Q4 2022 Clearsign Technologies Corp Earnings Call
Good morning.
Good afternoon, and welcome to the Clear Sign Technologies fourth quarter and full year 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. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two.
Please note, this event is being recorded. I would now like to turn the conference over to Matthew Selinger from IR Group. Please go ahead.
Good afternoon, and thank you, operator. Welcome everyone to the Crude Side Technologies Corporation's fourth quarter and full year 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.
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.
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 criticized products will be successfully completed; whether Clear Sign will be successful in expanding the markets for its products; and other risks that are described in <unk> public periodic filings with the SEC.
The discussion of the risk factors section of the 2022 Annual Report on Form 10-K.
Except as required by law, Chris 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, <unk>, President and Chief Executive Officer, and Brent Hi, Chris Byrnes, Vice President of Finance and Controller.
At this point in the call, I would like to turn the call over to the VP of Finance, Red Himes. So, Brent, please go ahead.
Thank you Matthew.
And thank you to everyone joining us here today.
Before I begin, I'd like to note that our financial results for the year ended December 31, 2022, were included in our 2020 annual report on Form 10-K.
Bob with the FCC on March 31st.
With that, I'd like to give an overview of the.
Financials for the year ended December 31, 2022.
The company recognized $374,000 in revenues during the 12 months ended December 31st, 2022.
The revenues of 607,000.
12 months ended December 31st, 2021.
Our net cash used in operations for the year ended.
As of December 31, 2022, it was approximately $49 million, compared to approximately $67 million for the same period in 2021.
That is a year-over-year decrease of approximately $18 million.
With the recent news in theaters about liquidity, I think it's only fair to mention that we do not perceive any specific banking risks with our cash.
Our cash is held at a large national US institution, and we invest a substantial portion of our cash in US government-backed securities.
Now, turning our focus from cash profit.
Net loss for the 12 months ended December 31, 2022, was approximately $58 million.
Impaired to approximately $79 million for the same period in 2021.
That is a year-over-year improvement of approximately $21 billion.
There was a favorable improvement driven largely by our reduced R&D costs as we shifted from R&D activities to commercialization efforts.
We have approximately $91 million in cash and short-term investments as of December 31, 2022.
And there were 38.023 million 701 shares of our common stock issued and outstanding as of December 31, 2022.
We have confidence in our financial position and balance sheet.
With our year-end balances, we have sufficient working capital available to carry us through to 2024, and that is without cash from any other source.
Nevertheless, I think it is fair to mention that given our current backlog of customer projects, we expect customer cash collections to significantly increase in 2023 compared to 2022.
And that increase will begin in the first quarter of this year.
And with that I would like to turn the call over to our CEO , Jim <unk> Jim.
Thank you, Brent, for the financial overview.
I'd like to thank everyone for joining us on this call today and you'll continue to interesting class on.
For the call today, I'll go through our business segments, starting with process patents.
From there, I'll discuss the recent sales and developments in our boiler burner business. Then, I'll touch briefly on China and our prospects there.
Before I do, I have a few comments on acknowledgments.
Some of the progress I will discuss involves a span of testing.
We had two projects of major importance to play assigned in the testing phase concurrently at the facility about Zika.
For those of you not familiar with industrial-scale burner testing, it is done in foresight tests.
Outdoors and is a methodical and been working with new technology time consuming process.
For those of you not familiar with Oklahoma, it can get very cold, windy, and wet, but I'm sure the team is showing some additional resilience when testing is scheduled over the winter months.
Both tests were a huge success, and I want to recognize the effort and determination it took to get there from the combined CECO and class on test and engineering teams.
Also.
Suzanne Emmeline stepped down as a director of play assigned to.
Saddam was instrumental in the operation of the plants onboard, and I want to thank us for the service.
I'm also delighted to have Catherine delays, he joined us as our new Board member.
He has truly hit the ground running like very much look forward to working with.
With her in the future.
I will now move on to developments in our process burner product line.
During our last call, we identified two important tests that were on the horizon involving our process burner technology.
The first was the multi-burner phase about testing and the fund-performance demonstration for a 20-bed project for our California refinery.
This test examines the progression after the initial single bed, a test that concluded in November.
The final witness testing was completed smoothly in the presence of the breakfast-sensitive customer and the Global Engineering Company, which is supporting this project.
The burden of data comfortably met all requirements, and since the completion of this testing, the data has been sent to the Air District.
I mean for a customer to proceed with the project was issued in May.
The order has been formally requested to proceed with the fabrication of the bonus for delivery later this year.
I'll leave the final step remains which is to install the badness in that refinery.
The initial installation date wants to be late this year. However, we have recently been notified that this has been pushed into 'twenty 'twenty four due to revisions in the refinery's turnaround planning.
We are scheduled to be fully complete with the manufacturing and delivery of that business this year. So basically, we are over 90% complete with this, both in terms of Atwood and from a financial perspective regarding revenue and income.
I want to stress that we have successfully completed all of the product setups, demonstrated directly to the customer, and that this project is moving forward.
Conversations have now turned to shipping and special requirements for our personnel to be on site to assist with the installation and startup.
Additionally, regarding cash, I want to note that we expect to invoice for the majority of the order.
And only a small portion will remain until the final installation.
Successfully reaching this point and achieving such positive results is a major benefit to us, beyond just the progress toward completing the sizable commercial order.
These trends demonstrate NOx emissions numbers significantly below the 5 ppm guarantee, and robust performance throughout the operating range is ensured.
In short, they show what we have always believed: That technology is capable of, and to get color coding, that customer is the best business in the world.
The business use for all of us.
Demonstration will not be part of the shipment to California.
Will be kept for demonstration purposes at the facility about policy.
In the coming months, we plan to host industry demonstrations to show customers and key stakeholders. This performance as well we have presented and promote that I've been in technology for most people see is believing.
The second test that we were preparing for with 100% Hodgen Ultralow Nox burner project funded by a 250000 department of energy Grant.
As a reminder, the goal of this project is to develop Ultralow NOx hydrogen burner technology capable of burning up to 100% hydrogen in the fuel gas, while maintaining low single-digit NOx emissions.
The purpose of this first phase was to prove that our technology is capable of achieving these results.
Well, building hydrogen does not produce CO2; it does produce a significantly higher concentration of NOx.
And with natural gas.
Therefore, the objective although the overall project is to develop and commercialize a range of business that.
This will enable the control of NOx emissions to levels required for controlling ground-level ozone in critically polluted areas, combined with the adoption of hydrogen fuel for industrial heating.
The anticipated outcome is to achieve reductions in industrial emissions, both carbon by outside and not shouldn't oxides.
Currently available solutions for banning hydrogen provide the format.
That's it.
As noted in the press release yesterday, we were successful in completing the objectives of this first phase of work.
The results will be documented and submitted to the Department of Energy, meeting the requirements of this grant.
We have always described this way is a phase one grant as our ambition is to continue with this work and all in the process of applying for a fault one grant.
Commercial development and commercialization of this hygiene-focused burner technology.
The funding for the phase two grants can be up to $1.6 million over a period of two years.
On a more general note regarding government-funded and industry-funded grants.
We do see other opportunities also.
Something that we plan to pursue for ourselves.
And something that maybe, by the opportunities in partnership with customers.
Nearly all relates to decarbonization, and all pollution reduction and generally have a consideration of social equity, which supports that business and target market as well.
While the receipt of grant money is a plus we see these grants as a means to accelerate the development of our technology and also but more important to us to incentivize the critical initial installations necessary to gain the confidence of customers and the regulators.
Beyond these projects, we continue to see an increased pipeline of potential commercial orders and projects.
In the USA and abroad.
I would temper these comments with the caution the one chasing orders; nothing should be taken for granted.
But from my vantage point today, we have multiple proposals for various projects. I find that promising, and accordingly, I'm encouraged. Do you foresee an increase in project flows gaining traction in 2023?
Now moving on to boiler business.
We have been encouraged in the new year with our boiler burner business, starting with some initial success by securing our first two sales in succession.
Spoiler: In all of the sold, it is in conjunction with that part, like California boiler in the San Joaquin Valley Appellation Control District of California, and is scheduled to be installed there in the second quarter of 2023.
While at first there was significant, and the fact that it was California's first commercial fire tube boiler burner order in and of itself is also very encouraging because the customer came to us for a solution. After competing products failed to meet the district's new 5 ppm NOx emissions requirements.
Additionally, we are excited that this sale is generating a whole new business for bad school medical and business waste services.
Last point helps demonstrate that these businesses have a very broad market diverse industries in the United States and around the world.
The second order was also sold in the California market to a national provider of recycling. So, this is for the food production and restaurant industries.
But I know, as part of our recycling plant upgrade, we will increase energy efficiency for one of these customers' nationwide sites.
The boiler burner will be installed into a new boiler almost solely as a package without part of California boiler in the San Joaquin Valley Air pollution control District of California.
But an umbrella are scheduled to be installed in the third quarter of 2023.
The second button in particular will truly set the bar for boiler business.
They spun is larger and is in the size range that requires sub-2.5 ppm NOx emissions, a capability that we believe is unique to Cliffs I'm Badness, as all other solutions require the inclusion of an SCR and the associated capital costs and ammonia handling that go with them.
As stated in the press release at the time. They spun is that first commercial boiler burner sale guaranteeing sub 2.5 ppm Nox spa.
Specifically developed to enable clients like this to operate in compliance with California's Central Valley region's new regulations, and without the need for ammonia and the hazards associated with such potent chemicals.
The manufacturer of these banners for both of these orders is underway.
We are very optimistic that getting these two installations up and running will provide a great catalyst for others.
Also, provide a benchmark for the air districts in California and the rest of the United States as they consider modifications and updates to clean air regulations.
That said, the rate at which we are seeing you request a quote for boiler burners and combustion has picked up this year, which we take as an indication that our combined promotional and sales efforts are having a positive effect.
You may also have seen news from both combustion, but they have formed a relationship with a company called Gulf Coast Boiler to extend their reach into Texas and Louisiana with the intention of accelerating sales of our boiler burner products there.
We are also seeing opportunities and receiving enquiries for our boiler burner products from other regions other than California, and also for other applications other than boys.
An example of this was an unused release we issued earlier this week, announcing the purchase order we received for the supply of a boiler burner in the Texas market.
This order is both significant and exciting for a number of reasons.
After California, we anticipate the Texas Gulf Coast region be the next large market for us and this order is that first into this region.
It is also the first for this global chemical company and the first in the industrial chemicals sector.
This is also the first application of our boiler burner technology in it.
Non-boiler heater, and very importantly, our first sale to heat the manufacturer who has included Abbott as their chosen solution to meet their customers' needs.
As I previously said when talking about asset-light strategy.
Heater manufacturers are a prominent channel to market better equipment, which I have been a part of almost everything myself.
I am pleased we are establishing relationships with some of these manufacturers.
In general, we are very encouraged by the accelerated pace of the leap.
All have been ordered this year.
But we are also encouraged by a list of outstanding proposals and look forward to adding to this list.
Turning to China.
Shortly after our last call, our President of Asia Money, Melendez, was able to enter the country.
While there, we were able to maintain our engagements and relationships.
I'm also pleased to be able to participate in a meeting, strongly joined by phone, during which they reiterated their enthusiasm for our business plans, as did I.
I also took this opportunity to let them know how much we appreciate their work.
Preparing for the upcoming.
Been a certification project.
As everyone has read earlier this year, China ended their Covid restrictions.
With the anticipated, I realize short-term effects that COVID-19 would spread widely and rapidly.
With this on the horizon, we brought Mr. Menendez back to the United States.
With the working environment in China now back to being mobile, Mr. Menendez is planning to attend the first week of May, as soon as the Chinese May Day holiday is over.
Its primary objectives are to get the two.
500 horsepower boarder cheap and 500 horsepower <unk> boiler burner certified for.
But the 500 horsepower.
The top priority as.
As we, along with strong long belief, there is a large.
The addressable market in the Shenzhen region, where the government has recently rolled out new NOx emission requirements.
We are also planning a trip with strongly on to that region to promote a joint capabilities and unique offering to both customers in that area and also the local government officials responsible for administering the new air quality standards.
Once those certifications are complete, we expect to see some early sales and anticipate that we will be able to have some initial deployments of our technology.
Commercial was, old smell.
It's only one part of the ship in China in 2023.
Well, I don't have any timelines to give right now.
I hope to do so in the near future.
Looking forward to the rest of the year 2023.
In terms of our process burner business, we will proceed with the manufacturing of a large California refinery order, following the successful customer demonstration earlier this year.
Which we believe will also deliver significant revenue and profit.
You will see increased promotion of the performance achieved with these partners, and we will also use the ability to find and demonstrate the burden to stakeholders in the industry.
In terms of our pipeline, we have more and more opportunities with both new and existing customers.
I expect to see orders from these.
We're also very optimistic about our prospects for the follow-on Hudson bonus.
Development Grant and believe we are well positioned to to further grants to aid and accelerate the adoption of that technology.
In our boiler burner business, we will deliver our first orders and look forward to having those units in commercial operation in California and Texas. We expect to build on this and the increased level of inquiries that we are seeing to maintain momentum in California.
And look to expand that business in new markets like Texas.
With the complication created by Covid now essentially behind Us in China, We look to progress our plans with strong meal, including bonus certifications are winning and delivering our first orders under that collaboration.
For a more general perspective, the progress we have made in getting commercial orders in progress for our boiler business and the resolution of the results achieved in our recent process burner testing mark significant development in the past, towards the mainstream commercialization.
We have come a long way over the past few years to get to this point.
We have developed time process Ben is to meet the new stringent Nox emission levels. While also meeting our objectives of being simple to install we call plug and play.
All sorts of lines Hoffa and operate in a manner that would seem familiar to an operator of a typical oil refinery or chemical plant.
We have developed a boiler burner technology to be a single component standard design, the new stores enjoy a boiler similar to a typical commercial boiler burner.
We have these technology programs.
Third party verified to meet the emission requirements of the most stringent new California regulations.
Perhaps just as importantly, we have to address barriers to entry and channels to market by developing partnerships with the global supply of Z code for the process, Ben is.
Providing international-level quality assurance at a globally recognized testing facility.
Prominent California based auto service company, California, boiler and subsidiary vote combustion dedicated to promoting our unique boiler burners throughout the USA along with their full installation and service capability.
Going forwards with all this and the achievement of the technical and commercial milestones just described.
You will see an increase in outreach.
As an example of this, we have presentations planned at a TCE Q, but as Texas Commission on it.
Environmental quality.
The government body that administers the erg was he regulations in Texas, they called visit in Austin.
And the American Petroleum Institute Conference in Seattle.
To attract attention, we will have a new six-foot-tall, full-size, highly polished stainless steel replica of actual advanced coal process burner technology in Seattle, and a full-size replica of a fire tube boiler burner in Texas.
In closing I V.
Recent sales and testing results provide good momentum, which we expect to continue and build homes going forward.
With that I'd like to open up the call for questions. Please operator.
Thank you very much. We will now begin the question and answer session. To ask a question, you may press star, then one, on your telephone keypad.
You're using a speakerphone. Please pick up your handset before pressing the keys to withdraw from your question. Please press Star, then two at this time. We will pause momentarily to assemble our roster.
Today's first question comes from Amit Dayal with H.C. Wainwright. Please go ahead.
Thank you, and good afternoon, everyone.
Jim, just to begin with.
Could you remind us what the full Q revenues comprised though I might have missed that thank.
Thank you.
Yeah, I can answer that. Payback in the past, that's a debt.
A full Q4 revenues.
It was $50,000 that comprised the spare parts sales.
Okay, okay. Thank you.
And then you know, just.
Looking into the sales pipeline, you know, for 2023 and beyond.
You know what mix you know between boiler burners and process burners, but how should we, people, do you know where your sales efforts are.
When or whether you are, sort of.
Engaging with the pipeline directly or primarily through your partners. Just a sense of, you know, what is in play for you in terms of the pipeline. You know, what percentage of that pipeline do you think you might be able to monetize?
Yeah, thank you Amit, there's a.
A number of topics that I saw.
I'll try to cover them.
Oh.
Thank you.
One of the questions. You asked was about how we're actually going about selling and the outreach.
At this point are primarily it's actually different for our two major product lines, but it's different for our process business and the other boiler burners.
The process has been a sales we all largely pursuing.
Through our connections, you know we have a number of people here within play, assigned very experienced and established where they need within the industry.
And we have, you know.
Good and frequent contact with them personally. In addition, we do meet with them.
At times when he had Zika, we met with them frequently at conferences, and quite frankly, they know us and also call us as they know.
Up needs.
In addition, we all three.
Through those comps, as always, we are reaching out and visiting new customers, but those activities all.
Primarily driven.
By closely working with employees just because of our experience on that, those are our strengths.
The boiler burner business.
Is delivered through our partnership with California Boiler and their subsidiary Road Combustion.
We are very heavily involved in those sales, but due to the.
Location, all those customers, and the California boiler sales team all visit them very frequently, if not on a weekly basis.
We are primarily assisting them with their sales and providing support at a local level. The activities of play assign are more strategic, and at a high level looking at.
Other channels to market and are a means to.
Reach out to new customers, and I'm quite friendly to spread the word.
What the place on bonus can.
Deliver.
Now you asked about the pipeline going forward.
This is at this point this is very encouraging.
I've always said that, to successfully lead to success, one of the key things we have to do is get functional equipment out in the field.
So that our customers can witness that for themselves and talk to the owners who are operating that equipment. This way, they can gain confidence in deploying new technology. I think they understand the value of it and why it is so special, but being you.
That is a big concern. I'm very excited to have these orders now going out to the boilers in California. So, we will finally have some installations that we can refer our customers to.
And that will give them the confidence to pursue using our new technology, rather than just something they are familiar with even though the other option would not be as.
Hum.
The value to them.
Along with the increased inquiries, we're seeing through our road and California boiler and just the other contracts we have in the boiler industry. I'm very encouraged for our future.
Future sales in the boiler pipeline.
Oh.
We'll also bring up the third order, which is a boiler button is not integrated into a board that this is going into heat, but having that technology installed and operating in the Texas market is actually very important for us. Texas is probably the biggest market for us in the country.
And I have some equivalent, finally down there, installed for operating in Texas again, as it's going to be a very powerful aid.
To our future sales.
Yeah.
I think the outlook is similar to the process, but again, one of the key elements of that is this very prominent California order.
The success, we had in the bone a test and the ability to demonstrate there's been as to industry and the Zika test furnace.
To have that data available for presentations and the customers who witnessed it.
The presentation also very prominent in the industry able to pass on that experiences.
Is going to benefit us we greatly believe as we pursue.
Future sales.
And, similar to the boilers, we have all the processes, but quotes.
Quotes and interesting.
Customers that we believe all on the near Horizon.
Understood. Thank you, Jim.
Just another one for me, sort of on the revenue side of things - you know, with deliveries and installation, sort of.
Starting to materialize in 2023, how should we think about the revenue cadence over the next, you know?
Full quarters, or is it going to be lumpy?
You know when will you be able to recognize revenues a little bit more smoothly across some abuse on new orders that you received.
I mean, let me I'll say, a few words I'm actually going to pass over to Brian because he can talk a lot more accurate about revenue recognition requirements.
This industry is inherently lumpy.
Especially on the process buttons the orders right.
Can be very large, which is very good.
But when the orders are large and they're also based on critical milestones, as you pass those milestones, that does.
Alright trigger a lump if you like in the revenue stream.
So at this stage.
All of our developments, the right financials, all are going to be lumpy on a quarter-by-quarter basis, but for the details, I'm going to pass.
Pass over to Brad.
Yep so.
So for Q1, specifically to talk about Q1 and give just some color.
If you look at the milestones that we met, as Jim talked about, we've passed performance tests and met those milestones for contractual obligations. We received cash flow for those contractual obligations. So for Q1, revenues will be recognized.
And there'll be significant very.
Very significant it just, to give some color, there'll be.
More than what we recognized in all of 2022.
All right. Thank you. Thank you Brent that's hopeful and maybe I can follow up with some other questions around this topic offline Israelis.
Yeah.
Yes, you guys had some success in Europe, I believe, last year. Is there any further traction in that market?
For you guys.
Yeah.
We did.
We are in discussions with European customers.
As I said before, we have very good contacts throughout the industry, especially.
Especially with heat and manufacturers and refiners, we meet with them, as I mentioned, at the American Petroleum Institute Conference.
We will be attending in Seattle.
So when we meet with them frequently, we talk about those upcoming projects.
The.
The most important.
Aspect all that European relationship today.
Is that that was a installation in a major global refiner, who also has very prominent refineries in the California market.
So.
The.
We'll be really focusing on with that client and other discussions all of their progress with the regulation obligations with the South coast.
And the heat of projects that they have in.
In California, So the you know the.
This is truly is a global industry and that European installation gave this client a chance to installed out there and it's getting our hands on it to see it operating it's been operating in their refinery now for I believe over a year.
So given them good experience as they look to them much bigger a requirement for low emission equipment.
In California.
But I'm just yes, that's all I'm days. Thank you so much.
Thank you Amit.
The next question comes from Robert toxic with Las Colinas Capital Management. Please go ahead.
Well hydro folks.
Thanks for all the Great news and thanks for all the hard work of everyones put in at the company.
Pays to be patient I was going to say.
Thank you Paul that boiler.
You bet on that boiler burner.
Recent one with Tulsa company.
Thing that jumped out at me was that they were replacing existing heater.
The F C R.
So.
Is that just kind of part and parcel of.
What we're selling to the Tulsa heaters.
Reason why they're using less.
Because it is a replacement for the F C R.
And I would I wonder if that's if that's kind of telling us what our path is.
Through these kind of companies to distribute that product.
Yes, Bobby.
No you've obviously looked at that in.
In detail to pick this up this was.
Exciting for us just to.
Help us understand what happened here with the.
The the new heat from Tulsa eat a midstream.
Is replacing the existing heat to Tulsa eat a midstream have elected to use Alberta.
To meet the requirements of the client rather than putting a SCR on the heater as the key to that is being removed had.
No.
I think we've always seen our competition as S yours, rather that not the burden of technology because of the level of Nox reduction.
But we can achieve without bed is.
This is just a very good evidence of all of that in play are this is where this is allowed totally in midstream to have a much more efficient.
Peter we believe a much cleaner heater, because that's no longer the need to bring in.
Ammonia or to have the ammonia slick passing out in the emissions of the heat. So I believe we're providing a much.
Better business fatality in the midstream and a much better solution for this client in Texas.
Yep.
And I think what the.
I already have.
And established company.
With with customers that they service, where a number of years, how do you kind of speak to that a little bit on that.
Are there other kinds of companies like Tulsa heaters that then would be may.
To be awakened is true.
Sorry.
Yes so.
For clarification the.
Technically the client for this order was supposedly he just midstream.
And hopefully he just midstream and assist the company Tulsa heaters, all very closely related in Tulsa, but they all separate companies.
Ed.
From that named Postheat, a midstream has a product that is targeted for the midstream industry and and that is that strength.
They are very well known they have a very good reputation.
They are very well run and I do believe they have a lot of respect in the industry.
And I look very much forward look forward to the other he's a companies see what postheat a midstream have done them.
Sure. They are watching this project and I really look forward to the news of the installation on the bullets, rather than getting out into the industry and into that Texas market.
Yes.
We're not because the previous question about pipeline.
That kind of gives us some sort of.
Improved.
Belief that that our pipeline and explore them.
Ooh.
So companies like them and other ones that do similar work.
Yes.
Yeah, Bob Thanks for putting them up I mentioned it.
Briefly in the.
Okay.
I apologize earlier.
But the heater companies provide a.
Big channel to market for US is one that I believe will pick up significantly.
Significantly once they get confidence, including our technology as part of their solution.
Because for them to install close I'm, Ben is rather than including N. S. C. All.
In the heat as well.
We'll save that money up it makes the products lighter.
It also avoids having to include all of the equipment to handle ammonia after that clients. It gives their clients. What we believe it is a much better solution.
I believe what's holding them back is obviously, they all making guarantees they customers and they are putting that names behind their products.
And there was some reluctance to do that with a brand new technology no matter. How good you believe it is when you do not have references and experience of others to point to in the field.
Getting these products out to market is so important to us because it truly gives our customers confidence. We also believe it will give.
Our channel customers, such as heated manufacturers confidence to work with us in the future for what we believe is giving me a much better solution for them and up and up.
Better product for their customers.
Sure.
We showed that that answered a lot.
At Oh, that's gonna still on the boiler burners.
The phone do a couple of different customers.
Yeah.
I guess with with combustion.
Kind of an automatic.
Process for them.
Two.
Basically they make the sale with such and such type of boiler.
Bernal.
Is there a lot of the difference between the different boiler companies that aren't they differ from.
Berner companies in the boiler burner business.
Well Bob.
Hope I heard you correctly the.
There are differences between the boilers in the details.
But generally the configuration of the boilers and the way that they operate is very similar.
But that leads to one of the most notable differences between a process, but I am ball up on our product lines and one of the reasons that we have a different type of partner.
The boiler burners very much lead themselves to a standard product that is basically off the shelf.
And once.
Alright, designed we will pretty much supply exactly the same thing over and over again for different heaters. So it makes it very efficient they require very few man hours.
And it's something that we can scale very easily by outsourcing yourself.
The detailed work on that product line is the installation and service and that's the work that's being handled by.
California boiler.
Compared to the the process, but those orders tend to be very large, but because of the complex nature of the old refineries. The burn is all.
While there are a standard technology. They all are.
Oh teak and customized for each.
Application. That's the reason they have to go through the test furnishes such as the recent testing we have mentioned regarding the California.
Refinery order.
Back to your original question, Paul I guess the short answer is yes. The board is all while there are differences on the boiler manufacturers all claim that there isn't the best.
The reality is that from Apple spiked it there as well.
It would affect the design of the bonus.
Hum.
Hum.
Yeah.
The change was pretty pretty.
Pretty significant which I guess kind of also.
It gives us a lot more optimism going forward.
A lot of that money has already been spent.
Do you think will be.
At the level that we saw in 2020 twos.
Is it.
It's subject to project out or is there somewhere in between.
As far as expenditures for R&D.
Bob.
Once you get that yeah, Bob Thank you for the question.
It looks like Youre looking at the financials.
Our net loss improvement.
Year over years, $2 1 million the driver for that was our reduction in R&D cost as we shift from R&D activities to commercialization activities.
As far as projecting expenses.
2022 was an exceptional year, we can't keep a trend of cutting $2 million.
Oh year over year without.
Cutting into the meat too deep.
But I would expect you know.
If you look back the past two years the run rate for the past two years and not to be materially off from that.
Are you talking about overall expenditures or R&D mode.
Oh, sorry, I was talking about overall expenditures operate our total operating expenses R&D expenditures will remain low.
Okay.
I would just simply kind of looking at the R&D line by itself.
And.
I didn't know whether.
Whether this was a maintainable level.
In the in the well.
And in the current future.
$1 million.
A year in R&D I was just simply looking at that sort of the overall expenses yeah.
But also we did talk about the government grants.
I'll I'll direct it to product development.
So I think that there's a difference between the the Rx spend R&D expenditures that would show up.
Yes.
No.
Alright expenditures from the company versus those that are part of a government funded projects.
Okay.
So I mean.
I think the underlying point is yes, we are very determined to continue to progress on our technology.
And as we see opportunities in the markets, we do intend to develop the technology to meet those needs.
Okay great.
Thanks very much for.
Bringing the fifth column progress it really looks great. Thanks, Joe.
Thanks for the questions about.
As a reminder to ask a question you May press Star and then one.
The next question comes from Jeff Sunglass private Investor. Please go ahead.
Yeah, Hey, Jim Thank you and congrats on a number of levels, especially with respect to the Burger tests now that was significant for you guys and hopefully the gentleman who made the remark that it's the best Berner that he's seen are desperate or in the world are will be.
Our voice to the industry or for you guys.
Amit covered I guess my first couple of questions, but one other point I wanted to ask was recently I saw something come out I guess from the E. P. A they call it the good neighbor letter.
Which was the first time I've seen anything that really focused on Nox emission you know the whole environmental.
Our mantra has been C O two but this is the first time I've seen anything really where it looked like the E. P. A maybe on a national level, we're focused on Nox emission.
Are you familiar with what I'm talking about in that regard.
Yes, I am not in great detail, but I am familiar with the.
The Navy and the Nox transport issue.
Yeah, I mean I was just wondering if.
That has brought up any new inquiries. It it looked like it was focused on a lot of Midwest related industry.
There's clear signs have product that can address it for these other industries other than oil and gas and in the end the combustion industry that you're focused on now but and has it shell has anybody been contacting us bend only a few weeks as it brought about any new interest or inquiries to you guys.
Yeah, So yeah, thanks, Jeff it.
The I think first of all just just pick on one called the.
In general just all the good neighbor and Nox transport as well.
Regarding the transport of.
Nox from one region to another for example, that's created in one area and affects another even though the area. They creates it may not be have severe.
Oh its own issues.
And we should still be required to reduce nox emissions because of the effect on its neighbors.
The.
But the main focus across the country at a high level and with the EPA is is ground level ozone.
And way of regions all right outside of compliance.
The east.
The states basically all required to put regulations in place to reduce Nox emissions, which.
But nox is that is a precursor to ground level ozone.
The.
Severe non attainment areas of the areas, which are really driving down to the very a lot of it.
Hello emissions that create in the markets and that we serve.
They're all.
No common low Nox burners and the market provided by the main incumbents.
<unk> been around for many years now.
I'll read it to be low cost and they do a moderate job of reducing nox emissions, but they reduce them to the extent of many of the regions within the country.
And those are the regions that are largely affected.
And and will be affected directly by.
Yeah.
Ah requirements such as this.
Good neighbor rule.
If you're following the.
Following les assign I'm looking at our markets.
I'd encourage you to look very much at the local level and to the states that all.
Driving nox emissions down to the lowest levels, particularly was seen.
Some interest in Colorado, Salt Lake City, California, certainly as I am.
Most active market right now we're also watching Texas very closely.
Yeah.
Got it okay. Thank you.
I have no further questions.
Thanks, Jeff.
This concludes our question and answer session I would like to turn the conference back over to Jim Deller for closing remarks.
Well, thank you everyone.
If your interest and for taking the time to participate today.
We look forward to updating you regarding our developments and speaking with you on our next call.
Thank you operator.
Thank you. The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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