Q3 2022 Clearsign Technologies Corp Earnings Call

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Hello, and welcome to the clear sign technologies third quarter 2022 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Hello and welcome to the ClearSign Technologies third quarter 2022 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please.

To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Matthew Selinger of FIRM IR Group. Please go ahead. Matthew Selinger, FIRM IR Group,

Please note this event is being recorded.

I would now like to turn the conference over to Matthew Selinger as firm I agree with <unk>. Please go ahead.

Afternoon, and thank you operator welcome everyone to the clarify Technologies Corporation third quarter 2022 results Conference call. During this conference call. The company will make forward looking statements.

Good afternoon and thank you operator. Welcome everyone to the ClearSight Technologies Corporation third quarter 2022 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 forward looking statement.

Foods remarks about the company's projections expectations plans beliefs.

Any statement that is not a statement of historical fact is a forward-looking statement.

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

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

The risks and uncertainties associated with the forward looking statements made in this conference call include but are not limited to whether field testing and sales of course I'm products will be successfully completed with a clear sign will be successful in expanding the market for its products and other risks that are describing clear signs public periodic filings with the SEC, including the discussion in the risk factors set.

The risks and uncertainties associated with the forward-looking statements made in this conference call include, but are not limited to, whether field testing and sales of ClearSign products will be successfully completed, whether ClearSign will be successful in expanding the market for its products, and other risks that are describing ClearSign's public periodic filings with the SEC, including the discussion in the Risk Factors section of the 2021 Annual Report on Form 10-K .

So the 2021 annual report on Form 10-K.

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

Except as required by law, ClearSign 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 criticized President and Chief Executive Officer, and Brent Heinz Christians, Vice President of Finance and controller. So at this point I would like to turn the call over to Brent Hi. Please go ahead Brett.

So on the call with me today are Jim Deller, Claire's President and Chief Executive Officer, and Brent Hines, Claire's Vice President of Finance and Controller. So at this point, I would like to turn the call over to Brent Hines.

Sure Matthew.

And thanks, everyone for joining us today.

Please go ahead, Brad. Thank you, Matthew.

Before I begin I would like to note that our financial results on Form 10-Q filed with the SEC on November 14.

And thanks everyone for joining us today.

Before I begin, I would like to note that our financial results on Form 10Q were filed with the SEC on November 14.

And with that I would like to give an overview of the financials for the third quarter 2022.

And with that, I would like to give an overview of the financials for the third quarter of 2022.

The company recognized $324000 in revenues during the three months ended September 32022, as compared to revenues of $190000 for the same time period in 2021.

The company recognized $324,000 in revenues during the three months ended September 30, 2022, as compared to revenues of $190,000 for the same time period in 2021.

During the three months ended September 32022, we invested $3 $9 million of cash in the short term U S treasuries to improve the overall effective interest income as compared to a money market account.

During the three months ended September 30, 2022, we invested $3.9 million of cash in the short-term U.S. Treasuries to improve the overall effective interest income as compared to our money market account.

With you at our cash and short term investment balances together and that result would amount to approximately $9 $8 million.

If you add our cash and short-term investment balances together, the net result would amount to approximately $9.8 million.

Our net cash used in operations for the quarter ended September 30th 'twenty 'twenty. Two is approximately zero point $9 million compared to approximately $1 $9 million for the same time period in 2021.

Our net cash used in operations for the quarter ended September 30th, 2022, was approximately $0.9 million compared to approximately $1.9 million for the same time period in 2021.

This favorable variance of one $1 million was driven in large part by cash receipts from customer collections of approximately $440000.

This favorable variance of $1 million was driven in large part by cash receipts from customer collections of approximately $440,000.

$1 million decrease in net loss during the three months ended September 32022 is primarily attributable to decreased R&D expenses.

The million dollar decrease in net loss during the three months ended September 30, 2022 is primarily attributable to decreased R&D expenses.

If you recall from prior Investor calls during the same period in 2021, we incurred R&D expenses to demonstrate our boiler burners in both California and China.

If you recall from prior investor calls, during the same period in 2021, we incurred R&D expenses to demonstrate our boiler burners in both California and China.

For the nine months ended September 32022.

Net loss decreased $2 $2 million as compared to the same time period in 2021.

For the nine months ended September 30th, 2022, our net loss decreased $2.2 million as compared to the same time period in 2021. As noted earlier, the decrease in net loss is primarily attributable to decreased R&D loss coupled with an increase in adverse profit.

As noted earlier the decrease in net loss is primarily attributable to decreased R&D cost coupled with an increase in our gross profit.

There were 38.019 million 951 shares of our common stock issued and outstanding as of September 30th 2022.

There were 38,019,951 shares of our common stock issued and outstanding as of September 30, 2022.

We have confidence in our financial position and with our quarter ending balances we have sufficient working capital available to cover us through to 2024.

We have confidence in our financial position and with our quarter ending balances we have sufficient working capital available to cover us through to 2024. And that is without revenue from any other sources.

And that is without revenue from any other sources.

Jim.

And with that, I would like to turn our call over to our CEO , Jim Dellert.

turn our call over to our CEO , Jim Deller. Jim.

Thank you Brent for the financial overview.

I'd like to thank everyone on the call today for your time and interest in class on.

Thank you, Brent, for the financial overview.

During this call I will go through developments and progress in our major business segments, starting with our process burner business then onto boiler burners, and then touch on our progress in China.

I'd like to thank everyone on the call today for your time and interest in ClearSign.

During this call, I will go through developments and progress in our major business segments, starting with our process burner business, then on to boiler burners, and then touch on our progress in China.

We have significant developments in two of our previously announced projects.

We also have updates related to our markets and sales channels, which I will mentioned.

We have significant developments in two of our previously announced projects.

We cover the related product lines.

We also have updates related to our markets and sales channels, which I will mention as we cover the related product lines.

Starting with processed bed is.

We have progress to report regarding our previously announced projects for the California refinery and.

Starting with process burners.

And the government sponsored projects to provide a commercial five ppm, nox, 100% hydrogen capable bed.

We have progress to report regarding our previously announced projects for the California refinery and the government-sponsored project to provide a commercial 5 ppm NOx 100% hydrogen capable burner.

The Midwest Debottlenecking project is still alive, but we did not have any significant updates.

The Midwest De-Bottle Naheed project is still live, but we do not have any significant updates.

Since our last call.

Yeah.

So the 20 billion of California.

since our last call.

A refinery heater retrofit and the Hudson burden of projects have progressed, the beta testing and demonstration phase.

Both the 20 burner California

Refinery, heater retrofit and the hydrogen burner project cut progress to the burner testing and demonstration phase.

Well both of these projects, we are working with that partner Zico scheduling. This work in conjunction with Zika the other commercial testing needs.

For both of these projects we are working with our partner Zico and scheduling this work in conjunction with Zico's other commercial testing needs.

These tests are expected to be completed in succession with.

But the commercial California band is being addressed first due to both the availability of the testing resources and more importantly, because this is a commercial supply project.

These tests are expected to be completed in succession.

with the commercial California burners being addressed first due to both the availability of the testing resources and more importantly because this is a commercial supply project, especially since the burners are scheduled for installation in the customer's refinery turnaround plan for Q2 of 2023.

Basically since the bad news are scheduled for installation in the customer's refinery turnaround plan for Q2 of 2023.

We have discussed as 20, but California refinery retrofit project on prior calls mentioning that the project timeline has been compressed and we were notified that the fabrication and delivery schedule have been moved up.

We have discussed this 20 burner California refinery retrofit project on prior calls, mentioning that the project timeline has been compressed and we were notified that the fabrication and delivery schedule have been moved up.

For those who did not see the press release yesterday. We have also just received the completing purchase order for the final manufacture and delivery of the bed is to complete this 20 bed in order.

For those who did not see the press release yesterday, we have also just received the concluding purchase order for the final manufacture and delivery of the burners to complete this 20 burner order.

On our last conference call. We had just received the purchase order a full bed is testing and longer lead items.

On our last conference call we had just received the purchase order for four burners, testing and longer lead items.

This was the second purchase order of this project following the initial order for our engineering of these banners and the computational fluid dynamics modeling the business operating in the destination heaters.

This was the second purchase order of this project, following the initial order for our engineering of these burners and the computational fluid dynamic modelling of the burners operating in the destination heaters.

The format is required for full scale testing and demonstration of now being fabricated for the first nine installed the test furnace to facilitate the optimization process.

The four burners required for full scale testing and demonstration have now been fabricated with the first burner installed in the test furnace to facilitate the optimisation process.

We have already progressed to the point that just before Thanksgiving a preliminary observation of the bed is operating in the test furnace was conducted by two of our clients fired.

We have already progressed to the point that just before Thanksgiving, a preliminary observation of the burners operating in the test furnace was conducted by two of our clients via e-mail.

Equipment expense.

This observation went very well and was positively received by our client.

equipment experts.

This observation went very well and was positively received by our client.

This preparation is ongoing in the form of witness demonstration is expected to be completed in the coming weeks.

This preparation is ongoing and the formal witness demonstration is expected to be completed in the coming weeks.

When testing is completed successfully we will receive additional cash for the second phase of this project, which will bolster our cash position.

When testing is completed successfully, we will receive additional cash for the second phase of this project, which will bolster our cash position.

Also and I would argue more importantly.

The successful completion of this performance demonstration will commit the progression through the manufacturing phase of this project.

Also, and I would argue more importantly,

The successful completion of this performance demonstration will permit the progression to the manufacturing phase of this project.

Which will include the majority of the revenue associated with their supply.

And the delivery of the bad news to the job site in California for installation next year.

which will include the majority of the revenue associated with this supply.

and the delivery of the burners to the job site in California for installation next year.

It might be helpful to reiterate the timing of the different phases of most better project orders since what we are seeing with this 20 billion of project is typical.

It might be helpful to reiterate the timing of the different phases of most burner project orders since what we are seeing with this 20 burner project is typical both in the timing of the project itself as well as the cash and revenue timing.

The timing of the project itself as well as the cash and revenue timing.

The initial phase is one that we don't announce since entitles a response to a particular issue a client is trying to solve.

The initial phase is one that we don't announce since it entails our response to a particular issue a client is trying to solve.

We respond to such request for quotes or RF, skus without solution and proposal, including price for the work as outlined.

We respond to such requests for quotes or RFQs with our solution and proposal including price for the work as outlined.

We have a number of these are a few responses out and we believe that although I would note fairly below both the number of requests for proposals and the acceptance rates will increase when we have demonstrated success with the 20 billion of project.

We have a number of these RFU responses out and we believe that, as I will note further below, both the number of request for proposals and the acceptance rates will increase when we have demonstrated success with the 20 burner project.

Yeah.

But back to the timing once accepted as the best supplier. We then work with the client to book a purchase order or P. M that will specify and pay us well the engineering work to customize that band is for their particular needs and nuances of the target heater.

But back to the timing, once accepted as the burner supplier, we then work with the client to book a purchase order or PO that will specify and pay us for the engineering work to customize our burners for the particular needs and nuances of the target heater.

Once the engineering work is completed a second P. O is codifies what is included in the original purchase order. The second phase is released.

Once the engineering work is completed, a second PO is codified or if included in the original purchase order the second phase is released.

We're out testing, a one or more of the bonus and a test facility.

Once testing progress is satisfied the final and largest purchase order drops always released.

to carry out testing of one or more of the burners in a test facility.

Once testing progress is satisfied, the final and largest purchase order drops or is released.

Encompassing the manufacture and delivery of the class on coal burn as we are supplying.

Revenue recognition rules are a bit complicated, but suffice it to say that we normally receive sufficient cash to finance the construction of the bonus although we won't book the majority of the revenue until we meet our contractual performance obligations.

encompassing the manufacture and delivery of the clear sign core burners we are supplying.

Revenue recognition rules are a bit complicated, but suffice it to say that we normally receive sufficient cash to finance the construction of the burners, although we won't book the majority of the revenue until we meet our contractual performance obligations.

Using our California refinery project as an example cash from the initial engineering phase made up a significant part of the over $400000 of cash received in the past quarter.

Using our California Refinery project as an example, cash from the Initial Engineering phase made up a significant part of the over $400,000 of cash received in the past quarter.

The follow on purchase order announced September 1st is expected to be completed this year, resulting in payments likely in the first quarter.

The follow-on purchase order announced September 1st is expected to be completed this year, resulting in payments likely in the first quarter, quarter 2023, and the follow-on order for the fabrication and supply of the burners is the order we announced yesterday and is expected to result in cash being received as we complete our contractual milestones.

<unk> to 'twenty to 'twenty three.

A follow on order for the fabrication and supply of the Bad news is the order we announced yesterday.

And is expected to result in cash being received as we complete our contractual milestones.

In the future when we have multiple projects in various stages of engineering testing fabrication or installation at Kashi revenue recognition will start to smooth it out.

In the future, when we have multiple projects in various stages of engineering, testing, fabrication or installation, our cash and revenue recognition will start to smooth out.

But until then investors need to understand the timing of those various stages.

To reiterate.

But until then, investors need to understand the timing of those various stages.

This.

This stage timing is not uniquely assigned it is standard for all process burner suppliers.

To reiterate

This stage timing is not unique to ClearSign. It is standard for all process burner suppliers.

Getting back to the California refinery retrofit.

Illustrating importance of this project to play assigned Steve So our vice President of business development and I attended the recent American Petroleum Institute for refining and equipment standards meeting in early November .

Getting back to the California Refinery retrofit, to illustrate the importance of this project to ClearSign, Steve Sock, our Vice President of Business Development, and I attended the recent American Petroleum Institute for refining and equipment standards meeting in early November .

This is the most significant gathering what are known as subject matter experts from refining companies and manufacturers and engineering companies that support them.

This is the most significant gathering of what are known as subject matter experts from refining companies and manufacturers and engineering companies that support them.

As we have mentioned before place encore bed is a definitely a great interest to these companies.

As we have mentioned before, Clear Sign Call burners are definitely of great interest to these companies. And from our meetings at this conference and other ongoing interactions, it is clear that our California project is being closely watched.

Our meetings at this conference and other ongoing interactions. It is clear that our California projects is being closely watched.

We operate in a very conservative industry.

And the value of them installed and operating equipment that is performing well cannot be overstated.

We operate in a very conservative industry and the value of installed and operating equipment that is performing well cannot be overstated.

From conversations with our current clients staff. This is also true for future prospective projects and as clients same and other refineries.

From conversations with our current client staff this is also true for future perspective projects in this client's SAME and other refineries.

As an aside while the API conference, we did get confirmation that our European installation continues to perform well and that refiner like others is very interested in our progress without California refinery project.

As an aside, while at the API conference we did get confirmation that our European installation continues to perform well, and that refiner, like others, is very interested in our progress for that California refinery project.

The other project, which is heading into testing is the ultra low Nox hydrogen burner project.

As announced back in May we were the only company to have it.

other project which is heading into testing is the ultra low NOx hydrogen burner project.

Company to be awarded a 250000 government grants through the small business and the ZIP research or S. B I O program with the department of energy.

As announced back in May, we were the only company to...

company to be awarded a 250,000 government grant through the Small Business Initive Research, or SBIR, program with the Department of Energy.

As noted this is a six month project starting from the end of June .

Upon completion of the phase one work, we won't be able to submit a follow up proposal to continue the development work they phase II grant.

As noted, this is a six month project starting from the end of June .

Upon completion of the Phase 1 work, we will be able to submit a follow-up proposal to continue the development work with a Phase 2 grant.

They used to grant funding can be up to $1 6 million for a two year duration.

Phase 2 grant funding can be up to $1.6 million for a two-year duration.

Okay.

We have been able to complete initial proof of concept runs without technology, demonstrating our ability to run successfully fueled comprised of 100% hydrogen.

We have been able to complete initial proof of concept runs with our technology, demonstrating our ability to run successfully with fuel comprised of 100% hydrogen.

The remaining work is program to demonstrate sub five ppm Nox over the typical operating range of refinery better.

The remaining work is programmed to demonstrate sub-5 PPM knocks over the typical operating range of a refinery burner.

The tests that are on the other components required for the first planned phase of the testing are manufactured and ready to go as soon as the test furnace ancillary equipment and personnel resources required to run the tests are available.

The test burner and other components required for the first planned phase of this testing are manufactured and ready to go as soon as the test furnace, ancillary equipment and personnel resources required to run the test are available.

Yeah.

Yes.

It might be helpful to again reiterate that while hydrogen is considered by many to be a clean fuel when burned in most industrial settings. The high temperature of a hygiene flame grades exponentially more thermal nox than that created by a natural gas fired flame.

It might be helpful to again reiterate that while hydrogen is considered by many to be a clean fuel, when burned in most industrial settings, the high temperature of a hydrogen flame creates exponentially more thermal NOx than that created by a natural gas-fired flame.

In other words, while embedding of hydrogen.

Eliminates carbon emissions without solutions that clay assign can.

In other words, while a burning of hydrogen it...

Hopefully supply this carbon reduction is offset by a dramatic increase in Nox emissions, a known source of ground level ozone smoke and resulting health problems.

eliminates carbon emissions without solutions that clear Sancon.

can hopefully supply this carbon reduction is offset by a dramatic increase in NOx emissions, a known source of ground-level ozone, smog and resulting health problems.

Yeah.

Concluding full process Spanish speaking more generally.

We have put out multiple proposals for various projects do you foresee and increased project order flow gaining traction in 'twenty to 'twenty three.

Concluding for process burners and speaking more generally, we have put out multiple proposals for varying projects and do foresee an increased project

Particularly following the startup of the California project.

Okay.

particularly following the start-up of the California project.

Now moving onto boiler beds.

Our boiler business has been an area of frustration for us in terms of the speed of order flow given that we have.

Now moving on to boiler burners.

Our boiler burner business has been an area of frustration for us in terms of the speed of order flow given that we have them.

But on top of all of them as validated by third party source tests that may meet the most stringent, California Nox requirements.

Burner performance validated by third-party source tests that may submit the most stringent California NOCs requirements.

From what we have seen and heard one element of this order inertia is a while they are emission reduction targets in place the play to <unk> core strengths.

From what we have seen and heard, one element of this order inertia is that while there are emission reduction targets in place that play to clear sign core strengths.

Regulatory authorities key to this product line allow the payment of fees as an alternative to reducing nox emissions at <unk>.

Regulatory authorities key to this product line allow the payment of fees as an alternative to reducing NOx emissions.

Present, the scale of these fees do not seem to provide the leverage that we would have expected for a more rapid adoption.

At present, the scale of these fees do not seem to provide the leverage that we would have expected for a more rapid adoption.

That being said, we do believe that this will be a meaningful segment for our business and that they will be larger scale adoption of our technology.

That being said, we do believe that this will be a meaningful segment for our business and that there will be larger scale adoption of our technology.

As mentioned on our last call the process of applying for and obtaining permits is extensive and includes a period.

As mentioned on our last call, the process of applying for and obtaining permits is extensive. It includes a period for...

For public comment.

process of applying for and obtaining permits is extensive and includes a

The good news is the wind permits applied for all then approved they all made public. So we can see progress even before funding our purchase orders are issued.

The good news is that when permits applied for are then approved, they are made public so we can see progress even before funding and purchase orders are issued.

One example was posted just before Thanksgiving.

Road combustion.

One example was posted just before Thanksgiving.

The subsidiary about partner, California, boiler set up specifically to market and deliver at a boiler burner technology.

listing road combustion.

The subsidiary of our plant, the California boiler, set up specifically to market and deliver our boiler burner technology and with the permit specifically citing clear sign core technology as the designated equipment.

And with the permit specifically, citing clear sign core technology as the designated equipment.

Some of you might have seen a copy of this payment application posted by Rogue honest Linkedin page.

Some of you may have seen a copy of this permit application posted by Rogue on its LinkedIn page.

Okay.

Based on this particular example, another ongoing sales dialogues. We believe initial orders are on the horizon.

Based on this particular example and other ongoing sales dialogues, we believe initial orders are on the horizon.

In addition to better sales rental strategy is also moving forward with some deployments anticipated in the near future.

In addition to burner sales, our rental strategy is also moving forward with some deployments anticipated in the near future.

This is important for US is all rental units deployed to give customers hands on experience of using our technology and in general provide a greater quantity of reference installations that we come with our prospective clients to full validation of the capabilities of our business.

This is important for us as all rental units deployed give customers hands-on experience of using our technology and in general provide a greater quantity of reference installations that we can refer prospective clients to for validation of the capabilities of our burners.

For our customers rental boilers unimportant resource cases, where additional steam or hot water is needed on a temporary or at least no permanent basis.

For our customers, mental boilers are an important resource in cases where additional steam or hot water is needed on a temporary or at least non-permanent basis.

I have some deployments kind of on continuously for many months uneven years.

This can be as a result of other equipment needed to be shut down for repair or to bridge a gap you're not customers' needs as they for example, implement a production increase of rework.

as some deployments can run continuously for many months and even years.

This can be as a result of other equipment needing to be shut down for repair, or to bridge a gap in our customers' needs as they, for example, implement a production increase or rework period.

Existing infrastructure.

They can also be deployed at short notice when permanent modifications or increase the border capacity are delayed by equipment lead times and the permitting process.

existing infrastructure.

They can also be deployed at short notice when permanent modifications or increased water capacity are delayed by equipment lead times and the permitting process.

Before discussing China. This is an opportune time to share some insight into other market territories that we have not discussed previously.

Before discussing China, this is an opportune time to share some insight into other market territories that we have not discussed previously.

It also faces by saying that this is from conversations with prospective customers and inference from the inquiries that we have been addressing and not from any formal documentation or communication from regional government authorities.

I will also preface this by saying that this is from conversations with prospective customers and inference from the inquiries that we have been addressing and not from any formal documentation or communication from regional government authorities.

That being said, we are encouraged by indications that regions of Canada, and particularly Alberta or at least considering a five ppm nox requirement for some flight equipment, which aligns with our products.

That being said, we are encouraged by indications that Regionals of Canada, and particularly Alberta, are at least considering a 5 ppm NOx requirement for some fired equipment which aligns with our products.

We have also started to see the same customers in Texas for new equipment, which if codify and a new clean air regulations will be very good news for clear sign.

We have also started to see the same from customers in Texas for new equipment, which if codified in the new clean air regulations will be very good news for ClearSign.

The opposition to lowering emissions regulations is impart an argument by industry. The meeting such obligations is prohibitively expensive.

The opposition to lowering emissions regulations is in part an argument by industry that meeting such obligations is prohibitively expensive.

The primary value of class on technology that we provide a means to meeting this need for a very reasonable cost at challenge is that we are relatively new in terms of having a commercially ready technology and we currently have only a limited list of installed on operating equipment, our all important reference list.

The primary value of ClearSign technology is that we provide a means to meeting this need for a very reasonable cost.

Our challenge is that we are relatively new in terms of having a commercially ready technology and we currently have only a limited list of installed and operating equipment on our all important reference list.

And as a result, the argument that five ppm Nox solutions are prohibitively expensive gains more traction than it should.

And as a result, the argument that 5 ppm NOx solutions are prohibitively expensive gains more traction than it should.

For this purpose, we make a point of promoting our capabilities also to the air District regulators.

For this purpose we make a point of promoting our capabilities also to the Air District regulators.

Okay.

Well any personnel from a regulatory bodies on this call. Thank you for your time and attention and please reach out to US we will be very happy to show you what based on technologies can do to lower Nox emissions and the routine process by which our technology is cute installed and operated.

For any personnel from air regulatory bodies on this call, thank you for your time and attention, and please reach out to us. We will be very happy to show what ClearSign technologies can do to lower NOx emissions, and the routine process by which our technology is procured, installed, and operated.

While discussing you Nox regulations also switching our.

While discussing new NOC regulations, I'll also switch focus to China.

Our focus to China.

Our president of close on Asia My name on and is now in China.

Through the mandatory Covid quarantine period is.

Our President of Clear Sign Asia, Manny Menendez, is now in China.

His first off with a strong young to bolster our ongoing business development plans with them, which include the certification about 500 horsepower <unk> boiler burner.

and through the mandatory COVID quarantine period.

His first stop, Witherish-Fong, Lyon, to bolster our ongoing business development plans with them, which include the certification of our 500hp 5-tube boiler burner.

And developing sales outreach into the region of Shenzhen, Justin land from Hong Kong on the Southern coast of China with a population in the region of $15 million.

and developing sales outreach into the region of Shenzhen, just inland from Hong Kong on the southern coast of China, with a population in the region of 15 million.

The Shenzhen administration of ecology, and environment has recently announced a requirement for all gas fired boilers to meet nine P. P. M. Nox for existing boilers and 7.5 P. P M for all new borders.

The Shenzhen administration of ecology and environment has recently announced a requirement for all gas-fired boilers to meet 9 ppm NOx for existing boilers and 7.5 ppm for all new boilers.

This is good news for us.

Particularly because the majority of the boilers in this region of the fine too tight and we already have the hundred and twenty-five forced by Ben This range certified for sale in China unexpected progressed through the other sizes with strongly on using utilities and structures available at this site.

This is good news for us.

Particularly because the majority of the boilers in this region are of the fire tube type and we already have the 125 horse by burn of this range certified for sale in China and expect to progress through the other sizes with Huangliang using utilities and structures available at their site.

Yes.

We will also continue to develop our relationship with the Beijing District heating group.

Plans to install a larger water tube boiler business there.

We will also continue to develop our relationship with the Beijing District Heating Group.

and our plans to install a larger water tube boiler burners there.

Looking forward into 2023.

Clearly our primary immediate focus is on securing the purchase orders we have been.

Looking forward into 2023.

Anticipating for the last few months, but have been delayed by permitting internal approvals project schedules et cetera.

Clearly, our primary immediate focus is on securing the purchase orders we have been anticipating for the last few months, but have been delayed by permitting, internal approvals, project schedules, etc.

And technically getting the California process burner project completed installed and operated to provide a significant referenced will close on in the refining industry.

and technically getting the California process burner project completed, installed and operated to provide a significant reference for clear sign in the refining industry.

We do anticipate that this installation will accelerate sales both from that same company and others, who are closely watching this project.

We do anticipate that this installation will accelerate sales both from that same company and others who are closely watching this project.

We won't need to build on our boiler burner installations, both in California and also other regions that are showing demand for Nox reduction technology, we provide.

We will need to build on our boiler burner installations both in California and also other regions that are showing demand for the NOx reduction technology we provide.

This includes both new boiler sales.

Bret fit better sales and the deployment through rental boiler units.

This includes both new boiler sails and new

Yeah.

retrofit burner sales and deployment through rental boiler units.

With these successes accomplish we won't be heavily promoting <unk> technology.

Bolstered reference list to drive sales and engagement from new customers, who are currently waiting to multi first and also engage new channel partners and increased attraction with engineering companies and are regulators to ensure the deployment of class eight technology and the benefit we provide is utilized to the maximum extent possible.

With these successes accomplished, we will be heavily promoting our technology.

and bolstered reference list to drive sales and engagement from new customers who are currently waiting to not be first and also engage new channel partners and increase our traction with engineering companies and air regulators to ensure the deployment of clear-side technology and the benefit we provide is utilized to the maximum extent possible.

Okay.

Yeah.

I continue to be delighted by the way the place I'm team is pulling together.

I continue to be delighted by the way the ClearScim team is pulling together.

I do want to recognize I give special thanks at this time to our engineering team and the testing team of Zico as we pushed through the meticulous way of optimizing our business for the California refinery.

I do want to recognize and give special thanks at this time to our engineering team and the testing team at Zico as we push through the meticulous work of optimizing our burners for the California Refinery and continue to communicate and demonstrate these burners to our customer.

And continue to communicate demonstrate these benefits to our customer.

The formal demonstration of this project and the Zico test facility is scheduled to be complete in the next few weeks.

The formal demonstration of this project in the Zico test facility is scheduled to be complete in the next few weeks.

The success will be a great milestone for clear sign.

And the industry.

This success will be a great milestone for ClearSign.

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

and the industry.

Please operator.

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

Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys.

Please, operator.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Your question. Please press Star then two.

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

To withdraw your question, please press star, then 2.

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

Today's first question comes from Sameer Joshi with H C. Wainwright. Please go ahead.

Today's first question comes from Samir Joshi with HC Wainwright. Please go ahead.

Uh huh.

My question and congratulations on the order.

Thanks, Jim, for taking my questions and congratulations on the order.

Just a clarification or or maybe more elaboration on.

Just a clarification or maybe more elaboration on

<unk>.

The timeline.

The.

The Oh another one that this was going to be scheduled for two Q and would you be ready with.

the timeline is the

Is the turnaround at this facility scheduled for 2Q and would you be ready with all 20 learners to be installed before that in terms of having it ready and ready to go?

All 20 burners.

It could be installed or before that.

Themselves without having liquidity in but it'd be cool.

Hi, good afternoon.

Thank you for your question.

The but when you're all Craig I think we've mentioned earlier the schedule for the California refinery project.

Nice to meet you, good afternoon.

Thank you for your question.

When you are creating, I think we've mentioned earlier, the schedule for the California Refinery Project.

Is that the burn is expected to be installed in the turnaround on that site and that turnaround is currently scheduled for.

is that the burners are expected to be installed in the turnaround on that site and that turnaround is

Late Q2 next year.

currently scheduled for

They are born everybody. These things can change, but that that is what we believe.

late Q2 next year.

I warn everybody these things can change but that that is what we believe.

And I have been told and yes, we absolutely will have.

Planned to have.

have been told and yes we absolutely

C band is out there on site ready to be installed into that phone is prior to the start of that turnaround that is absolutely I'll go.

the burners out there on site ready to be installed into that furnace prior to the start of that turnaround that is absolutely our goal.

Understood.

Well really remind us.

Well as to the size.

Understood. And then will you remind us as to the size of this project as it related to other projects? For example, this one has 20 burners. Are the other opportunities we are looking at also similarly sized or bigger or smaller?

The size of this project as it related.

Related to other projects for example, this one is 20 burners. So are the other opportunities that youre looking at also similarly sized or bigger or smaller.

Yes, I can certainly.

It helps I think to focus on this.

Yes, I can certainly.

California project in whole.

It helps I think to focus on this

If you are in the August right, but wanted to if you recall this is actually being comprised of three purchase orders that we received.

California project in whole.

if you and I guess for everyone if you recall this is actually being comprised of three purchase orders that we've received

Over the past year. The first was for the initial.

Initial phase the engineering.

And some computer fluid dynamic modeling.

over the past year. The first was for the initial phase, the engineering and

The second then progressed into burner testing, we have to fabricate all bad news for that testing and then this final phase the page stored we received yesterday for the fabrication and supply all of the 20 burners.

The second then progressed into burner testing. We had to fabricate four burners for that testing and then this final phase, the purchase order we received yesterday for the fabrication and supply

You got to put our arms around the.

The size and value of the order and I really would help everyone buildup into track.

We had to put our arms around the...

the size and value of the order and I really help everyone build up and to track

They value all of our other waters up.

I'll give some guidance.

the value of our other waters up.

It will be aligned with what we've given before Doug I, a reasonable estimation of about $100000 or better is appropriate you can add some controls equipment to those but it is in the range of 10 to $15000 per bed.

I'll give some guidance.

will be aligned to what we've given before. So a reasonable estimation of about $100,000 a burner is appropriate. You can add some controls equipment to those burners in the range of $10,000-$15,000 per burner.

The.

Engineering phase.

We'll be in the regionals.

The

$250000 somewhere in that range, and then declining depending on the complexity of testing.

engineering phase.

will be in the region of

you know, $200,000, $250,000, somewhere in that range. And then depending on the complexity of testing,

That's.

We're going to be in the region of <unk>.

Yeah.

$250000 somewhere in that range, you can build it up to give a.

That's it.

going to be in the region of

No.

200, 350 thousand dollars, somewhere in that range. You can build it up to give a...

And magnitude of that order.

And then as you look at the other orders we have received in the past and you eat it.

No.

a magnitude of that order.

And using those numbers full future orders, you'll be able to gauge.

And then as you look at the other orders we have received in the past and you...

Now how we pulled my auto players on.

using those numbers for future orders you'll be able to gauge.

Yeah, Yeah, I know certainly Oh I was just wondering if oh. The other parties that are also interested or are on the on the fence or will they be similarly sized in terms of say 20 blood notice or would they be forky button or something like that.

how important they are to player design.

Yeah, yeah, no, certainly. I was just wondering if the other parties that are also interested or are on the fence, will they be similarly sized in terms of say 20 burners or would they be 40 burners or like in that?

Yes, I mean, we have you know.

We.

We have put out a law proposals and have and continue to talk to.

Yes, to me we have

You know we

We have put out a lot of proposals and have and continue to talk to...

Most of it at least most if not all of the major refineries certainly in the United States.

most or at least most if not all of the major refineries certainly in the United States.

We've.

Talk about projects ranging from single banners and three brothers and heater.

We've

talked about projects ranging from single burners and three burners in heater.

Up to.

Projects with multiple heaters with 20, plus bonus to eat as cheetos.

up to

projects with multiple heaters with 20 plus burners two heaters

Kudos. He just they are they really really cover the gamut to understood.

I think too just for everyone's expectations I think the.

to those heaters? Are they really really covered the gamut to...

I think to just for everyone's expectations. I think the

I would really say, hey aid a typical large projects is likely going to be.

I really said no it's a typical large

In the.

a typical large project is likely going

Yeah, maybe bigger than the California project, we're probably in the 20 to 40, but a range I think it will be the larger end of normal suddenly ranging down to smaller heaters.

Maybe bigger than the California project. We're probably in the 20 to 40 burner range. I think will be the larger end of normal. Certainly ranging down to smaller heaters.

Which incidentally, we really all chasing because they are more likely to be good first installations for us all.

which incidentally we really are chasing because they're more likely to be good first installations for us.

Yeah.

More readily available, which will be the smallest three button, a full better and even the single button heaters, but that's a.

more readily available which would be the smaller sort of three burner, four burner and even the single burner heaters. But that's a typical range of the type of refinery heaters that our burners are extremely well suited for.

A typical range of the off the type of refinery heaters.

And is all extremely well suited for.

Understood Thanks for that color.

And you mentioned several times on this call are that there are several other <unk>.

Understood. Thanks for that color.

And you mentioned several times on this call that there are several other

The parties that are looking at the and including some of the interaction that you had that the API meeting.

parties that are looking at it and including some of the interaction that you had at the API meeting earlier this month or earlier in November .

Earlier this month or early in November .

What does this look like what is the stage of their involvement with you.

Thank you.

what what is this like what is the stage of their involvement with you? Have they issued RFQs? And have you responded to those? Or are they waiting for the California project to come through and then they will be going through the RFQ process?

How have they shoot all excuse and have you responded to those or are they waiting for the California project to come through and then they will be going through the audit process.

It's a.

It makes we.

It's a

It's a, you know…

We talk to I believe we talked to all of it.

It's a mix. We

Todd.

I'd like to thank all the refineries in the U S certainly debate.

We talked to, I believe we talked to all of the, I'd like to think all the refineries in the US, certainly the vast majority and of the global majors.

Fast majority as it'll be right the global majors.

They use their engagement, but this ranges to the other refinery how's the Europeans deep with major installations, so they're actually running one of our banners and continue to be very interested they also have California refineries.

Their engagement with this range is to the other refinery that has the European supermajor installations. So they're actually running one of our burners and continue to be very interested. They also have California refineries.

We have other refiners that have given us or excuse to quote, although they're not ready to move but.

We have other refiners that have given us RFQs to quote although they're not ready to move.

They are looking at those very seriously.

And then there are others, who are interested in the technology. They are they meet with US often we've met with their engineering teams.

They are looking at us very seriously.

And then there are others who are interested in the technology, they meet with us, often we've met with their

But they are waiting to get comfortable with the technology before they start to present.

but they are waiting to get comfortable with the technology before they start to present.

A specific he says to us full quote.

Okay. Okay.

a specific hetus to us for quote.

There was some technical difficulty on my side so the.

Follow up on this separately.

I think there was some technical difficulty on my side. So I will follow up on this separately. But just one last question. For the enclosed oxidizer, I think the press release said it was sold. Does that mean that you have a purchase order and are working on delivering it, or has it already been delivered?

But just one last question.

For the included oxidizer or I think the press release said that it was sold.

Does that mean, what you have a purchase order on the working on the believing in this or has it already been delivered.

That project is the order has been received and the equipment has been shipped to our clients. So that order is complete.

That project is the order has been received and the equipment has been shipped to our client. The order is complete.

Okay.

Thanks, a lot.

And good luck on execution.

Thanks a lot and good luck on the execution. Thanks Jim.

Thank you Suzanne.

The next question comes from Jeff Feinberg private Investor. Please go ahead.

Thank you, Svea.

The next question comes from just fine glass private investor. Please go ahead. The next question comes from just fine glass private investor.

Yeah, Hi, Jim Thanks for taking the question Hey, I just wanted to try to put a little meat.

The numbers you were throwing around there.

Hi Jim, thanks for taking my question. Hey, I just want to try to put a little meat to some of the numbers you're throwing around there. I mean if I throw back of the envelope you know that this 20 burner order sort of north of two and a half million dollars is that fair to say in revenue?

So back of the envelope.

There's 20, berner or sort of north of two and a half million dollars is that fair to say.

Revenue.

Yeah. So they can be forgiven follow those guidelines generating yeah, you've got the math about right there.

Yes, we'll give you...follow those guidelines, Jeff. You've got the math about right there.

Okay, and that's and just to make sure that 'twenty by the water was just for one heating unit itself, it's not pulling power facility.

Okay and that's and just to make sure I'm clear that 20 burger order was just for one heating unit itself it's not for an entire facility say.

It's it's a single order at the band, especially going into it is too he says.

It's a single order. The burners are actually going into, it's two heaters.

That all in one unit author find me, but they are very very small part of all of our refinery in total.

that are in one unit of the refinery but they are a very small part of the refinery in total.

Okay, and I may have missed it but I mean, yeah.

I think you said.

I think you said this is a pretty typical size order even though you may be focusing on smaller that you guys would be seeing from facilities of this size.

Pretty typical size order, even though you may be focusing on smaller for for.

We'll be seeing from facilities of Lasalle.

Yes.

You know from my background as well of course, just I am proud to place on I've spent 20 years working with Honeywell studying buttons into the process industry.

Yes, as a you know from my background as well of course just prior to ClearSign I spent 20 years working with Honeywell selling burners into the

<unk> 20, better in a process of water is.

Pretty close to the middle of the Bell curve in terms of order size.

A 20 burner process order is...

Gotcha.

pretty close to the middle of the belt curve in terms of order size.

Okay.

Extrapolating, what that means for potential revenue.

Gotcha.

I'm just in my head extrapolating what that means for potential revenue on that. Okay, that answered my question. Thank you, Jim. Thank you, Jim.

Okay that answered my question. Thank you Jim.

Thank you Jeff.

To hear from you.

Again, if you have a question. Please press Star then one.

Thank you, Geoff. Good to hear from you.

Again, if you have a question, please press star, then 1.

Seeing no further questions. This concludes our question and answer session I would like to turn the conference back over to CEO , Jim Deller for any closing remarks.

Seeing no further questions, this concludes our question and answer session. I would like to turn the conference back over to CEO Jim Deller for any closing remarks.

Well. Thank you everyone for your interest in taking the time to participate today, we look forward to updating you regarding our developments.

Well thank you everyone for your interest and taking the time to participate today. We look forward to updating you regarding our developments.

And speaking with you on our next call.

Yeah.

speaking with you on the next call.

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

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