing and highly scalable business in China.

Our plans were strongly on are being developed with the encouragement of the Beijing District heating group.

Also confirmed our intention to incorporate <unk> into their fleet of boilers as part of their emissions reduction strategy.

We expect to certify a large 2500 horsepower and later this year and have operational clear fine technology installed with the Beijing District heating group for this coming season.

When investors ask me, what I believe the upside potential of our various products are I'll remind them of the partnerships that we have developed.

For the most part these entities whether they be zico here in the United States, while the Beijing District heating group or strongly on in China.

Large organizations.

If they believe the potential for our products was measured in the single digit dozens.

Believed that they would not dedicate the financial and more importantly, the manpower resources to work with this these partnerships have taken time to develop and while in the early stages. We believe that we will be able to leverage them for a growth going forwards.

We have confidence that these partners have skin in the game and are engaged with us because they believe our collaboration will also provide meaningful success for them or do you want to take a moment to thank our employees for making all this happen we have an incredible team here at <unk> and I am proud of the work we have done.

And to be a part of what we will continue to create.

With that I would like to open up the call for questions.

Operator.

We will now begin the question and answer session.

Ask a question you May press Star then one on your Touchtone phone.

If you are using a speakerphone please pick up your handset before pressing the keys.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

Okay.

Yeah.

Okay.

Our first question will come from Amit Dayal with H C. Wainwright. Please go ahead.

Thank you.

I appreciate you taking my questions Jim just to begin with in terms of you know.

Just a high level outlook for 2022 from a revenue perspective.

Could you give us a sense of you know all these orders that you have in hand, you know how what portion of that will be deployed this year and how that translates into you know.

Revenue range, you know what kind of revenue range should we expect from the orders you have in hand silicone.

Yeah.

Hi, Amit.

Good towards you think to your question no we're not.

Going to give guidance per se, but.

I can certainly talk about the the orders we have and what's in them.

And we.

I really to allow everyone through.

Pakistan envelope math for themselves.

And we've previously talked about the all the process been us and the price range that they sell and so ballpark.

Uh huh.

Yeah, you can assume depends of selling an average of about $100000 puppies.

Yeah.

And the you know the <unk>.

<unk> boiler burners range in size and the prices do change with the size, but on average they're about the same same number.

So from the orders we put out you can look at the number of vendors you're going to get a a reasonable ballpark for the value of the orders to play assigned tip.

Typically it's the orders we are putting the timeframe all the deliverables and there's orders if we Don and just to give everyone. Some.

Yeah.

Our ability to project going forwards a typical process burner order is roughly going to be nine to 12 months from the time you take the orders the time and punished delivered.

For a a fire tube boiler burner order, that's going to be in the regional typically three two.

Four months.

Okay.

Just just looking back at what we have in hand, right now we announced the Midwest refinery order in November of last year.

Accepting the cautionary note that I mentioned that order was for 16 Venice.

The.

All of the California that we've just recently allowance.

The bigger older there.

Clearly 20 bed is see if we can do the.

The math based on that.

The.

Forward looking pipeline Mlps young I don't have a crystal ball, but I'm very encouraged by the inquiries we get.

We are seeing.

Increased.

Referrals, we think based on the on the good results we're getting from the.

Sure.

Global Super major and the advantage we have in that refinery in Europe .

They have refineries in California, we've been receiving a lot of work from them. The engineering companies involved in those inquiries and the order we last week.

We.

Announced last week.

It was engineering companies are also now passing us inquiries, which we all all of them.

Obviously working on.

And all of them.

In the.

At the same rate as soon as we get these finished buoy the bedroom orders in two weeks.

But to get the same value from the references we do see out.

Our orders are increasing as we get more references.

And the market.

You asked about revenue I'm actually going to pass it over to Brian because I know, they're all specific timing always requires a accounting not all of them.

Let the experts talk about that.

Yeah, so from a revenue perspective keep in mind.

Jim is talking about orders and the Bakken.

Of the envelope calculation that you do there keep that in mind that the revenue will.

It will be.

<unk> put on the books once we meet the performance obligations as outlined by.

606 regulations, so that would be.

When we meet those obligations such as delivery and inspection.

Understood. Okay. Thank you for that.

With respect to this Midwest customer.

Is undergoing this M&A situation.

Of the 16 on have you delivered a three to five.

Or.

You were than those so far.

Yes.

So the way these orders would and I'll I'll.

I'll speak more.

I'll speak generally about a process been on order and it's actually the same for the for the California Order we recently.

We received.

The first phase is engineering computer modeling and Mayo may not also include the <unk>.

<unk> demonstration all eight of the finished article button.

In the test that it's just for us that will be conducted at Zico, specifically in these cases, the Midwest refinery. The initial part of that engineering scope does include the the witness test and.

And that is.

We're currently working on the schedule for that what that cost would we expect to be completed within the next week or so.

The California Engineering order includes the engineering design and computer modeling with the testing to be a.

Later phase so right now the.

The bonus in the Zika test furnace are working really well.

We also point of scheduling that final formal witness test on.

And that will complete our deliverables for this size of the order that we haven't had to date.

Okay understood. So for now we should just assume that nothing has changed.

With respect to sort of you guys delivering.

We're deploying these units.

Until we get another update from you on that.

Yes, that's correct I don't have it.

We found it too.

Announced Tonight.

And then you know given the timelines you discussed Jim.

Related nine to 12 months for process were in those three to four months for the.

A fire tube burner. So this 500 horsepower fired burners with respect to the California market, you know where you are seeing a lot of interest.

I know they are busy.

12 to 18 months away from having to deploy this but.

Shouldnt there be starting to place orders for this in the next one or two quarters. If they are to meet these compliance requirements.

Yeah.

But that is correct.

It's.

I think very prudent of especially of the large customers. They have a fleet of boilers.

And.

Want to make.

Certain that the technology that they are buying is going to meet all of that needs the future.

Our strategic we are working with them initially as the first adopters because obviously they have great value in putting our equipment into one bedroom.

Sorry, one boiler initially.

You got to.

To kick the tires as it wanted to make sure that they are confident that they can then they recommended solution for the rest of their fleet.

So.

Yes, you are correct, we do expect orders to be coming in in the very near future.

We have also been very strategic especially to work with first adopters that have a large number of boilers to follow.

Okay.

I'll take my other questions offering Jim Thank you so much.

Thank you Amit.

Our next question will come from Peter Jacobs with Stifel. Please go ahead.

Hey, good afternoon, Jim and everyone.

First.

Jim Congratulations on the progress you've made at the company of the past year and a half or so.

Secondly, this is a.

A bigger picture question and as I think about emission control.

And reduction technologies into the future, particularly carbon capture.

How does that fit in with Nox reduction, meaning that with carbon capture technologies.

Reduce the need for Nox emission reductions because it would capture the nox or do they or do they complement each other could you just kind of talk about that as we're thinking about 10 to 20 years down the road.

Yes.

Peter first of all thank you for the compliment.

The right so.

Carbon dioxide and Nox, all obviously two different different molecules, but they all.

They all auto related and in the industry.

Because the reason that carbon capture is something that people are talking about is it basically enables the production of hydrogen as a fuel and then the ability to Ben.

Hydrogenate.

<unk> been hydrogen hygiene doesn't contain carbon to be been hydrogen. It only produces waters you essentially end up with a.

C O two in triple a non zero to increasing fuel.

When you blend hydrogen the.

The combustion is more intense and the flame temperature is higher than the net result is it.

Great more Nox alright.

All right so what is being done.

To modify the fuel will actually create more nox unless you put a very good nox, reducing technology or not reducing type of burner into the funds to control the Nox.

We have proven the players find technology, so far to running on an excess of 80% hydrogen that was part of.

While meeting all the obligations all the Exxon project, which we did successfully.

I believe going from 80% to 100% is I.

The modest change to the technology, we believe we have the capability to do that.

That will give us the ability to produce a a banner that actually has a very good not controlling capability, even when using one honeywell underpinned hydrogen fuel. So as you see this as a good opportunity for clear sign.

What we don't know is the time, yet as you suggest that the carbon capture projects all quite long ranging and in their early stages, but we see that has a very big opportunity.

And most likely assigned can really play a part in the future.

Okay. Thank you. Thank you so much that helps put some context around that that's all I have thanks.

Yes.

Our next question will come from Jeff find glass, a private investor. Please go ahead.

Hey, Jack.

Go back for a second you had mentioned a project and I don't I.

Didn't call, where you had mentioned it but I just want make sure I got this straight I hold that.

Formed at half the rate of the expectation or payback period would be did you say within 12 months.

Yeah, Hi, Geoff let me I think what you're referring to is the is the Midwest refining project.

That we have.

I can go over we have there are two very strong value propositions for the clear sign.

This has been a technology one is.

What we often talked about is is our ability to very efficiently meet the new Nox emission requirements.

The other is through our ability to control the flame envelope and produce small flames.

We can.

Put burners into heaters, where theres a lot of heat for very small volume in general terms and allow those heaters to operate at a high heat release or high heat inputs.

<unk> throughput than they can with traditional low nox burners, which tend to have very large.

And bushy flames.

So in the case of this specific Midwest refinery projects. The economic driver is that we can increase the or we believe both us and the client believes that we can increase the throughput.

All of these heaters, allowing the refinery to increase the barrels per day that may process.

Based on our estimation.

Even if we.

Achieve half of the process throughput improvements that we both expect.

The.

Payback for that customer will be in the order of one month.

Whereas normal capex projects.

Projects are the good ones, you're probably looking at one to two years.

A good projects. So this is the value proposition in the cases, where.

This technology is required at all.

Yep.

Exceptional.

Yeah, maybe that's an understatement exceptional.

I mean forgive my ignorance, but that seems significant to me.

Back period.

From a capex perspective am I misreading it.

It did the combustion industry, you expect things to be paid back and then and a 30 day period.

It's it's quite special we agree yes.

Overlying, though that it is a very exceptional circumstance.

Okay.

Your question definitely make sure I heard that right.

Scratch out here to make sure I heard one model.

Yeah, it's good news.

Thank you Jeff.

Our next question will come from Robert <unk> from Las Colinas Capital Management. Please go ahead.

Hi, Jim.

To ask you about the refining industry in general.

And in today's marketplace.

Is there very much expansion of refineries of existing facilities.

And what about the.

Billing.

Building off.

New refineries.

Hi, Bob.

Yes.

Yeah.

So.

No I don't.

I don't have a.

Crystal ball on that one.

What was what was taking most of what we stay on that respect is actually in the form of.

Feasibility studies.

And the like.

We are not seeing a.

A lot of typical expansion, we're seeing a lot of environmental projects, which is the most exciting for us.

Alright, mainly driven by.

Our new emission regulations. These the ones on on the near term horizon.

You know, there's there's lots of talk of carbon capture projects, but those are.

Much more distant.

The.

The emissions regulations within the industry to discussions of how they are going to be met.

Can we regulations all and then the engagement of the engineering companies in these emissions.

Regulated projects and helping that customer's workout the most economical the best solutions.

It's really the dominance.

Conversations in the industry that we're aware of.

Okay, and then on the on the difference between the the emissions type of benefit and the throughput benefit that you talked about.

I'm wondering how.

How prevalent.

We could expect more opportunities for the throughput type of.

Economic benefit for the customer.

Is this a really unusual heater or is it.

10% of the market or 20% of the market you know some sort of ballpark of how.

Sure.

Yes.

Yeah.

It's a really good point, Bob So I don't have.

A specific numbers, but it is a.

A fairly common situation as the Nox emissions have been reduced over the years and the traditional business is being developed and deployed.

The resulting flames have golf bigger and bigger leading to more and more furnaces basically being undersized for the volume all of these new flames of course, replacing heaters is expensive.

So what happens is either the heat and puts the heaters gets reduced so that the heated over hyatt.

All he does get filed by holiday and they can look up and lead to.

More maintenance than is normal.

So it's.

We believe it's a.

A good market.

And the great thing for US is that the that market is global it is not restricted to areas like California, and soon to be Texas, where we expect the emissions regulations to be driving a market for us.

We think this is applicable to a very large portion of the globe, where there are at least some form of Nox controls required.

The bonus.

In terms of the.

The orders I really believe this is the cases, our success will breed success, but we have the right companies I believe we will get some companies willing to try as we have with this Midwest refinery.

Once we have technology in the field that demonstrates we are successful that will lend spread and become known and people with restrictive heaters, we expect them to.

To come to us and social solutions.

So I'm really excited about this technology I think it's a very good deployment all of this very special talk about do we have here a clear sign and it's one that we've only really only just started to.

And see the benefits of what it can do in the industry.

And then also you have all the different products I would assume.

With this water to them.

Growing are proceeding ahead.

So that we now have products in the different categories that you want it to be and is that a fair statement.

Yes.

Right from three years ago, when we laid out a strategy.

Of developing this unique technology into products that was easy to install and easy for our customers to deploy and as close to what I'll call a normal traditional banner as possible.

<unk>.

Bringing the water tube boiler burner to market, obviously because of the successful launch of the fire tube.

And the.

Well, it's not a proven.

Process, better, especially with applications, we have running in California and Europe .

We believe that we have the.

The full suite of our core products developed and and I'm really enjoying getting into the commercial phase of the business.

That's all that's all I got thanks, Jim.

Thank you Paul.

Our next question will come from Robert Harvey a private Investor. Please go ahead.

Hi, Jim.

Thank you for your team's hard work and a oh.

In a difficult year as we know.

Variety of perspectives.

Wanted to go back to.

At this point to just find glass raised about the the one month payback and as the immature.

The question that comes to mind is.

Uh huh.

Looking at this product these products that you have in installations in Los Angeles and filling it.

It seems to me that the demand is significantly driven by what the environmental restrictions are.

Even though these refinery should be putting your products in.

For variety of reasons, because your new they don't pull the trigger until they have to but it seems to me when they have to their demand is inelastic or its price inelastic.

No one else has a product they can get two and a half P. P M.

Then.

In the summer and then the productivity side.

I realize it might be separate application or one month payback tells me that the product is being priced too low I mean, how about a six month payback and you raise the price six fold.

My concern is I'm just looking at you know.

$6 million to $7 million annual burn rate and I'm looking at three and a half million in revenues over the next year and a half.

And the dilution to the shareholders of selling you know more stock at these prices.

There's a critical question here I think about Oh is it.

Are these customers really would they not by berner, because it costs $200000 versus the scrubber instead of a $100000 when I'm sure you've thought about this but I just am I overlooking something.

Major simplifying some major realities oversimplifying some important realities.

I'm missing.

Well I think you're making some good points when you certainly appreciate the.

What I believe is the value.

All of the technology.

And we provide I believe me as the as we believe the market will accommodate pricing we are absolutely in this business to make money I make absolutely no hesitation in saying that.

I think we have to recognize that.

Today, we are a.

In the industry, we are considered a new technology and firstly, we have to do is to get a reference list built up.

And to get the early adopters to put our technology in and actually demonstrate to the market that it can do what we say I can do I can do that reliably.

So the in the eyes of our customers it becomes less new and potentially less of a concern for them in selecting it.

And becomes much more common than normal so that we can recognize the full value, especially compared to the next best alternatives.

The technology can.

The liver.

So at this point I think we've I feel comfortable with the pricing where it is at today I think as the as the value of the technology and the performance of the business.

Is established.

And the market understood if it gives us the opportunity to.

Increase the pricing absolutely.

Oh, I'm, all for that and recognize that possibility.

It's just is today.

Would it be too greedy I really want to get this I just want to get the volume out there and I think we priced it fairly to make a very healthy profit for class line.

<unk> being in the range that we can.

Get the first adopter customers too.

Place orders with us.

Thank you.

Okay.

Thank you Bob.

Due to time constraints. This concludes our question and answer session I would like to turn the conference back over to Jim Deller for any closing remarks.

Yeah.

Thank you all right.

Thank you everyone for your interest and taking the time to participate today.

We look forward to updating you regarding our developments and speaking to you on our next call.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.