Clearsign Combustion Corporation Aktie

Good day, everyone, and welcome to the ClearSign Technologies First Quarter 2026 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to hand the floor over to your host, Matthew Selinger, Investor Relations at ClearSign Technologies. Sir, the floor is yours.

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation First Quarter 2026 Corporate Update 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.

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 described in ClearSign's filings with the SEC, including those discussed under the Risk Factors section of the annual report on Form 10-K for the period ended December 31, 2025. 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 with me on the call today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So with that, I'm going to turn the call over to Jim.

Thank you, Matthew. As always, I'd like to thank everyone for joining us on the call today and for your continued interest in ClearSign. Like our more recent quarterly calls, we will use a Q&A format for this session. Some of you have sent in questions ahead of time. And we did assimilate those questions into the materials that we will cover today. So over the call today, Matthew will lead a Q&A session where we'll go through the different best units, much like our previous calls. If you wish, you can send any questions to our Investor Relations at [email protected].

So it starts off today, I'm going to hand over to Brent Hinds, who will go over the financial numbers for the first quarter to 2026.

Thank you, Jim, and thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-Q was filed last week with the SEC. With that, I'd like to give an overview of our financial results for the first quarter of 2026.

For the first quarter of 2026, the company recognized approximately $200,000 in revenues compared to approximately $400,000 for the same period in 2025. This year-over-year decrease in revenues was predominantly driven by the decrease in spare part deliveries during the first quarter this year. Our gross profit for the quarter decreased compared to the same period in 2025. This decrease is mainly due to lower revenues and our warranty accrual of [ $40,000 ] made in anticipation of potential modifications to some installed equipment in a California refinery. As a result, the year-over-year decrease in gross profit was approximately [ $539,000 ].

Our net loss for the first quarter increased by $114,000 compared to the same period in 2025. The impact from the gross profit on our net loss was offset by a $369,000 increase in general and administrative expenses. Our G&A expenses decreased in comparison to 2025, a large part due to reduced legal fees that were incurred during 2025 for a special committee of our Board of Directors that was decommissioned after our 2025 stock

Now let's shift focus to cash. Our net cash used in operations in the first quarter of 2026 was approximately $1.3 million compared to approximately $1.1 million for the same period in 2025. This year-over-year gains were predominantly driven by a reduction in our current liabilities. As of March 31, 2026, we had approximately $7.7 million in cash and cash equivalents, with approximately 5.4 million shares of common stock outstanding.

And with that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Thank you, Brent. Again, thank you, everyone, for joining us today. I'm actually going to hand it over to Matthew Selinger, who's going to lead the question-and-answer session. But just remind as we go through this. If you do have questions, you can send those into [email protected].

So with that, Matthew, I'll hand it over to you.

Right. Jim, Brent, thanks for joining me here today. We did just have a call a few weeks ago. However, we have been busy between now and then, and we do have some specific events and to discuss. So with that, let's kind of dive right in.

Jim, just last week, we announced an order for the next phase of a 32 burner project for a California refinery. To keep dive into this and talk about what do we mean by the next phase of this order?

Yes. I think it's good, especially investors new to ClearSign. So we were given by the start of actually 2 quarters late in 2025, almost 4 -- 6 burners going down to Texas refinery and then 1 for 32 burns destined for a refinery in California. As is common with our projects, these are released in phase. The first phase was for reinitialengineering and the computation modeling, where we basically simulate the burners and the burners effects and flow performance on a computer modeling system. That phase is now complete for the California order. The next phase of the project is then for us to fabricate or do the detailed engineering and fabricate the first article of those burners we will then install that and demonstrate if we'll make any optimization necessary but show it performing in a for-scale test furnace at the Zika facility.

Okay. And this -- Jim, this is a ClearSign Core Gen 2 technology.

Yes, in a modified form. So what's actually interesting about this order is the burn that was developed -- the round burden was developed as part of the SBIR program was of our standard shape of what we developed was a continuable acid that we could then adapt to flat plans or different shapes or formats to fit into the variety of different heads you find of refinery rather than just being restricted to the hesitated a round burger. So this particular order is for a heater that needs a long thin burn that actually fires up again stay or more. So when you see the work. That's just the type of heat of the -- this is...

And it's been that -- in the press release, we referred to as a flat plane application.

Yes.

And so this then I'm going to jump back a little bit. The ClearSign Core Gen 2 is really -- you referred to it as such in the past, it's a burner platform.

Yes, that's right.

And you just mentioned the word there, which has configurable architecture. Is that correct?

That's what we referred to. Yes. I think that's a good description. I mean -- the way that the burner works is a series of components that create the flow field that controls the ox and allows the burn to operate the way it does. -- but we can arrange those components to control the flame shape and the shape of the burner depending upon the needs of the client further. So it's a very flexible technology that gives us the ability to adapt it to the different types of heaters taking 2 different processes on refineries and chemical plants wherever they be.

Okay. So back to the discussion of the order. So the progression of this order, can you quantify what that -- this might be into the dollars?

I can. I mean this is a there's more engineering in this particular project because it is one is a very technical kite. And it's also the first flat-link configuration what type of bone done. So the engineering and testing portion is just shy of $0.5 million for this is part of the order and the order we received.

Let's can we then step back. Can we break down kind of, call it, an average process burner order by the faces and maybe the potential dollars on each phase. Can we match this out?

I think we can. It's probably useful. I know we have a lot of new investors that in ClearSign. I like to make this Egypt, let's talk about hypothetical project. The orders we started at the end of last year, postaural for 36% is going down Texas 1 the California investor take a hypothetical burner order. And we've given guidance for an average price of a process earnings about $100,000. So with 30 burner order the equipment is going to be about $3 million.

On top of that, there is typically about $300,000 in engineering, computer modeling and testing that goes into the initial phase of a product as we dial the further details in. So to walk through the typical process as we've seen in this California order, topic about $150,000 would be the initial engineering and moving the bonus and on the competition platform, showing the customer how they work, how they operate indeed of what they should expect.

The next phase is typically about $250,000, $100,000 that will be the first burner because that next phase is going to take our first production article, put it into the test furnace and then demonstrate that to the customer. That's their chance to come and see it firing for real for the burner through spaces, check emissions, check the operation, make sure it does everything they need. And then the completion of that phase, we will then be released for the fabrication orders. So in this case, this 30 burner order we've manufactured on for the test. We'd be raised to manufacture the other 29 and of course, refurbish the word we use for testing.

And the last thing, I know we referred to you in the past as kind of the equipment order, the bulk of the equipment order.

Yes. And that's the -- in terms of finance and revenue, that's the bulk of the project for us. The initial engineering phases really are dialing that design in. And then, of course, the manufacturing is the large part the large revenue driver.

And on that equipment manufacturer, what are the terms we tend to get 50% upfront of that?

Yes, I think a good -- we also get stage payments, they can vary a good approximation is 50% upfront at the point at least you obviously -- our process pens are provocated by Zika they have to go on and buy materials and then they start working with those. And then we get the other 50% of the payment for that part of the project. typically when a product is created and ready to be collected from

Okay. So Brent, I'll turn to you. So then these projects are basically self-funding. Is that right?

Yes, that's correct. Before we recognize revenue, we'll receive cash from the customer to augment the cost that we incur.

Great. But we're not...

Just to add a point you mentioned at the -- as key from my perspective is we're typically able to collect cash ahead of our expenditures on a project. So when we look especially projects in the like $3-plus million range, we don't have to dig into our cash reserves to execute those projects. We get cash in from the customer ahead of our cash going out 2 years to do the project. So essentially self-funding through the project.

Okay. Fantastic. into the other large projects you mentioned, the 36 order. And this one, as we mentioned on the last call, differs as well, differs from the 32. It differs than what we previously announced. Is that correct? Could you kind of describe what's going on this?

I mean from a technical perspective, our without burning, we really offer 2 different things to our customers. The first is the obvious. Our customers have to meet new aggressive emissions regulations, our burner technology allows them to do this for a much lower cost than the incumbent technology that's buying a elected cast reduction. So all emissions were a much more economical option by our clients to comply. Our burner technology gives us the ability to structure frame and shape them so that we can control the plant shape, how they interact and how they transfer heat to the clients' heater -- what that means in a real perspective is it gives us the ability to make Hedis operate better with the best to reduce maintenance requirements or in some cases, to increase the throughput of a heated.

On projects like the hands we can actually offer our clients a very positive return on investment. So not just buying burners to meet commission's requirements. They're actually -- and we're actually enabling them to either say, downtime in through just maintenance or to get more production from the heaters, i.e. make more money. What's exciting about this donor going up to Texas is while there is a obviously, an emissions limit on that job, the driver is actually increased performance of that client's heater

The configuration of burners in this case, again, is different. If you think of this particular heat as being a series of square boxes pushed up against each other, our burner find hostly through opposing wall. So the on side or petering in toward each other. This again is another adoption of the burn technology to fit this lead just with the benefit that the objective is actually increased performance of the heater in addition to controllable emissions.

So then is this getting us into larger market and/or larger heaters or maybe even larger heaters and/or a larger market? How is that kind of working for...

On this -- there's some of both. The -- getting the heaters that use the platform, there are some processes where a lot of burdens in that use a pipeline technology anyone looking at the process you might look at Delayed Coke as small example of refineries, there's most flatlines typically in a delayed copy unit. So being able to put burners into heaters that we were not have been able to do before we completed the SBA program with this Gen 2 technology to essentially expanded the addressable market for ClearSign.

The other phenomenon that we've seen recently is there's been a lot more interest in ClearSign, and we've got true engagement from the majors in the industry, or at the household names, the glovebofiners, these refineries have a much bigger throughput, essentially means the heat is much bigger. They have a lot more -- so the orders we just talked about, the ones are California has 32 beds and have gone down. Texas has 36. The previous orders to ClearSign have been quite beds and much more heater so getting involved and adjusting these bigger projects, is there's a lot more revenue disorders as they flow through the orders and we get to process it.

Okay. So one of the events I'd like to bring up and talk about is, and we highlighted this on our last call, was the process burner demonstration at Zika, and that was good to happen -- so can you give some discussion of how that event went? I know you can't be means, but perhaps you could describe in attendees.

I can. And just for anyone on the last call, 2 of the major events this year in the proton we identified was this launch and demonstration of our new Gen 2 process better technology. And then the second is the start-up of a major order that we shipped at the end of last year. Those firms are down on the client since in the U.S. Gulf Coast, Watson store and start-up is scheduled for October. So at the time of the last call, we were getting ready for the first of those 2, which was this demonstration. So we can now talk about as a past event. It was really successful. The burner ran through all of its paces, the Mox was good. We ramped from 100% natural gas to 100% hydrogen demonstrated that transitioning smoothly back to unnatural gas. We put the further to its case. We demonstrated some other criteria, showing the safety in or the burn along with some demonstration information sessions for the customers. The attendance was 1 of the major things for me, just looking at our traction in the industry. We had about 100% of the people that responded not quite honest, but don't want us there. the people respond they would come actually showed up. That's a really big deal.

I believe we had 23 people in attendance on the day. Amongst those 23 were representatives from large refiners on national energy companies along with consultants and to manufacturers. I think also what was really pleasing seven, we have a collaborative partnership with the very imported part for very a $1 billion-plus company that they manufacture our burns. That's where we did the demonstration.

Don Zinc, the President and CEO of Zeeco actually came down and gave a welcome and introduction to ClearSign as a start of that demonstration to our customers. So showing thereby in and's interest in what we are doing and the technology that we're developing. I think it was very pleasing with us and a very powerful message to the clients and attendance. And then what sort of feedback have you received that post the event -- so it's been positive. I think to -- right, so we actually had a chance to talk with customers that were there and also people have spoken to. We regulated there's twice a year, there's American Petroleum is due by API conference where we review and update the refining equipment standards. That conference was the week after demonstration. So we were there -- I was there personally, and while there, we got to like meet a hat people who have been attended our demonstration and people who have talked to people who have been there at the demonstration. So we got a general feedback from the industry, and that was very positive. So I'm quite confident that we hit the market this demonstration. I think it was a great success.

And are these customers or others kind of discussing the regulatory environment right now?

They are -- I mean that was the reason that a lot of the refineries and consequent and the other attendings were there at demonstration. Many of them were talking to about projects that they have. They came to check out the technology. So the great chance for them to see some technology they've not seen before, uncheck that follow-up. So yes, they're very much looking at what they have to do, trying to work out their best plans to meet the regulatory compliance and the new regulations that are being formalized for Texas and of course, the refineries in California already know they have. They have plans in place to get there or refineries to the state they need to be.

And then one of the projects you didn't address or you mentioned then is that 26-order, that was shipped back in December.

Yes.

And that's on schedule then to be start coming up?

Yes. So just carat,the project was completed in September. It actually shifted early in January. Our conclusion was to create the be just for details. Those piers are down on site. They're due to be installed. Things change in now they're due to the store at the middle of the year within July and the project is due to start up in October.

And that's for a petrochemical company you've always said. Now does that get us into kind of the chemicals, the chemical market?

It does -- it's actually the second capital customer we have. The first was a midstream is down also on the Gulf Coast of Texas. If I can, I think a bit of clarity is worthwhile. As we look to the -- the long term, the big picture for ClearSign. Part of our future plan is to get into high center applications. And by that, I mean, ethylene furnaces, downside reforms, that is a very big potential market for players in. Those are hard chemical processes. Also on the chemical plant of the more refinery type heirs that are a stepping stone towards those high applications. The heaters that we are starting up in October of refinery process type heaters, but they are in a chemical plant. And with the flat plan configurations we've talked about for the California project, -- we do see that as a very significant stepping stone towards getting into the high temperature work that we are plan for a longer-term growth of ClearSign.

Well, interesting you brought up Jim, the M1 installation in a chemical plant, and that was about a year ago, and that was through Tulsa Midstream.

Tulsa Heaters midstream. Yes.

Yes. And then we just announced today another M1 order from that. Is that correct?

That's correct. Yes.

And they were the first adopter of the M1 Series product -- that is correct?

In fact, that heat down on U.S. Gulf Coast was the very first in that we shipped. Correct.

It's nice to see them come back, let's say, a year later. So how are you feeling about the M-Series products in general?

I'm feeling very good. I know there's not been a lot of orders coming in, and we've talked about it frequently. But I've been worried if there wasn't the interest any question. We have had a lot of interest, a lot of big price more even coming in this week. So the -- what we have M1 -- we have a M25 startup as down in Midland. We have an M1 already out ship waited to be installed. We have another 25 that's shipped. We need to install -- there are a lot of M1 cores and M25 cores and they continue to come in. So I'm feeling very good about that market. I think it's just time as they starts coming as like more quicker. But in terms of the interest, there's a lot of interest, and I'm quite confident that market is there for these values.

And you mentioned a couple of starts pending speaking of start-ups. There's also a flare project poised to start up very soon. Is that correct?

That is or to clarify the formal source testing starts. So we've already done this equipment, but we couldn't do the formal source testing until a particular component outside of our scope was in store. I believe that's in and in store right now. And the latest we've heard is the source testing is scheduled for next month. So that will be the first source testing of our new generation of players or in the California market. But this has also been a good product line for us. We talked about systems projects where we've taken our burden technology I'm being able to expand that into a 4 system in the $750 million to $1 million range. This pure starting up is of that order. At the same time, we have our first 4-system project actually wellness weighted fabrication right now that's due ship later on this year. So -- but getting the source testing done and having that as a signed off for recognition of former technology I think is going to power that a market.

Yes. And I think we mentioned on the previous call that I believe that last one is the fifth installation. So we're seeing repeat orders for a customer. And again, could you say that a similar conversation you're having with our other customers and the other product lines as well, too? I know we mentioned even at some of the process payers that while we're working on, I believe it was a $32-order that you already even having conversations with that customer about potential future

And we do believe that this flatline does have future needs. And then in that same industry, there's other clients, these are going to the California market. Predominantly, we believe that there's other applications outside of this customer as well.

Great. I want to add to this one, Jim, are you still confident in the -- first of all, -- how are you thinking about status of Carson business? And maybe give a follow-up? And then are you still confident in the proposal pipeline that we've discussed in previous calls.

When you -- the answer to the second is also the date first Minor I appreciate the orders have been a slow over the last few months. The inquiries and the customer engagement have not. We continue to have inquiries for process burners we've got a lot coming in for midstream, which continues to be active players with the recent 1 with the flat start up next week with the success of the process further demonstration just a couple of weeks ago. And I'm looking at as a big picture, I do think our revenues are going to be lumpy, right? Our order intake has been lumpy. We're saying that we do have the 36 or the other 32 of those orders are in-house and being processed at this time. There is a substantial backlog in the prior process bonus. We know a lot of those customers are also looking to the installation down in the U.S. Gulf Coast, you start up and on paver. So while we have a few words right now, I think we're going to see a significant pickup after that project is up and running and clients that are talking to us right now that have not engaged we'll see that as a lot of confidence once that has started up, and that's aligned with the conversation we've actually had with...

Got it. So with that, Jim, is there any sort of kind of last comment there any items you'd like to bring up before we bring on questions?

There is one. I just -- and this is more in general, we just we talked about the highlights on these calls. We talk about the cortisols come in and the other bigger banks. I've talked on a lot of sales activities, getting ready for demonstration, a lot of customer events. There's a lot of engineering. There is a -- there's a lot of work going on within clear sign a lot within the finance and the function just keeping the business running. We do keep our headcount balance. There's not a lot of us here at ClearSign. And I just want to publicly take this chance just to extend my banks and appreciation doing the staff here at ClearSign for everything they do. they truly believe in ClearSign, and I really appreciate their efforts. And just I'd like to say that pumping I think that necessarily appropriate.

So with that, we will take the time then to open up for questions and also review and read off some questions that we're sending ahead of time. So with that, operator?

[Operator Instructions] Your first question is coming from Amit Dayal from H.C. Wainwright.

Matt went through pretty much a lot of the teams I had also going to bring up. But just 1 clarification, Jim. It looks like your 5 or 6 project starts between 1Q and 2Q. Are some of these at least underway already at this point?

Amit, I am sorry, could you repeat that question, please?

So I was saying, it seems that you may have like 5 or 6 project starts between 1Q and 2Q. Are these underway at this point or some of these are at least going for you?

They are -- we're actually working on. I think the big start-ups for us at this time, we have a flare for the source testing that. We're finding that the actual events when you start the unit are typically happen over just a few days. But there's a lot of, obviously, preparation going into that and planning. But the at flare will be a significant event for us. The big burner starter down in the Gulf Coast will be later on this year. That will be down in October, but we will be supporting the installation that's scheduled to occur in July. So just that -- because of what that project is and how large is that will be very significant for us. The M-Series start-ups, we do help with the agent the point with our repeat customers where they are getting quite familiar with those products. So whilst we give them technical support, they do not always require us to be out. on the job site. So we will wait to hear from them. We have other work in progress. We have a very large flare order in production also -- so we've got the 1 starting up next month. We also have the second large 1 was due to a complete fabrication later on in Q3 and be out on the job site. So we're expecting that to start up to all this year as well. [indiscernible]

So I mean just talk you through those, just the start-ups are significant for us, but most of these customers, if you think of the flare, we actually have, in our proposal pipeline, we have additional close out to those customers. The start-up we're expecting next month and the source testing, we believe, is going to be a large check mark for them before they look at their futures. We have one other quote. We believe they have additional ones permitted waiting to be moved on as well. So we do see but a very big significance in the start-ups, not just for completing those individual projects, but what it means for our future orders and growth.

Your next question is coming from Peter Gastreich from Water Tower Research.

There are no further questions in the queue at this time.

Great. Operator. I can read a couple -- we've got one actually that's coming from New Zealand. And the question is, there's been some announced reductions in EPA regulations across a wide range of areas. Jim, do you view that negatively for adoption going forward?

So for ClearSign, we I mean forint the reduction as in the easing all of the regulations for ClearSign, rather CO2 emission regulations do not really affect us. They have an impact on hydrogen consumptions of fuel. But the ClearSign technology is focused on NOx emissions, and those have wit,continue to be pushed. They're largely regulated by the states, driven in the U.S. by the EPA and ground level zone. I think from what we've seen generally around the world, the emissions continue to be timed -- everyone values clean out as population grows.

And we -- while our business is predominantly in the United States at this time, we have one installation in Europe. We are very much looking at the wider global market in our future plans through our relationship with Zeeco. Zeeco is a global company with support and manufacturing around the world. So through them, we definitely have the ability to serve a global market, and we actually benefited from that Zeeco relationship when we service the one installation we have out in Europe. So that is a problem model for us. So Yes, we do watch the global market. The regulations do change as to the types of equipment that the clients use but I generally see the timing of emissions out in the Far East and in Europe as a very positive sign for ClearSign.

Okay. Another question, kind of a simple one. Tim, what does an average M-Series burner sell for?

That's a great question. So we've given general guidance of an average burner price of $100,000 right to keep things simple and to allow easy math. That I think that number holds for the M Series. But as you asked the question, there's obviously a variation -- the M1 is the low emissions burner. That's our higher technology, and it does sell for a premium price. And there's actually a bit more engineering and manufacturing that goes into that burner.

The common size of that burn a range from some in the regional of 80,000 up to north of 200. The M25 is a D2 version with less engineering, less IP to leverage, those will sell for a lower price points. Again, the common size is ranging from probably 50,000 up to -- some of them reached 150 to 200 million for the common sizes. So I think the $100,000 average is good. But one other thing to consider with the entire, what we're talking about those is these are standard burners. So unlike the process burners that go through a lot of engineering and have to get dialed in on the test furnace and the very long duration of the orders, the M-Series are standard burner configuration. And what we're finding is that also amongst those size ranges, there are common sizes.

What that means is once we have like -- if you take this reason are, as we build this one and one for this application for Toledos Midstream, as we have further applications for that same burn, we already have the drawings of the engineering done is just a case of manufacturing those same burners. So that enables us to have a very high degree of efficiency and really focus on the profitability for ClearSign. So this is -- it's a -- we can talk about the revenue and the sales price. But when we look at the profitability of what this means for ClearSign I really like the M-Series burners.

So -- Great. Operator, I have no more questions coming in. I'll turn it back to you.

[Operator Instructions] Your next question is coming from Peter Gastreich from Water Tower Research.

Apologies before there I had muted my line. But congratulations on the results. It's great to see the momentum in the orders this month. Also appreciate the comprehensive presentation and you have answered a few of the questions that I have had, so I really appreciate that. I just want to ask a kind of an industry-wide sort of question. You talk a lot about the comparisons versus the incumbent technologies and that the advantage there is very clear. I'm just curious if you could share any thoughts about how you would describe the landscape for any competing new technologies, if any that are out there?

Thank you, Pete. And thank you for your questions, and comments. I mean, I definitely see the incumbent selected CAC production technology as the main competition for ClearSign and I think we have a much more efficient product and it's certainly much more economical for the customers. So our very simply, when we look at the market, our objective is to displace SCRs going forwards. There Well, there's obviously other burden manufacturers trying to come up with products. We don't see a lot from others. There's obviously with the advertising and marketing. But at this time, I do believe that ClearSign very much has the dominant share and the main name recognition in the SCR level -- market within the industry.

For somebody new starting up with a burner technology, there are some significant barriers. One, you have to have people expert in the industry, is a very specialized field. of engineering. But beyond that, the customers have certainly one is to demonstrate burners in a Fortscale furnace. They have very specific manufacturing needs. ClearSign has overcome that barrier through our abeta arrangement with Zeeco. But for somebody else without those connections, I think just for that getting into this market would be very difficult.

That concludes our Q&A session. I'll now hand the conference back to Jim Deller, Chief Executive Officer, for closing remarks. Please go ahead.

Thank you, operator. Thank you, everyone, for your interest in ClearSign and taking the time to join our call today. I do thank you also for the questions that you've sent in and for the questions that you've asked live here. It's always good to get some feedback. We look forward to updating you regarding our developments and speaking with you on our next call. In the meantime, we do update LinkedIn. We do send less formal message out that way, so please keep checking for our developments on our website, and please follow us on LinkedIn.

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Greetings. Welcome to the ClearSign Technologies Fourth Quarter and Full Year 2025 Corporate Update Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Matthew Selinger, Investor Relations. You may begin.

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation Fourth Quarter and Full Year 2025 Corporate Update 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.

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 the other risks that are described in ClearSign's filings with the SEC, including those discussed under the Risk Factors section of the annual report on Form 10-K for the period ended December 31, 2025. 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 with me on the call today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So with that, I am going to turn it over to Jim Deller. Jim?

Thank you, Matthew. As always, I'd like to thank everyone for joining us on the call today and for your interest in ClearSign. Like our most recent calls, we will use a Q&A format for the session. Some of you are sending questions ahead of time, and we will assimilate those questions as we go through this call today. So for the call today, Matthew will lead a question-and-answer session. I will go through the different business units, much like our previous calls. Many of you may have seen this, but just a reminder, you can send in questions ahead of time to our Investor Relations, that is Matthew Selinger at [email protected].

So with that, Brent will go over a summary of the company financials for the fourth quarter and full year '25. Brent?

Thank you, Jim, and thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-K were filed last week with the SEC. And with that, I'd like to give an overview of our financial results for 2025. For the fourth quarter of 2025, the company recognized approximately $3.7 million in revenues compared to approximately $590,000 for the same period in 2024. This year-over-year increase in revenues was predominantly driven by our 26 process burner order that will be installed in the petrochemical plant of the Gulf Coast of Texas.

Now for the full year perspective, we recognized approximately $5.2 million in revenues compared to approximately $3.6 million for the same period in 2024. This 44% year-over-year increase in revenues was predominantly driven by our process burner products. It is important to note that during 2025, we did recognize revenues from our other offerings, specifically midstream burners, flares, spare parts and engineering services like CFD studies.

Now I'd like to turn our attention to the full year income statement. Our year-end 2025 gross profit was approximately 27%, which is down approximately 4 percentage points from 31% compared to 2024. This year-over-year decrease in gross profit was driven by our warranty accrual. In addition, our year-end 2025 net loss increased approximately $197,000 compared to the same period in 2024. This year-over-year increase was predominantly driven by nonrecurring legal fees of approximately $746,000 in 2025.

Now I'd like to shift the focus to cash. Our net cash used in operations for the full year 2025 was approximately $4.7 million compared to approximately $4.4 million for the same period in 2024. This year-over-year change was predominantly driven by our change in net loss discussed earlier. As of December 31, 2025, we had approximately $9.2 million in cash and cash equivalents, with approximately 5.3 million shares of common stock outstanding. We believe our overall working capital positions us to continue executing on our long-term growth plan to scale our revenue and profits beyond our breakeven goal as we continue to build a technology company recognized for its innovative solutions.

And with that, I'd like to turn the call over to Matt Selinger.

Thanks, Brent. And Jim, thank you for joining me here today. So Jim, we've had a lot of new interest in the company lately, and I see some new attendees on the call today. So can we take a moment to give a high-level overview of what ClearSign does and then maybe move into how we do it. So Jim, what in a nutshell does ClearSign do?

Sure. Yes. So we are an industrial technology company. But the technology we make is a low emissions industrial burner, right? So these are the components that control the flames in companies like all refiners and chemical plant, also boilers, midstream gas heaters, but the very large industrial flames. And this industry is driven by the need to meet the latest emissions regulation and specific to provide ultra-low NOx emissions. And we can do that by controlling the chemistry in the flame and we do through control of the flame structure. The NOx emissions are driven by the Clean Air Act, they're imposed by regulation.

So these are a level that our customers are required to meet. Our advantage in the market is we enable them to do it in a much more cost-efficient manner than with the existing technology. So the levels we're talking about, the other technology to reduce emissions is called an SCR or selective catalytic reformer (sic) [ selective catalytic reduction ]. It's basically a back-end chemical plant that has to be built into a heater to remove the emissions from the flames before those gases go up the stack. With the ClearSign technology, we just don't make those emissions in the first place.

To put that into perspective, one of the orders we have in-house, we were talking to the customer prior to receiving that order and their estimated costs for going with the alternative SCR solution were about a $50 million project for a conversion of one of their heaters. The -- our estimate of the ClearSign solution, their total cost, which includes our burners is in the region of $7 million to $10 million. So it's our belief just on this one project that we're saving this client in the region of $40 million. There's a very clear cost advantage to our customers in selecting this new ClearSign technology and not making emissions in the first place.

All right. So you've talked about what we do, the drivers in the market, kind of the competitive landscape of technology. Maybe describe more kind of the market and the market opportunity, Jim. Would you be able to kind of quantify what our addressable market is?

Sure. And -- right, we -- our biggest market segment is oil refining. We're also looking to develop into the petrochemical industry. But to try and put our arms around the realistic market opportunity for ClearSign, the regulations that require technology are the newest strictest areas. So for us, while there's some in Europe are predominantly for this purpose, which is think about Texas and California, is that our estimate is there's about 28,000 burners installed in refineries in California and Texas.

And we did a technology feasibility study with ExxonMobil back in 2019. And as part of our conversations during that process, ExxonMobil expressed their assessment that about 15% of their burners were good targets for ClearSign technology. So if we use that 15% guideline of the 28,000 installed burners in California and Texas, that gives about 4,200 burners currently installed in refineries in California and Texas that are good applications to be retrofit with ClearSign technology to comply with modern emissions requirements. And the timing, you can expect that will be done over probably 10 years as we just trying to get our arms around or bracket the market.

And then the other important piece of information is the average price for burners is about $100,000 plus more for the big ones, less the smaller ones. But for the sake of this math, we consider a ClearSign burner to sell for about $100,000 apiece. That will give you a number for the refining industry, the petrochemical industry, we would assess to be about the same size as the refining industry. And when we look at the total ClearSign product sales, we have other products as well. I'd expect our flare and thermal oxidizer products combined to make about 20% of our business. Our midstream and water products make up another 20% sort of the refining and petrochemical, that will be about 60% of the total.

Okay. Great. And again, you referred to that burner -- a typical burner price around $100,000 because we've referred to that as what Brent said in that 26 burner order, and we'll talk about some orders later that will help investors kind of quantify what a total order size may look like if you apply that dollar amount to a burner for one of our orders.

Yes, it's a good guide. I think the other piece of relevant information, if you're looking at the company, right, we are -- when we talk about the company structure and how we work, we are an asset-light company. We need a run rate of about $16 million per year or 160 process burners per year to get to breakeven, right? So that's not an extremely high number. But with that market size when you do the math, there is plenty of market there for ClearSign to develop a very profitable business.

Great. And one thing you just said there, Jim, which is a good segue to the next question, you mentioned asset-light. So you mentioned, obviously, we're an industrial technology company. And because of being asset-light allows us to capture these ballpark 30% margins, which Brent said. How does ClearSign do it? How are we structured? And how are we going to market?

Yes. So we have a unique IP and technology. And in fact, we have unique capabilities with our computer modeling. Since I joined the company in 2019, we set a strategy of leveraging that IP selling into this very industrial market with very established clients like our refining companies. Those clients require full-scale demonstration of furnace. They require the equipment to be manufactured in the shop that they have accredited with a very sophisticated quality control system, right? It takes a lot of money to develop that kind of asset.

So rather than doing that, we said about leveraging our IP, but to work through collaborative partnerships with other companies that already have that infrastructure in place. And there are some really big companies in this industry. We formed a collaborative partnership with one of the really big major Zeeco in late 2019. Zeeco is a multibillion dollar [indiscernible] billion with a B company. They're based here in Tulsa. They're about 10 minutes down the road from our office. They have the largest burner test facility and manufacturing plant here. So we can demonstrate our products now in the Zeeco test facility.

Our process burners get built by Zeeco. So our clients get to benefit from the approval of their manufacturing and their quality control system. So basically, we get to deliver our IP but to present it through the market with the credentials of Zeeco. For Zeeco, our capital arrangement allows them to compete in areas of the market that extend beyond the capabilities of their own technology. So this is truly a win-win relationship for both of us.

Okay. That's great. Well, then let's turn to the year-end and fourth quarter. The company ended the year-end on a high note and recorded quarterly -- record quarterly and annual revenues. Brent did mention, but what were the contributors to this?

No, I'm going to turn this over to Brent. He has all the details from the finances and can talk about more specifically.

Thank you, Jim. Thanks, Matt. Yes, the fourth quarter revenues were predominantly from our 26 burner order that would shift down to that petrochemical company in the Texas Gulf Coast. I think it's important to note that in the fourth quarter, the revenues weren't just made up of that. We also recognized revenues related to spare parts orders and engineering services. Specifically, one of the engineering services that we're citing was a customer witness test, where a subject matter expert from a petrochemical company came in and got to look at our burner and kind of run it through the test facility. I liken it to inviting a test driver to come run the race car around the racetrack and get to play with it.

And that went well?

Yes, it went well.

Great. It's good to hear. So then the 26 burner order was completed and delivered and the revenues have been booked. Is that right, Jim?

That's correct. The requirement work we had the burners are complete and packaged and ready to collect by year-end. And Zeeco really came through for us. They work long hours. But before everyone left for the holidays, we haven't combined with Zeeco had that done. So yes, we did recognize the revenue.

And when will this project start up in the field?

The burners are currently on the client site. They're waiting to be installed, which is scheduled to happen early after midyear this year. The current expectation is the start-up will occur in October.

Okay. So then let me ask you this. Do you think this will boost or help our visibility and potential pipeline?

We expect this to be very important for us. There's a number of reasons for that. I mean clearly, it's a very dominant client. It's in the heart of our biggest market down on the Texas Gulf Coast. The burners are an early version of our new Gen 2 technology, which is a great burner for us. The project was done through the Wahlco, who, I believe, the leading engineering heater revamp company here in the U.S. So there are a lot of eyes on these burners. I think generally for everyone.

But we have to be very careful when we talk about customer names and the details of projects openly. Within the industry through all the conferences and the interpersonal relationships, this project is very well, right? They know the burners. There are a lot of people watching this project and talking about it. And even companies like Wahlco have been a very good reference for us because they've been through this project and see the burner development, seen them operate in the Zeeco test burners. They've already been very meaningful in talking to other clients about ClearSign burners and their experience of working with us.

Yes. And I know we mentioned in our previous calls and mentioned the name Wahlco, you can go to their website and they list the logos of their clients, and it really is a who's who of super majors, major petrochemical companies, and you can see it on their website.

Yes. And they're actually part of a very large organization themselves. So yes, they've been a very good client for us.

So then let's talk about other announced process burner orders. We've announced a 32 burner order for a major refiner and a 36 burner order for another major. We're calling it a household name. So in regard to the latter, the 36 burner order going to the Gulf Coast, how is that order progressing?

Very well. The -- so both of these orders are released in phases, which is actually very common. The first phase being engineering and the computational modeling or simulation of the burners operating in the clients. That has gone extremely well. Those results are sent to the client. So we're currently discussing moving into the testing phase of that project.

The other interesting part is the installation has been split into 2 phases. And in the first half has been pulled forward so we can supply the burners into the first 2 sections of it. There's a large 4-section heaters preferred being supply the burners in the first 2 sessions, and those could be established quickly and then roll into -- we expect to complete the other 2 sections, but the first manufacturing phase actually being pulled forward, which is very good news for us.

And then so earlier, you spoke about the drivers for our technology and the use of our products. But -- and you spoke about NOx emissions being the main one. But this project is a bit of some other drivers. Is that correct?

It is. And this -- we mentioned the CFD and the competition modeling, this is where that really gets to be very valuable. So a big part of the economic driver for our client in undertaking this project is not only maintaining compliance with NOx emissions, but in this case, to improve the performance and the operation of the heater. So another thing that we can do with our technology is we have great ability to control the shape and the structure of the flame and impact the pattern or the way that the heat is transferred to the heating services inside the heater.

So we can distribute the heat evenly and basically reduce hotspots that can occur if you don't do that well. What that means for the client is that we can reduce the maintenance requirements, we can reduce the frequency of prevent having to replace damaged tubes, increases the what they call the uptime of heater basically increasing their productivity and reducing their maintenance costs. So we can deliver a very real return on investment for the client in addition to or as opposed to on the emissions-based projects, we're really -- in that case, we're delivering a much more economical way of solving a problem for them. In projects like this, we can actually give them a return on investment in terms of making more.

Okay. So we're actually making the heater run better and more efficiently.

That's correct.

Now the other layer about this project you and I were discussing recently is what I'll call the design or engineering of this order. And you were telling me this is kind of a new iteration or application of burners. Could you give some more color about that?

Yes. And it makes sense. So to tie back to when we talked about the company and the industry in general and the feasibility or the assessment from ExxonMobil of 50% of burner being good application to ClearSign, that was based on the burners we had available at that time, which were upwards vertically fired round shape burners, which is the most common shape. But there are different types of heaters and different shapes and configurations.

This particular case on the Gulf Coast, the burners are mounted and firing horizontally on opposed walls at the end of the square box. They're firing in towards each other. There are a number of heaters of this configuration, getting into and getting this reference and demonstrating the burners performing well in this configuration provides a very good reference for us and opens up this new type of heater for ClearSign and expanding our market. So it's actually not just showing what we can do in control of the flame shape and making the heater run better, it's also getting us a reference and an extension of our product line into the horizontal configuration.

Right. So it's demonstrating a larger applicability and expanding our addressable market?

Yes.

So then let's turn to the 32 burner order and how is this order progressing?

So this order is very similar to the first in many ways. So we received the CFD and the engineering order upfront. That has gone very well. The same as the first order, this project has also been split into 2 parts and the first part being accelerated. So we're actually going to expect to move into the testing phase quite soon. In fact, we recently received the order for some engineering to support that test. And then after that, expect to move in and be able to make the product for that first heater ahead of the schedule that we originally anticipated. So that's good news.

That's positive. And then since we're on that previous order, we're talking about designs or applications. Is this a standard application or a configuration?

These -- it's amazing how similar these projects are. This is -- it's a different configuration. This is a flat burner. So whereas the standard burners around, in fact, the horizontally fire burners we just talked about around, this burner is a long thin flame and the burner is designed to fire up against the wall inside the heater. To get the heater, the heater has a either a brick or a concrete, a high-temperature concrete wall, the burner heats the wall up, heat radiates on the wall onto the process tubes.

What's especially interesting here is there are a large number of heaters and refineries of this configuration that makes this burner very relevant. What's particularly interesting in is looking forward to our product development pipeline, we're looking to get into the petrochem and specifically the ethylene manufacturing heaters. And having a flat burner that fires up against the wall of this configuration is a very common format in the ethylene furnaces. And that industry in itself is about the same size as the entire refining industry if we can get into that production.

So these burners, as we're developing them for this refinery process heater are a good step in that direction. It shows our capability to produce the shape of burner. There's still work to do to get into the ethylene furnaces, but I believe this can provide a very valuable step forward as we move into and expand into that ethylene markets, are very exciting for us.

Yes. So not only are these 2 orders, large orders for us, they're both different configurations and each one that are going to be great references and expand our applicable market.

That's true. And I think at a higher level, when you look at these, I think what is showing with our very developed CFD capabilities and a very adaptable burner technology that we developed through the government SBIR program is that we have the ability to take our standard burner and to adapt that to meet the special needs of customers in these different heater applications where the burner has not been successful.

So it truly platforms and showcases what we can do at ClearSign, the high level of engineers that we've been able to recruit and hire the sophisticated CFD technology that we deploy, the experience within the company, combine that with the IP that we have and what we've developed through the big SBIR project we've just completed. I think it shows those capabilities at a high level and how we can adapt this technology and readily take it and put it into these different configurations and show the success that we've been able to show.

Okay. Well, then beyond these 2 existing projects, what does the pipeline look like? Now we did mention a story on the last call about a new major refiner wanting to get quotes on 10 or so heaters. Have you seen any of these requests?

We have -- again, let's take a step back, if we can. We gave an update call in February of this year. And the main reason we did that is we've seen a shift in the type of inquiries for quotes that we've received. Basically, we started to get a lot of interest from super major household name, major refineries have rolled into the orders we've just talked about, but there was a lot of other interest from these big customers that we've been pursuing and had not had great success while our technology was just not well known or trusted within the industry. And seeing that significant shift in the market dynamic was very relevant, leading to the update we gave in February.

So as part of that call, we did talk about one instance we discussed was through heater engineering company, by Wahlco, one of the major refineries and one of the key decision-makers, subject matter experts there talking to his close relationship person at Wahlco to get references of their experience working on the 26 burner project, a turn around and asked Wahlco to refer 10 projects that they have lined up in their queue to ClearSign for input going forward, right?

So now to date, we've received 4 of those inquiries and been able to provide proposals for them to set expectations, right? These type of projects are usually scheduled over a long period of time. They're scheduled around our refinery turnarounds and project planning. There's a lot of work. So this is not all work that's going to come in, in the next 12 months. Some of these are scheduled out years and will continue to be. But in terms of building up our proposal backlog, this is very significant. So to date, we've quoted 4 of these. We expect more to come.

Great. And then for those -- and you're right. And referring to that last call in February, we did talk kind of a market dynamic that we're seeing, right? Larger customers, larger facilities, larger heaters, thus, we're seeing kind of larger orders, quoting larger orders.

Yes.

And then from that, could you talk about the total process burner pipeline in general?

Yes, I can. So just as a -- put some data points out of those 4 heaters for that refiner total about 73 burners, I think, is the total for those 4. In the last call, the -- we gave a general number, the backlog quoted was around 200. The -- and that included what we knew about the 10 heaters from -- because we've continued to get inquiries. We received some more, and I believe that total around 225 as we sit today. And again, those are also from household name well-recognized major refiners.

And then what sort of -- I mean we also talked about in the last call, but what sort of marketing initiatives do we have kind of on the horizon coming up? We mentioned a demonstration coming up later this month.

Yes. I mean there's obviously -- we're pushing LinkedIn and advertising campaigns. But the big event right now, we have a new burner technology we developed under the DOE SBIR grant. That development was completed last year. And the last part of that project, we're actually releasing that and demonstrating that to industry in a couple of weeks on April 23. So we have a demonstration going on at the Zeeco test facility with decision-makers and subject matter experts from major refineries and engineering companies coming in to town for that.

And how does this compare? I know we've done previous demonstrations like this, but maybe just could you give a comparison how this might compare? I know it hasn't happened yet. But how does it look like so far compared to previous demonstrations that we've done?

Yes, we can because we -- obviously, we track the responses, the invitations and new crews coming in. Much like the dynamic in the market and proposals, we've got a -- the previous demonstration, I believe the attendance was around 16 to 18 people. So far, we have just over 30 and counting people coming into this demonstration. But what's particularly important is who is in that 32.

So we have key decision-makers, subject matter experts from the major refineries and major engineering companies, including customers that we're bidding to and have on the respective pipelines coming in to see. These people are taking time out of their schedule, flying to Tulsa, spend a day with us. So this is a very pleasing development for us.

Yes, I think it will be a great event. Well, then let's shift to the M series, which is our midstream focused product. Jim, like you did with process burner, would you mind kind of describing the midstream application and maybe in comparison to the process burners?

Yes. This is -- so the industry to start with, right, the refining and petrochemical is taking crude oil and processing it to an end product. The midstream, we're moving upstream. The midstream is really transportation and predominantly with this being about gas, it's also the purification and the cleaning of the gas. When it comes out the ground, it's got components in you don't want to burn, so it gets cleaned and then transported to the gas you'll see coming out in your homes and the client side.

For the heaters and burners, the equipment is typically a lot more simple than the refinery heaters. It's also a lot more standardized. So that means that the burner products that we have can be designed, but once designed, they don't get customized on a job-by-job basis. The fuel is always natural gas compared to refineries where you got a whole mixture of blends. The business for that reason, can be much shorter cycle. The burners tend to get built to existing prints. It is a very low consumption of engineering and project management resources once the products have been developed. So it's a very -- well, it's based on the same technology and expertise in terms of the product line itself and how we think about it, it actually operates very differently to the process.

So we can take an order to revenue much more quickly. We don't have always detailed visibility of the pipeline because once clients -- our clients heater manufacturers, once they have pricing of our burners, they will use that pricing on multiple occasions whenever they have an application for that burner, they don't come back to us for details. So there are, I'm sure many quotes out there using our equipment that we don't even know about.

And we did talk about pipeline. I know, again, we keep referring to that last call, but we did mention I think our proposal pipeline on that last call, which sits about...

It was about 50 at that time, I believe.

5-0?

Yes. And they continue to come in. And like I said, that's what we know about. I'm sure there are others out there that we don't know about at this time. I think just on that note, right, we have -- there's 2 burners. We have an M1 burner that has run now for many months. That's our first burner, that's the ultra-low burner that burn ran around 2ppm, far exceeding any requirements of these burners. But we've also developed a lower cost, what we call the M25, which is a lower spec burner for a much broader application. There's a lot of inquiries using this burner. The first of those started up 2 weeks ago, met all requirements, that burner is up and running. So that was a very pleasing development for us to actually have one up and running at actually Devco heater down in Texas.

Okay. And that's through Devco. And that was the dynamic we talked about how we sell to third-party manufacturers, companies like Devco. Have there been some developments with these third-party manufacturers?

Yes. I mean the -- in particular, Devco, watching the news. So we've mentioned Zeeco as our partner, Zeeco is a multibillion-dollar company. Zeeco actually purchased Devco, now Zeeco. So they are now very close to our office. I believe -- well, the first thing that happened was I reached out to Zeeco at the same time that Zeeco reaching out to us to confirm that the ClearSign would still be part of the Zeeco business. So we were both pursuing the same goal there. So that's very pleasing. My understanding is Zeeco has obviously taken that business over looking to grow it. They have a lot more resources than the old Devco. So I believe that's actually very good. We could be seeing a lot more Devco work in the future.

Okay. Great dynamic. So then we've covered refining, we've covered midstream. Let's get closer to the production well and talk about another product line, flares. Now this is a product line that we've seen a strong resurgence and expansion in orders and in the monetary size of orders. So can you give -- just like the other 2 product lines, Jim, could you give a brief description of our flare products?

Yes. So most people will see flares, you -- when look at more refinery, you see the large flames on very tall sticks or pipes or stretches going up in the air. There are many different types of flares, right? Ours are a much smaller flare. The typically stand 30 to 50 feet high or they're inside of that size of vessel, they are enclosed flame. And the reason they built that way is that like our other products, we have a low emissions flare. So on flares in certain regions of the company, they're also required to control their NOx emissions.

We have a burner product that can do that. The earlier orders for the flare burners we took were to upgrade the burners in existing flares. So basically, our clients have purchased flares from another supplier. The flares didn't work, but they couldn't meet the emissions requirements. They came to ClearSign to replace the burner, which we did inside the existing stack. Those orders to us ran in the region of $200,000 to $250,000 per burner order.

Recently, our clients have seen benefit from having us replace more and more of the equipment. So now we're typically replacing not just the burner, but replacing the fuel control system, the blower and in fact, the elements of the stack. The most recent order is a good example of this. We refer to them as system project by replacing the entire system. And these orders are coming in on the low end, $500,000 up to about $1 million apiece, the last order was right around that $1 million.

Right. And so we talked about that, that our most recent order was, I think, the customer's fifth order from us, and that customer evolved from you say, just burning -- excuse me, just ordering the burner parts, morphing into a full system. And this last full system came in around that -- closer to that latter number, the $1 million range. Is that correct?

Yes, that's right.

And then what does our prospective pipeline look like here for this product?

Yes. So I mean just with this client, we have one flare with them is due to stop at start of any time is just waiting on a component, which is not as supply somebody else's supply. We have the one that we've mentioned now that is being built. We believe or understand from them that they have 4 or 5 more flares that they will need. Now we don't know exactly the timing, but that's -- there are more flares needing low emissions coming up based on California and also, we believe also the Midwest.

When we think about this technology though, we also look at it in a horizontal, which generally referred to an incinerator or thermal oxidizer. And in that format, the ability to burn a hard-to-burn waste gas has a lot of inerts is another big cost driver, right? If typically, the client will have to buy natural gas to burn this type of gas completely. With our burners, we can burn this in its raw form, don't -- without the need to buy any supplemental gas. And we have a number of projects quoted and hopefully going to come through later this year based on that.

So those -- we generally group those also into that description of system projects. So both in the vertical enclosed flare format and in the horizontal incinerator or thermal oxidizer format, we're seeing a fairly healthy pipeline there. And in the latter in the thermal oxidizer format, there are a lot of renewables applications. So it's not just the refining and the wellhead fields, it's getting into other industries.

Okay. So you can look to some potential continued momentum in this product line.

Yes. Very much.

So with that being said then, Jim, we're partway into 2026. And looking forward into this year, what are the milestones that investors should be looking for?

I mean very clearly, at this time, it's all about building our backlog in the company. So getting orders in. But we're seeing significant opportunities out there now. We need to bring those orders in-house. So we've got that backlog to consistently get to a breakeven point and to stay there. So we're bringing in these large refining process orders and by building on that momentum.

The start-up down on the Texas Gulf Coast is going to be a very significant reference point for us. I believe there are a lot of people watching that project. The demonstration on April 23 in just a couple of weeks to industry is going to be very significant all in [indiscernible] all about building the backlog, bringing these orders in, growing our traction with the refining industry and pushing out with new shapes and getting into more heat and showing what we can do. We're getting more and more of that work.

Beyond that, the flare systems projects and thermal oxidizer projects with the size of those orders, that can be a very meaningful revenue stream for the company. So we are absolutely looking to push and maximize the references from the installations we get in that segment. And the midstream, there are a lot of quotes out there in that midstream industry just bringing those in and turning that into a routine business for us.

Okay. That's great. So that's all the prepared questions I have today. So with that, let me take a pause, and we will open it up for Q&A from analysts and investors.

[Operator Instructions] Our first question comes from Peter Gastreich with Water Tower Research.

So congratulations on your results and a great start to 2026. Just first of all, I appreciate the detail around the burner order configuration. Are you able to expand a bit more on what this will mean for your addressable market? And how would you characterize the size of the market opportunity?

Thank you, Peter. I mean the -- it's actually very large. The most pleasing part about the SBIR project was the burner platform that we've developed. It's certainly a very good straight refinery burner. But the way that the burner technology is structured, it allows us to adapt it to different shapes. So in the quarter, the 2 orders we talked about, if I had to put a number to it, it probably adds 20% to 25% to our refining coverage in just those 2 formats.

But when you think larger about what we can do with that burner, I mean I truly think it opens up the door for us to get into the ethylene production, as I mentioned, which is about the size of the refining industry in itself. And I'm not sure where the boundaries are, to be honest. It's just a very flexible burner format that is very applicable, I think, and can probably open up some new markets we've not even considered yet.

Okay. Great. And so for the fourth quarter, you had a big jump in revenue with that equivalent to 70% of the full year. Meanwhile, you mentioned before that Zeeco made a substantial effort to ship 26 burners by year-end. So with your technology really being something you as potentially being disruptive, big addressable market out there, orders could expand meaningfully. How should we think about the capacity of Zeeco and the supply chain to facilitate this large growth outlook?

Yes. I mean when you put things in perspective, right, Zeeco is a multibillion-dollar company. They have global manufacturing. So I would love to be a supply problem for Zeeco. They have the biggest test facility in the world. They truly have -- up in the region, I believe, north of 15 test furnaces there. So they -- it is not a problem.

Also for the other product lines, we have multiple other manufacturers in Tulsa that we can use that are used to manufacturing equipment for the combustion and the oil industry in general. That's part of the reason we moved the company here in addition to the human personnel and the expertise here. So there -- believe me, there is very adequate resources within Zeeco and then within Tulsa for the other product lines for ClearSign.

Okay. Great. I'll just ask one more question here before getting back in the queue. So it looks like your installed base here is on a solid trajectory. How should we think about the aftermarket pull-through here, maintenance, spare parts, things like that as a contributor to future revenue? Like how substantial will that be?

I mean based on what we've seen at ClearSign and also for me, based on my prior experience, it is an extremely meaningful product line in itself. It is very profitable because the -- all the engineering and the design work is done, and the clients' need is based on responsiveness. So it's very profitable and the more equipment we get out as our business grows, it will continue to grow.

And it is likely that in terms of profit margin, it may well end up being close to the largest source of income for ClearSign as we look further ahead in the field and as we get more equipment out there in the market. So it is a very important product and one that we pay a special attention to now because of how important we expect it to be in the future.

[Operator Instructions] The next question comes from Amit Dayal with H.C. Wainwright.

Just with respect to sort of cadence of revenues in '26, how should we think about quarterly revenue flows this year?

That's a great question. From a quarterly perspective, Q1, I feel confident in saying that it's not going to replicate Q4 of 2025. But from an overall annual perspective, we feel confident with the revenues for 2026.

I think if I can, just in general for, we've said this before, given that our orders are very large and also long term, our revenue flows will be lumpy, right? We're not going to get consistent smooth quarters, especially not at this stage. As the business grows and we get more orders in-house, that will tend to smooth out with the volume. But at the period we're at right now with these large orders, I say it's going to fluctuate. Looking long term at the -- well, we talked a lot about the interest from our customers and the pipeline we're seeing on the proposals. As that flows through and those come in, I mean the long-term view for the company is very healthy. I chime really just to caution that I do expect things to be lumpy in the short term.

No, I appreciate that. Just wanted to see if that is still sort of in play. Not expecting anything different, but it's good to know how we should think about '26. And then just from a balance sheet perspective, are you comfortable as your orders ramp with respect to working capital needs, et cetera, to meet your growth requirements?

Yes.

Yes, we feel very confident in the cash position that we have.

I think for the new investors on the call as well, it's good to point out with our projects that they're typically self-funding. We actually bring enough money in early in the project to cover our cost for the execution of those orders. So we do not need cash. So as the large orders in our pipeline come in, we don't actually need our cash to execute those orders. We typically get that cash in, in advance of our costs or expenses.

Okay. Understood. And then just last one. With sort of this current macro situation in the Middle East, in the energy space, some of the product deployments need downtime, et cetera, for customers to put these things into play. Do you think you might face some pushouts from that perspective? I don't know, it may be too early to tell, but any thoughts on how that part of the execution...

So you're referring to the Middle East?

We lost Amit's line. I will see if I can get him back on the line for you.

Okay. I believe he was asking about the Middle East and the structure there. So those projects will be long term. We don't know what is happening there. Typically, the emissions regulations in the Middle East are not in the same level as those in the U.S. So it's unlikely that ClearSign technology will be deployed to the Middle East in the near term.

No. If that increases the demand and the production in the U.S., it may well drive the need for equipment or upgrades in the U.S. There may be some benefit there for ClearSign. But to be clear at this point, I don't see ClearSign products being shipped out to the Middle East just because there's not a need for them.

And I'm going to go ahead and dovetail a question that was sent in about a similar topic. There was a question asked, Jim, if there was a great need for U.S. products being sent there, could our, in a sense, manufacturing supply be disrupted? Could we have issues getting our own burners manufactured, let's say, here locally?

Yes. I don't see that as being a concern. I mean one of these projects tend to be long. But also if we're thinking most of these will be refineries, if it's Zeeco. Zeeco is a global company. They have manufacturing around the world. In fact, they actually have a manufacturing base in Saudi Arabia there to serve the Middle East. So our products are typically manufactured in the U.S. plant. So I don't see that as a concern at this time.

And I'll give another follow-up question, if I could, Jim, from an e-mail that came in. There's been also very news kind of relevant. There's been a lot of discussion of potentially the first new refinery being built in Texas. Are we seeing or hearing anything about that?

We obviously see the news, and there's been a couple of release out this week. Within the industry, we're not hearing much actual factual news. So we're watching it closely. I'm -- I think at this point, I'll just say we are paying attention to it. I would not put too much at stake at this time. As things develop, if they do, and they've mentioned there being a hydrogen fuel to that site. If that does materialize, it could be very relevant for ClearSign. But at this point, we are watching 4 developments, let me say, there's -- we've not seen any solid details about that yet.

Okay. Great. Jim, I'm seeing no more questions. So with that, I think we'll go and wrap up the call. I will pass it back over to you.

Great. Thank you, Matthew, and thank you, everyone, for joining us today and for your interest in ClearSign and especially for taking the time to listen to our call. We will be presenting at Water Tower Research Insights Conference next week on April 15. and the company can be found on their website, watertowerresearch.com.

We look forward to updating you regarding our developments and speaking with you on our Q1 2026 call, which will occur in May. In the meantime, please keep checking in for developments on our website. And for more behind-the-scenes updates, please follow us on LinkedIn. With that, thank you very much, and thank you, operator.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to the ClearSign Technologies Corporate Update Call. [Operator Instructions] I will now turn the conference over to your host, Matthew Selinger, Investor Relations. You may begin.

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation's update call. ClearSign does have a special meeting later this week, so the purpose of this call is to give a business update ahead of that meeting. I want to note that we will continue our normal practice of regularly scheduled quarterly conference calls.

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.

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 described in ClearSign's filings with the SEC, including those discussed under the Risk Factors section of the Annual Report on Form 10-K for the period ended December 31, 2024.

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 with me on the call today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer.

So with that, I'm going to hand it over to Jim.

Thank you, Matthew. As always, I'd like to thank everyone for joining us on the call today and for your continued interest in ClearSign. We have received some questions, which we will work into the conversation today. Matthew will lead the call and go through the Q&A session.

And with that, I'm going to hand it back to Matthew.

Great. Jim, Brent, thank you again for taking the time to do this. Brent, the company finished the year strong, and you released preliminary Q4 and full year results over a month ago back on January 7. Would you mind kind of just giving an overview of those preliminary results?

Yes, Matthew. Thank you. Our preliminary revenues that we released reported approximately $3.6 million for Q4 and a full year revenue number of $5.2 million. And recall, we reported $3.6 million for the full year of 2024.

So it's very fair to say that Q4 was a record revenue quarter for us. I also believe it's important to note that we've consistently reported double-digit year-over-year growth for the past 3 years. I mean reporting a 3-year compound annual growth rate of approximately 141%.

Okay, great. And that was full year revenues were up approximately 44% year-over-year.

Yes, that's correct.

Okay. So Brent, again, what product lines were the drivers of that record Q4 revenue?

The majority of the record revenue was from our 26 burner order to that petrochemical company down in the Gulf Coast. But I think it's more important to note that our fourth quarter revenues also included revenues from our other offerings like Flare offering. We were able to execute engineering services like CFD studies and installation service revenue.

We also recognized other process burner revenues from customer witness tests, 2 CFD studies with 2 unrelated customers. We also delivered some spare parts orders as well. I believe this shows progression on our 2 strategic initiatives: one, diversification and the other one, market penetration, but Jim can talk to that in more detail.

Yes. I'll just give a little bit of color. I mean that trend is certainly continuing. We've recently launched what we're calling the Gen 2, the new ClearSign Core burner technology. This was a result of the DOE SBIR funding program, the flexible fuel burner.

I think the combination of that technology and the experience people in the industry have had from our recent orders have led to a significant uptick in the inquiries and engagement in our process burner line. The midstream industry continues to be strong.

We've seen a very healthy income of inquiries for the M Series burners and our flare product line has continued to grow both in the number of opportunities and in the scope of those opportunities. But just to follow on from what Brent was saying for everyone. I mean, amongst all of those, we continue the services.

And very importantly, as we get equipment out in the field, it continues to generate aftermarket business for us, especially in the parts sales. And as we get more equipment out into the market, that will only increase and will continue to become an increasingly meaningful revenue stream for ClearSign.

Great. So going back to that 26 burner order, Jim, could you remind us who that was for?

That was going down to a major petrochemical company down on the Texas Gulf Coast.

Great. And when will this be installed and fired up?

So the order was completed that was ready to ship by the end of last year. That was kind of -- I think it shipped down early this year. It is due to be installed, I believe, late Q2. We don't have exact dates for the startup, but I expect it to be around the middle of the year.

Okay. But Brent, you mentioned that we were able to book the majority of the revenue for this.

That's correct.

Okay, great. And keeping with this customer then, and we did discuss some of this on our last call back in Q3. The same petrochemical client had ordered comprehensive testing of the new 100% hydrogen capable burner. So Jim, why would a company do this?

I obviously can't speak for the customer. But what we've obviously talked about it with them in informal conversations. What we know is this testing was truly comprehensive. We had a wide range of different fuel gases. We had to demonstrate the burner across.

And the -- those fuel gases were chosen to represent the fuel gases of this client's facilities around the world. So it's definitely looking wide range. They were with us for about a week. So we spent a lot of time looking at this burner. This is truly a very comprehensive testing. And I believe that they are assessing this new technology.

They've got experience of this technology from the job going down to the Gulf Coast. They were very involved in that. And at this stage, I believe they're looking at their technology upgrades and their plans and scheduling for their fleet. And as part of their planning, they're looking for the role of ClearSign technology in those plans.

Right. So again, you ran the fuel specs from the kind of their global fleet, if that's correct?

I mean we've -- they represented the extremes of the global fleet, right? You don't -- don't do all of them, but a summary of them, you right, take the blends, the fuels available and you mimic the fuels of the different sites.

All right. And was this testing completed?

It went really well. Yes, it was completed. We've gone through a thorough report that's been submitted, and they were in attendance through this testing. As I said, they were with us for about a week and put the burners to its bases.

And that was all in Q4. And then -- so are there discussions going on with this customer regarding additional deployments?

Yes. I mean I need to be careful because obviously, a lot of this is considered confidential. I think it's fair to say that we are in good faith planning. We do not -- to be clear, we are not working on any specific orders at this time. But obviously, we wouldn't be working in this nature with the client if we didn't believe there was future interest in it for ClearSign.

Okay. So moving away from that one customer, let me ask about process burners from a larger market perspective. And let's start with the announced orders in terms of kind of getting into the pipeline here.

I know we've announced 2 large orders, one from a super major and one from we're calling it a name brand, and we describe it as such since you could, for instance, see this name when you're driving around to fill your gas. Would you mind diving in and talking about those 2 orders, Jim?

Yes. I think there's a really good starting point. So these are both very well-known major refiners. The first -- so these orders we have to date, the orders that get often progressed from an engineering phase to a testing phase and then into manufacturing equipment. So the first -- we're in that first phase.

So this is the early engineering. The first is 36 burners. This is going down to a single heater on a Gulf Coast refiner. And the second is the 32 burners going out to a California refiner. I think one of the -- I want to put here is when we start -- these are bigger clients. These are globally known household name clients.

These refineries process a lot more oil into gasoline. The heat is a lot bigger. They've got a lot more heaters. So as we're moving into this type of customer, a single order can encompass a lot more burners. So here, the 36 burners going down to a single heater in Texas. This is a significant development for ClearSign and the same for 32 going out to California.

And the 32 is 2 heaters for 1 order.

It is, yes.

So bigger, both in a sense are much bigger than anything we've announced in the past.

Yes.

Yes. Great. And then -- so can we talk more about the pipeline, if you don't mind, besides the announced orders, are you talking to other companies? And perhaps give us what visibility you can to that pipeline?

Yes. I mean, yes, there's a whole range of different ways that these inquiries come to us. But I think one of the big shifts for ClearSign is just the number of major clients that are now coming to us for inquiries. There's right, just from these, I mean, they're on our sister sites of some of the existing customers that we have inquiries with them.

We have other clients that have come to us through our own sales outreach. I think they obviously talk to the other people within the industry, within inquiries. And we actually -- what's really interesting is we've had -- there are some major clients out there that we've not been able to get to talk to personally, yet we have those clients through engineering companies still coming back and asking for ClearSign solutions to be included in their future planning.

So it's a really good sign. I think the industry is quite tight knit. But the fact that we've had people from the industry spend a lot of time looking at this burner. We've completed the manufacturing and the shipping of the burners going down to the Gulf Coast. I think that is getting recognized and leading to a lot more confidence with the rather big decision-makers within the industry to start to engage us in their planning process.

And then so would you be willing to go out and let maybe quantify some of this kind of prospect pipeline?

I can. I mean these are -- right, they're known -- they're not -- we don't have all respects, but they're known opportunities for us. And let me -- to get an idea of where these numbers come from. As an example, one of these clients, right, through our sales outreach has reached out to others in the industry that have had personal experience with our burners.

And as a result, have identified, I believe it's about 10 heaters within their global refiners or refineries that would need burners and the ClearSign should be a good solution for, right? We've not received all those specifications yet, but that's one particular -- just from one particular company. We do actually have the first of those 10.

We're still waiting for the rest. But it's not just to how these numbers have recently built up from my side, why we're getting so excited about what we're seeing for the long-term prospects of ClearSign. But you asked about numbers. So that understood, I mean, aggregating the numbers we've got, I believe the inquiries on our horizon that we're aware of are totaling between 200 and 300 burners.

Burners, right.

200 and 300 burners, and they're probably spread over about 15 to 20 heaters is our estimate from what we've been told and been able to pick up to-date.

Okay, great. So you mentioned again, one potential client may actually have up to 10 heaters themselves. And then the market dynamic that you addressed earlier, I wanted to maybe just kind of go back and highlight that you mentioned, obviously, we're working with bigger and bigger customers.

These customers have bigger facilities, thus they have bigger heaters. In the past, again, we've talked about multiple burners in a heater maybe being 4 to 5. You just said a while back that these heaters, for instance, their current order flow, one is 36, there's 32 divided over 2. So again, we are now dealing with bigger and bigger companies, thus, in a sense, potential bigger, bigger projects. Is that?

That's right. I think on top of that, the key people we're working with work across multiple refineries within that same customer. So as they get experience of ClearSign technology, it's not only that one refinery that gets experienced effectively, it's pass-through. They are responsible working on projects across the other refineries within that company at the same time.

Okay. Well, I'm going to ask a high-level question, and I hope it doesn't come across as silly by any means. But is ClearSign a known entity in the process burner world in your opinion?

Yes, it's hard. So I think the evidence that we have supports that, right? The shift in the opportunities that we're getting, especially the fact that we are getting inquiries from end users that we have not been able to talk to directly that they have still asked for our technology to be included in their projects.

And I think it's another data point, if you like, we are -- also, we're very proud of this new burner we've got. I think it's an incredible thing for the industry. We're putting on a demonstration day at Zeeco in April. Previously, there are a number of key people within the major refiners and petrochemical companies have tried to get in.

And while we get time, we talk to them, we've not really got serious consideration for them. We have those people coming into this demonstration, right? They've taken their time out. They're flying installed, so to spend a day with us.

So the fact that we're -- it looks like that everyone is starting to understand and to have confidence in what ClearSign can offer and to give it enough consideration to be able to carve time out of their schedule, I think is very supportive of us being recognized in the industry for what we can actually do.

Yes, that's great qualitative information. Let's shift the conversation here to an adjacent product, the M Series, which again is focused on the midstream. We had an initial flurry of orders when it was first announced. And then towards the end of the year, we had a few more. And this product has mainly been sold through channel partners like heater manufacturers, THM, Devco. What are we seeing with this product line, Jim?

We're actually seeing a lot of activity in the midstream and the gas pipeline industry has been very buoyant Admittedly, we have not seen a lot of orders in the last few months, but that does not reflect what we're seeing in the interest in the industry. I mean just to put some round numbers to this, we have about 50 active proposals for M Series burners at this time.

And in the last week or so, we've had another 12 inquiries come in that we've not yet had the chance to quote. So they're coming in rapidly. There's a lot of interest. So while there's not been a lot of orders, the fact we've got that number of quotes out there, I am very optimistic that these will obviously come through the system and turn into purchase orders at some point in the future.

Okay. And are you willing to put a potential ballpark price tag on those 50?

Yes, I did. Sum them up, it's in the region of $10 million, if you look at the sales price. I mean clearly, they're not all going to come in. They do tend to move out, but having that many out there gives us very good confidence we're going to get a very meaningful stream.

Yes, it's a healthy sales.

Yes, exactly.

Yes. I did mention Devco in the previous remarks there. And many of our investors, and this is an investor question as well, by the way. So thank you. It was in the news that Devco has recently acquired by Zeeco. What do you think this means for us?

I'm actually quite excited about it. We obviously saw the news. We're actually in close contact with Devco. We can talk to Devco. We -- in fact, I was reaching out to Zeeco to ask about how this relationship develops, they were actually reaching out to us at the same time with the same question about how can they continue to buy the ClearSign M Series burners for the Devco business. So that was very positive.

What I've been led to believe is Zeeco bought Devco to invest in that business and to grow it. Zeeco have huge resources. So I believe that they're looking to put more resources on the Devco business and actually get -- bringing more business.

And through the conversations about them continuing to use the ClearSign burners, I'm actually -- I think this is going to be very good for us. We also have a very good relationship with Zeeco. We had a good relationship with Devco as well. But from that perspective, I don't think there's anything but good news on this with ClearSign.

Okay. So going back to some of the early comments about Q4 that Brent mentioned, having revenue contribution from multiple product lines. One of them was flares. We did just announce another flare order and in fact, a flare system. Jim, could you give more color on what this order is? And what does the system compared to just a flare burner?

Yes. Maybe if I can, it make sense just to take it back one step further and explain what the flare burner is and where this is going. I mean these -- so the -- there are many types of flare in the industry. This particular type that we sell is going into clients like the oil companies pulling oil out of the ground.

There is often a low-quality waste gas that comes out of those oil fields that they have to -- if it's out in a remote area, it has to be disposed of cleanly. And that's the flare that we sell allows them to do that. It's an enclosed flare, it burns in a big vessel. The key -- or a couple of key features of the ClearSign technologies is we can do that and guarantee low NOx emissions, which is a requirement that's increasing in the Western states.

We also have the ability to burn completely a very low-quality gas. The gas can have a lot of inerts in it, a lot of things that don't burn very easily. We're able to handle that. The flare burners that we've been selling was a special burner element that could be at that point, be fitted into somebody else's flare, maybe replacing a burner that wasn't working properly or had some other problems.

So we could upgrade the existing equipment to meet that performance criteria. But what we've found recently is the clients have often a need to upgrade the entire system. And we've developed that from selling just that burner technology in order to be in the ballpark $150,000, $200,000 into supplying more and more component of the complete system, which will include the vessel and the controls and the fuel control systems that go into that flare. And that takes a single order of what would have been a 200-pound burner, we're able to leverage that into about $1 million systems order.

So this order was closer to that -- by the way, it was the fifth order from the same customer. So now we're really a supplier to them. But you would suffice to say that this would be closer to that latter number you just quoted.

It's actually right around in that range, yes.

That's great. And then so what does the pipeline look like in regards to this product line?

It's actually looking quite healthy. This is a product that's continued to grow. So this particular client obviously has experience of ClearSign flares. This is their fifth order. We believe that they have the need for or very likely the need for more flares in their future. These regulations are in the Western states.

So we believe that also that there are -- there's more opportunities outside of this one client for us to grow into. And as we supply more of the equipment, I think the scope is going to get bigger. We're going to be selling more of the systems, but there's other variations of it as well.

I think another interesting feature is essentially, if you take the flare structure and you turn it horizontally, it becomes a thermal oxidizer, which we can also make and sell as the systems. And we actually have some very solid proposals out and leads for thermal oxidizer systems in the future as well.

So in terms of growth, I think there's more with this client, there's more clients, there's more space. And then we've taken the technology and we've also got it adapted as a thermal oxidizer configuration as well and have clients for that type of system.

Interesting. So again, this is a product line that for a while was kind of, call it, quiet, but it sounds like it's a product line that's growing quite healthily for us, could be quite a contributor going forward.

I believe so, especially when the orders are coming in, in the, let's say, $500,000 to $1 million a piece, it has the ability to be a very significant revenue stream for ClearSign.

Great to hear. Speaking of revenues, I'm going to pivot to some financial details, Brent. What was the approximate cash balance at year-end?

It was approximately $9 million.

It was $9 million?

That's correct.

And that's down from just over $10 million at Q3.

Yes, that's correct. Now recall, we started the year in 2025 at approximately $14 million in cash. So we ended the year with approximately $9 million in cash that brings our average quarterly burn rate to about $1.25 million.

Okay, great. That's great information. I'm going to go and bring in another question here from one of our investors. So thank you, investors again for sending questions in ahead of time. But Jim, there's been some news recently about federal regulation changes and in particular, the recent repeal of the Endangerment Finding. Is this affecting your business now or do you see that it may?

First of all, yes, this question, thank you. We've actually heard from other investors as well, it's always good to know all your interest. Thanks for the question. I think there's two elements this both. The short answer is no. We don't. I think the -- the technical reason is the Endangerment Finding regards CO2 emissions and predominantly the vehicle emissions, right? So that in itself does not affect ClearSign.

The main driver for ClearSign is the NOx emissions, which is a criteria, one of the emissions that were at the basis of the EPA regulations. And we've seen no indication that there's any pressure or question as to why the NOx regulation should be reduced. In fact, we continue to see them be tightened up. We see them, right? Texas is in the process of finalizing their plan.

Of course, we've recently seen the regulations updated in California. And from general news in the industry, it's a continuing trend. So we're not seeing that reduced. I think the other -- the other answer -- the other way to look at this is we talked about the amount of work that's out there for ClearSign, the amount of projects that the refiners are asking for ClearSign solutions for.

We're seeing the same in the midstream that a lot of NOx burners are getting a lot of inquiries, a lot of traction. The reason we're talking to Zeeco about continuing to supply our burners into Devco now part of the Zeeco business, all of those are driven by NOx emissions.

That's not just from us, just the feedback from the market is suggesting that no one has taken their foot off the gas, maybe it's a bad pun. Regarding NOx emissions, yes, so at this point, I'm seeing no reasons to be concerned or any effects of that on ClearSign.

Great. I want to bring in another question that I -- that came in from an investor that I still get quite a bit. And we did address a bit of this on the Q3 call, Jim, but why don't we give the names of customers?

Okay. This is very -- believe me, if we could do this, we are not holding this back. We would absolutely love to [indiscernible] these names. I absolutely understand that it's a common question, something people -- we get it. It comes up.

The short answer, we have very extensive contracts, as you'd imagine, when you're dealing with companies like the major oil companies and petrochemical companies. And within those, right, there's NDAs and there's very strict language around disclosures, and they're very protective of the use of their name.

And that prohibits us from -- the short answer is we're actually prohibited by those contracts we have to sign with them or our purchase orders that prevents us from using their name. We would very much like to do so, but we have to abide them and want to abide by their contracts because we want to be continued suppliers to them. They have to trust us.

Yes. And I'll give you a little color, too. I mean, on the Q3 call, we did address this as well. I think on the Q3 call, as a reiteration, we mentioned that we're working with 3 out of the call, 5 to 7 super majors, right, depending on whose definition you use. We mentioned other companies as household names.

And again, the term we're using is we should probably use it as called drive timing. If you're driving around and maybe you need to fill your gas, you may see these -- fill your gas up at one of these companies or things like global petrochemical companies, right? So the point is that we're working with bigger and bigger companies, like you said, Jim.

Yes. And when we -- I think it's important to be able to categorize the company as an investor to understand the prominence, significance of the customers we work with maybe to assess the potential future work that they may have and to gauge the development of ClearSign the fact that we are getting orders now and engagement from top-tier global super major companies.

That has been one of our -- something we talked about doing for a long time. We're finally -- we're getting the [indiscernible] when they come in, they really just started to come. I won't say all the ones, but very quickly.

And the dynamics, which you just mentioned, the dynamics that come with these larger customers to break it out simply, larger companies have larger facilities. These facilities have larger heaters, right?

The heaters hold more burners on average, right? We're talking about maybe what, 10 average and upwards. So thus larger projects for us. That's the dynamic that comes attached to -- and again, these names or non-names that we're giving you or descriptors and what it means for our business.

That's why while we can't name them, it's very important to understand the size of these companies and the fact that when we get an order from them, it's typically not going to be for 3 or 5 burners, it may be for 36 in the case going down to Texas or 20, but a significantly bigger number.

And we've -- we put numbers out there for ClearSign to get to breakeven in about 160 burners of the process burner type of that number. This is where that comes from. When you start to see a heater coming in at 30-plus burners, it's very easy to see how you get to that number.

Maybe you add an affair at $1 million that's worth 10 of those burners in revenue. Those numbers add up very quickly. So there's a -- this is where there's a lot of business. We just have to get to the point where we're getting into this type of work that we can now start to see this really building up in our pipeline.

This is that road or that path the numbers you're talking about. Great. Last one on this, though. Do you believe there will be opportunities in the future that we may hear any of these companies' names that we may be able to use them or they may even release their name in conjunction with our technology?

I do. And my past experience supports that. I think the -- it's very likely once we get these projects that we're now excited because we get [indiscernible] as these projects go through the process and get to be installed and successful, typically, at that point, in fact, it's not just mentioning their names, we get to jointly present -- or expect to jointly present with those clients at conferences.

They may be putting their own publicity out because being involved in ClearSign shows them going the extra mile to buy clean air to the local constituents. It's good news for everybody involved. It's good news for local regulators. They can show that they're doing their job.

So I think it's -- nothing is guaranteed, but I think it's very likely that in the future, we will be able to use their names. They will actually be promoting their engagement with ClearSign. Until we get there, we're going to have to just try and give a fair description of the magnitude and really how important these clients are to ClearSign at this time.

Okay. So we've gone through then all the questions, obviously, that have been submitted ahead of time and that I had. So Jim, at this point, would you give a summary or maybe a state of the union of the ClearSign business?

Yes. I mean I think this is a very -- although it's not a typically scheduled quarter call, I think based on what we've been seeing recently is a very timely call. The combination of the SBIR DOE funded burner and what we've labeled the Gen 2, ClearSign called Gen 2. This is the new flexible fuel burner. The combination of having that burner properly developed and being able to demonstrate it and spend time with some very respected and key people within the industry.

And then in conjunction with that working with Zeeco and completing the testing, the manufacturer and shipping the burners down to that Gulf Coast project and having that go as well as it has done, I believe just the conversation of that information disseminating in industry has really led to a growth in confidence of ClearSign within the industry and the serious buildup of high-profile, very large opportunities for ClearSign to fit and this is very significant for us.

The midstream business we talked about continues to be strong. We've had a very steady [indiscernible] there. I'm very excited about the joining of Devco with Zeeco. Zeeco has been a fantastic partner for them to bring that Devco business within Zeeco, I think, can only be good news for ClearSign.

We talked about the steady increase of our Flare business, not only the number of opportunities, but the increasing scope going from a burner sale to a full system sale, I believe that has got great potential for ClearSign. I'm actually going to loop back right to the start of this conversation, we talked about the aftermarket.

It is a significant revenue stream for us right now, but it's not a huge revenue stream for us right now. When you look at the ClearSign business, truly what gets me excited is all of these orders that go out, I see these as being continuing support that ClearSign provides to our clients. But what that means for ClearSign is that is a continuing aftermarket business, and that will continue to grow as we get this equipment out.

So getting these bigger orders out to more burners out in the field means more aftermarket. Our clients want the aftermarket service. That's us supporting our clients. It's also a great business for ClearSign. And that is a very big part of the growth of the burner company and is a very big stream of not just revenue, but there's a lot of profit margin in the aftermarket parts for us as well.

Okay. And then maybe the very last thing, Jim, are there any sort of acknowledgments you'd want to send out to some of these partners or collaborators?

There are. Thank you. There's -- I'll say 2, I just want to flag 3 things. And I'll do the first one. We are a small company. We built ClearSign to be an asset-light company. We have a team of very talented people, right? You can see here we're having to get involved in many things. We change our technology very quickly. We develop our [indiscernible] greatly.

They've had to be very adaptable. They've had to work well as a team, and I'm very appreciative of the work of the ClearSign team. But 2 other callouts, I actually want to call out the DOE and the SBIR program. That program has contributed ballpark $2 million to the development of our flexible fuel burner we now labeled as Gen 2.

The specifications for that project, I think, was spot on with the industry needs. So a very well-positioned product. This is a burner that can operate across all of the fuel gas that is currently being consumed today and is capable to be ready for a fuel of tomorrow, the hydrogen fuels when they need it.

That means we've got a burner that the clients can put in now that does everything they need and meets the most stringent NOx emissions that we are seeing in the industry. And after they've done that, they are ready to accept the fuels of tomorrow. So it's a very well positioned burner.

And that project worked wonderfully -- that is a fantastic burner that we've ended up with. So that SBIR program has really done a good job here. And I just want to acknowledge that. And for those who want I'd just say, I really appreciate what they're doing. The second is our relationship with Zeeco has been strong. They've been an incredible partner for us.

They've supported us through R&D testing. They support us through customer demonstrations. They obviously manufacture the process burners for us, potentially manufacture the midstream burners for us as well, especially for the Devco business. But I want to point out the burners going down to the Gulf Coast petrochemical company.

From the top ownership of Zeeco down to the guys doing the crating and getting that product done on time for us, they worked with us step by step, working up towards that deadline at the end of last year as the holidays are approaching. They work through weekends. They work long hours to make sure they met those dates.

And I really think they show their character and their attitude towards this partnership in getting that done. And for all those guys involved, obviously, thank you to the public personally, but I'd like to probably just acknowledge what they've done and call out Zeeco for -- it's done a fantastic job for us.

Great. Well, Jim, Brent, thank you guys for taking the time to do this on behalf of the investors as well. Again, thank you so much for taking the time to do an extra kind of update call here. Thank you, all the investors for taking the time to listen to the update. We look forward to updating you on future developments and speaking with you on our regularly scheduled calls.

The next one will be the full year call in April. But in the meantime, please check in other developments either on the website and behind-the-scenes updates follow us on LinkedIn if you don't already. So thank you.

Thank you, everyone. Thanks.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to the ClearSign Technologies 3Q '25 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Matthew Selinger. You may begin.

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation Third Quarter 2025 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.

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's products will be successfully completed, whether ClearSign will be successful in expanding the market for its products and other risks that are described in ClearSign's filings with the SEC, including those discussed under the Risk Factors section of the annual report on the Form 10-K for the period ended December 31, 2024. 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, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So at this point in the call, I would like to turn the call over to Brent Hinds. So with that, 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 on Form 10-Q were filed with -- last week with the SEC. And with that, I'd like to give an overview of the financials for the third quarter of 2025.

For the third quarter of 2025, the company recognized approximately $1 million in revenues compared to approximately $1.9 million in the same period in 2024. This year-over-year decrease in revenues was driven by our activities in the prior year. Recall, during the third quarter of 2024, we shipped a large order with multiple burners to a California refinery customer.

Aside from the comparison and revenue numbers, I believe it's also important to note the difference in the year-over-year order volume. Last year's Q3 revenue was predominantly driven by one large order. And recall, this order accounted for approximately 50% of our 2024 annual revenue. Whereas juxtapose this with this year's quarterly revenue, this year's Q3 revenue was driven by our execution of several orders from our backlog, which has also grown year-over-year.

To be more specific, our Q3 2025 revenue was generated predominantly by delivering multiple spare parts orders, delivering a midstream order, delivering a flare order, finalizing a CFD analysis for another flare order, providing engineering services and completing a customer witness test at the Zeeco test facility for our large 26 burner order. This also highlights the fact that our diversification strategy is adding incremental revenue to our top line.

Now for the full income statement. Our net loss increased by approximately $274,000 compared to the same period in 2024. This year-over-year increase was predominantly driven by the decrease in sales volume discussed earlier. However, I'd like to point out a silver lining in this year-over-year change. Our Q3 2025 gross margin increased approximately 6.1 percentage points compared to the same period in 2024. And it's not just an isolated event to Q3. Our year-to-date Q3 2025 gross profit margin increased 5.3 percentage points compared to the same period in 2024. We believe this year-over-year increase in margin reinforces our overall long-term strategy to target margins between 40% and 45%.

Now I'd like to shift the focus to cash. Our net cash used in operations for the third quarter was approximately $1.8 million compared to approximately $1.4 million for the same period in 2024. This $400,000 unfavorable year-over-year change was predominantly driven by our change in net loss discussed earlier. As of September 30, 2025, we had approximately $10.5 million in cash and cash equivalents with approximately 52.5 million shares of common stock outstanding.

From an overall financial perspective, we believe our current working capital positions us well to scale our business while also providing our customers and suppliers a level of confidence to do business with us for the long term.

And with that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on the call today and your interest in ClearSign. For the call today, Matthew will lead a question-and-answer session, where he'll go through the different business units much like our previous calls. We will end with an outlook for the remainder of 2025 and into 2026. We will then open up the call for Q&A from our investors.

Many of you may have seen this, but you can send in questions ahead of time to our investor relations at [email protected]. So Matthew?

All right, Jim, let's get started. We've got a lot of exciting developments to cover. So Jim, there's been an uptick in order flow in the last quarter leading up to recent days. The orders are not just with one product line as we've seen orders across process burners, flares and even the new M series line. So from a macro or kind of high level, what do you believe is fueling this?

Yes. Thank you. I think that's right. It is very pleasing to see that the increase is coming across our major product lines. I think there are some high-level drivers that are behind this and playing to our favor. The key one, I think we've said this for a long time, just getting equipment out in the field, getting the customers to trust what we do is very important. We are getting equipment out. And in particular, we've got some very large orders that are well in progress, and those are being seen. And I think that, that is playing into this uptick, especially in the process burner orders where we've seen orders and many inquiries from major customers that are watching our projects.

There are ongoing regulatory pressure. There's new regulations being worked on in the Texas Gulf Coast area, a key market for us. And in the California regions where there's a lot of industry South Coast and San Joaquin Valley, those regulations have been in place for some time, but the due dates are coming up, and we are seeing inquiries from customers to meet their obligations under those. And I think finally, as we've got more products out there, we spend more time our products are evolving, they're maturing. And I think the same initiative I just getting installations out there. We're getting a lot more interest from our clients because they are becoming much more acceptable and usable for them.

But I want to ask almost the same question. Thank you for the answer on the macro level. How about then more specifically with the product lines. How about -- let's start with process burners.

Yes. I mean the macro play across these, especially on the process burners, getting the major orders that we have, getting the progress through the testing, having the industry see the products develop and hearing about how that work is going, I really think is influential work spreads very quickly throughout this quite closely community.

Definitely, the regulations in Texas, the orders we just announced, one is from California and one is from Texas, they're right in the regions where the regulatory pressure is playing a part. And on the process burners, we have a very big financial driver for our clients. The cost of installing an SCR is multiples of a burner solution. As the clients come to trust our solution, it is by far the most efficient choice, at least in our opinion.

I mean just a point of reference, the -- what we've heard in the industry for an SCR installation on a major heater is probably going to be in the region of $40 million to $60 million, somewhere around that range. ClearSign is going to be significantly less than that. So that's a very big financial driver for the customers in choosing -- we believe ClearSign as a solution for emission requirements.

And how about in flares?

So flares, I mean one -- again, down to the client experience, this is actually our fourth order with this customer for flares. So they have knowledge of our flares. They've seen what we do. So then I mean, clearly, their experience is playing into this. And we believe they have potentially more orders to come. The -- also regulations in California. They do regulate NOx emissions, which is not the same in every region, but California, we're seeing in Texas and now requires NOx regulations that means that ClearSign has a very valuable product.

And lastly, what are the drivers that on the M Series, a bit different. Isn't it?

The M Series is different, especially the market that we've sold into with these last couple of orders. The M Series burners are really targeted on the gas industry and the midstream gas. This is a very big growth sector of the energy industry, especially with export LNG.

So there's a lot of new equipment being manufactured and sold in this area. And for us, what's particularly interesting is a lot of the equipment that's out and installed is being upgraded, bought into compliance, minimize the downtime. So that leads to a very strong retrofit market. We developed that M25 burner based on that feedback. We've got a client that does that retrofit work wanting a good burner product.

Based on their input, we develop this burner. There's a lot of proposals out there, but these 2 orders are great examples of why we developed that burner. So that's a more unique driver for the [ M Series ] and the gas business in general.

Okay. Great. Jim, let's dive into and dissect some of these orders if we can. I'd like to start with an order that seemed a little bit out of the ordinary, not a Core equipment or engineering order, rather testing. And I'm going to read a couple of things here, the headline. The headline read, ClearSign Technologies Corporation announced its order for comprehensive testing of 100% hydrogen capable burner. And then with the subhead, petrochemical client requesting performance mapping for future deployment. What's this all about?

Yes. This was a very interesting order. This is not a typical order for us. There was no product sale with this order. The customer is a repeat customer of ours. They paid significant money for us to conduct a demonstration of our technology working in -- or working with fuel gas is that they picked to represent the operations of their global facilities. That includes up to 100% hydrogen. So looking at the future options that they may need and being global, the use of hydrogen is very much a consideration for the international market, even if it's slowed down here in U.S. at present. The work was to be conducted at Zeeco test facility. And it was truly an expansive testing, I think, forward-looking on the part of our client.

Okay. I'm going to unpack a couple of different things here, Jim. You say repeat customer. So are we safe to assume a, this is an existing customer. And let me also say it's referred to as a petrochemical customer. So the only other customer that's referred to as petrochemical customer is the customer that has a 26 burner order going to the Gulf Coast. So is it safe to assume it's the same customer?

Yes. I mean this client has a very good understanding of our technology. They've been engaged with us on major testing and demonstration of our burner as part of that project. That's important because the -- this work is not usual. With that background, this is a major customer, we believe that they have a genuine interest in the potential use of ClearSign technology throughout their fleet going forward.

And that was a major consideration when we agreed to do this particular project. It's not something we would do for everyone, but this was a very specific case. And that relationship and their understanding of our technology was a very big factor in us undertaking this work, and it is complete and went very well.

Okay. There's another thing you just said right there, Jim. You said it's been completed, right? So past -- so this project was announced, and this testing project has already been completed. Is that correct?

It is virtually correct. The demonstration is completed. We still have -- we're still formalizing a test report, but the work is done. And the background to this burner, just to take a little segue, we've undertaken a very significant project funded by the DOE and the SBIR program to develop a new burner technology capable of running from 100% natural gas to 100% hydrogen.

We've been working on this now for almost 2 years. It's gone extremely well. The final product of that testing was going through its last physical testing at the Zeeco test facility. That burner was then in place and able to be demonstrated to this Gulf Coast chemical plant. For us, the really appealing thing of having a burner that runs from 100% natural gas to 100% hydrogen is you really hit the extremes of the burner operations.

So this chemical client, when they came with a wide-ranging global fuel requirements, that burner is already there to do it. So we're able to demonstrate that burner, which is the product of the DOE SPR program, and it just worked amazingly across all of those product lines, completing every requirement. So it was a very efficient and effective way wanted to show our new technology to this very high-profile client and a very good demonstration of the value of that SBIR program.

So let me just parse this a little bit. The petrochemical client testing is virtually complete. You did mention the DOE SBIR testing project, where is that project?

So that project is almost complete. Let me explain that a little bit. The technology development and the engineering is complete. That burner met all of the DOE requirements. It met all our requirements, which I'd argue were probably more stringent than the DOEs. It showed its versatility and robustness and ease of use in being able to develop -- demonstrate it to the Gulf Coast chemical client, which really is the big opportunity for us.

What is left to do with the DOE project is our objectives and the DOE expectations are not that we develop a single burner to demonstrate this capability, but we develop a range of burners for future deployment. We are in the process of running a much smaller version of that burner through its paces. That's in the early phases at Zeeco at this point. The reason we're doing this is we need to validate the scaling criteria so we can have a complete range of burners of that DOE design.

So this -- I think the -- in easy terms, the hard part is done, the burner technology is developed. We are able to just validate in the scaling criteria. So we can put a bow on this and have a brand-new product line and seeing the way this performs, the way this burner operates. I'm very excited about what this can both do for us and the potential for further applications and different technologies going forward.

So it's partially complete. We've got more to do, but that will be executed and we'll announce that when that's complete. It's gone very well.

Absolutely.

That's great. So let's move ahead, I'm going to talk about another order here that was recently announced, Jim, and it was announced -- you called it a new, super major ordered an engineering for a retrofit of 2 process heaters,at a California refinery for a total of 32 ClearSign Core burners. Can you give a little more color on this order?

Yes. So this was announced on October 23, right? This is a new super major customer for us. The order that was announced was for the engineering order. I think to put this in perspective and help explain what this is, when we work with the client and we put the proposal together for these projects, we look at the scope of the entire project. And that proposal covers the initial engineering, also any computer modeling and the testing and the fabrication and the delivery of the burners and anything that goes beyond it. So we deliver a proposal for the complete scope of work.

So we're bidding on the comprehensive project...

On the whole thing. That's what the client assesses. As we've seen with other projects, they often -- the initial step is often just to -- they purchase this step by step. So this order is that very first engineering phase based on our proposal for the entire delivery of this business.

Right? So this is just like other orders we've announced in the past where, again, just to parse this, we're bidding on the full project. They basically look at it and they say, we want to move forward, they release the PO, the initial PO for the engineering order. Is that correct?

That's correct. And that's the way that we're seeing many of our previous orders being released.

Fantastic. And this is for, again, we're calling it a new super major customer and going to California. Is that correct?

That's correct. Yes. When we say new, it's -- we know the customer, we know the people. This is our first purchase order from this super major customer.

And it's been a direct relationship from ClearSign and the customer.

That's correct. Yes.

Fantastic. Let's talk about another one. There's another larger process burner order, and we call this from an integrated petroleum producer. And this is for 36 ClearSign Core burners. And this is to be installed in the U.S. Gulf Coast refinery.

That's correct.

How about a little more detail on this order?

So this one was announced September 17. As you said, it's the same structure. We bid the entire project, the entire scope. And again, the client as I've done here, has given us the initial order for the engineering to kick this project off. The drivers behind this are a little different. NOx is definitely a part and a consideration of this project. This is also an unusual mechanically structured heater and standard burners would not fit.

So we believe that a significant part of selecting ClearSign for this project were also our engineering capabilities, our ability to develop a burner to fit into this heater and deliver the right frame profile and with the CfD modeling and the engineering to make right to show the customer and to simulate that working in a heater. I think this speaks to the strength of the engineering that we have here at ClearSign in addition to the technology.

Okay. And that order was in the press release, we called it a name brand petroleum company. So this brings up a point, Jim, I'd like to move into kind of take a side bar here that one topic I get asked frequently is naming customers, right? Jim, why don't we name them in releases?

Yes. Great questions. We would love to name the customers, too. The reality is that in the purchase order contracts that we have with most of these customers, there are strict disclosure requirements, and it prohibits the release of the client's name. So this is -- whether we have ClearSign in my product, this is quite typical, but that is the reason that we don't. Now what we do, do in the press release is we do describe the companies quite carefully. So that description that you've mentioned, whether it's a global super major or...

Any brand petroleum company.

A global chemical company. We choose that name and descript it carefully to at least try and give the investors a good understanding of the prominence and the status of that customer. So while we cannot name them, if it's a global super major, you've got a good idea of what that customer is like if you don't know specifically.

And how many super majors are there?

Customers? There's various descriptions, but 5 to 7 seems to be the general consensus.

And we're working with how many...

So we now, as a company, since I've been with the company, we've received purchase orders from 3 of those global super majors. So give it just over or just under 50% depending on what description of global super major you use.

Right. And again, if they're not a super major, like you said, they're also a name brand petroleum company, a multinational energy company. These aren't in a sense, mom-and-pop operations. We're dealing with bigger and bigger companies that...

Yes. If it's a global chemical company or -- yes, you will recognize that is a household and then we try and describe them and their breath as accurately as we can.

Okay. I'm going to get back to the order topic. Thank you for that side bar. Let's shift to the M Series. We've seen 2 separate orders just 1 week apart for this new product, and both were through our heater manufacturing partner, Devco. And you did touch on this in some of your early comments, Jim, but could you talk about the M Series and kind of what's going on with that product line?

Yes. So this is -- it's primarily targeted into the midstream industry. We have different levels of technology. We have the M1, which is capable of delivering well below 5 ppm, so beating any emission requirements we have heard of. And then since then, with the feedback from the customer, we have developed an M25 specifically for retrofit applications.

Both burners are great reception. These orders are the M25. So this enables our customers to go out and to have a very effective burner product to retrofit heaters. So to go out and to come up with a more reliable burner to reduce the emissions. But this is designed to take out an existing burner and have a ClearSign burner to plug back in the hole and to upgrade that heater.

That's proven to be very successful. There are a number of proposals still out there. And we actually believe that there are more projects being quoted with our burners that we know about because once we provided a proposal for a certain size of burner, our clients are free to go ahead and use that proposal in other projects that they're chasing that would require that same burner.

So it's quite common for us to jump on a conversation with a customer for a project that they're working on that we didn't even know about and include our technology as that project gets close to fruition.

So these sales channels are kind of operating in the sense are bidding on their own.

That's the goal, especially in cases like this, where it's not a customized product, it's a standard product that give them the tools to allow them to go and then to run with it and to use that product more as they get traction that way, it's very efficient on our resources. It cuts our clients free to go and sell them and chase whatever projects they can without having to come back to us for every detail in the early phases of that project.

And because it's a more standardized size as then, Jim, I'm assuming then the sales process might be quicker and then even the sales to delivery, is that correct?

The whole process is more efficient, right, especially with a -- with this type of client, we typically got standard purchase order conditions. The order to delivery cycle is much quicker once we've already build that burner, once we've got the drawings. So we'll turn these orders in typically 10 to 12 weeks from quote to delivery. So it's -- while it's the same ClearSign technology at the Core is a very different order process to the previous orders we talked about where there are engineering and testing and multiple stages and also a very bespoke product for all the process heaters. These are very much designed to be standard burners that we can turn quickly and let our clients run and go and chase a larger volume of opportunities.

Okay. Great. Well, keeping with the theme of multiple orders, and you didn't touch on this in the very early comments, though. We did receive our fourth order for flare and this is for our California who's a -- California customer, who's a producers there. What's driving this? And what's going on kind of with the flare product?

Yes. I think 2 major points on the drivers. First is there are certain regions of the country that we have a NOx emissions limit on continuous flare and California is one of them in at least most regulated areas of California, especially where the oil fields are.

And the second is just the clients' needs. So this is an oil-producing customer. As part of that process, there is an off gas that comes out from the wells that client has to dispose off responsibly. If they cannot dispose off that gas, it actually can limit the production rates from the field. So they need more flaring capacity that they have to do in a manner that meets the regulatory requirements to enable them to maximize their oil production. So this could potentially limit their oil production if they don't have the flaring capacity to meet their needs.

Interesting. Okay. Very interesting there. And this -- and I think you talked about this in the past on previous calls, Jim, that this isn't just a simple kind of dumb flare, right? Is that correct? This is a more complex kind of project and product?

Yes, 2 parts. I mean our flares are quite sophisticated because we do maintain the emission regulations that is normal across most players. We're quite unique in that field. For this one, in particular, I have talked about systems projects and expanding the ClearSign scope on previous calls and our ambition to get into bigger projects where we can leverage our technology and then include the vessels and the equipment that surrounds that burner basically to multiply the size of our scope.

This order is actually a long way of that process. This is not truly 100% of the supply of the flare, but we are replacing major components of an existing flare. And we're probably up in the 75% to 80% of that flare range. I don't normally give revenue numbers, but to emphasize the point here, a typical flare burner will be $150,000 to $200,000, somewhere in that range. With the other parts for the flare that we're able to sell here, we're up in the region of $0.5 million for this 1 particular order.

Thinking more generally for the systems projects, this is probably the bottom end of what a systems project will be, and they've certainly got a scope to go up above $1 million per piece. But the intention is to take a special ClearSign burner and then leverage that to supply the scope of the product that, that burner fits into rather than just selling the burner have somebody else build that scope. There are certain products where it makes sense for us to actually sell the whole thing, which allows us to expand our revenue significantly.

Interesting. So again, for us, it's very interesting because it's not only an emissions product, but then it's also helping the customer maximize their production.

Yes.

Okay. is a new -- I think it's a new kind of reasoning that I don't think our customers fully -- excuse me, our investors fully understand.

It's certainly a very valuable lever for the customers as well.

Let's turn to the sensor product, if we could, Jim, the ClearSign Eye. On the last call, we had a previous update about a pilot installation going to a super major. Can you give an update on this product line?

Certainly. So that has -- as we expected, this project is going ahead. The sensors were shipped and installed and are operating in the clients team. We've had some very beneficial feedback from that client. We also have further opportunities to quote those sensors now to this client actually for a sister refinery, which is very encouraging, I think, speaks to their experience to date.

Incidentally, we also have a another site that we are installing the sensors on ClearSign burners, which will be a first for us. So there's -- I'm actually very encouraged to actually getting some traction on the sensing technology.

Great. More to come there. On the last couple of calls, we have spent a long time talking about our partner, Zeeco, right? So can you give an update on the relationship? How is that going with Zeeco?

It's going really well. I mean just going back through what we've talked about here today, the DOE testing and the testing for the Gulf Coast chemical company is a fantastic example. That testing was extensive, right? They have limited -- they have the world's biggest test facility I have to say, but they have given us extensive access to develop our products in that testing.

I think to emphasize, if we look at the project that we recently talked about, the validation of the demonstration project for the chemical company, that wide range of fuels was the most extensive range of fuel that I think I tested in my career, and I've seen a lot of burner testing. They had to move in fuel tanks and actually rearrange the fuel system for the test burners to do that, which they willingly did. They took the ball around with it and put -- they had everything in place. And that testing went smoothly, both the burner performed wonderfully, but also my house off of the Zeeco team, they did an incredible job running that furnace and getting set up and making sure that everything was running consistently in the lead up to and throughout the testing.

On the -- right, the other major thing they do for us is fabrication of burners. We have, I think, our biggest burner production brand going through the Zeeco shop right now. They're building those burners. The updates and the interaction, we are obviously the shop that the clients inspect us. So they have been extremely supportive of the ClearSign business. If I can, just one is, we've actually started receiving proposals now or request for proposals from Zeeco sales team. So we've had a couple to address as well. It was nice to see.

It's great to see. I think that's what a lot of investors are interested to hear. So Jim, we have the year-end insight mid-November. What do you see for the rest of the year and then moving into 2026?

Yes. Well, there's not a lot of the year left, but there's some very specific things this year. The big one is we have 26 burners being manufactured at Zeeco. Those are on schedule. We're looking to get those shipped by the end of the year. We also have a flare in California that's starting up. But really for this year, shipping those 26 burners is a big focus. Looking forward, there's a lot of quotes out there, a lot of the M Series that we said, also a lot of flare and process burners.

I'm very much looking forward to further traction and orders coming in from those. We've got the 2 process burners we've talked about so far, the engineering phase. I look forward to those projects progressing, rolling in through testing and ultimately, the equipment orders. Speaking personally for me, the burner that came out of the SBIR program is very exciting. I mean this burner is subtly different from our previous burner, but what it does and the way that it does it, I think, is going to be extremely significant in the industry.

I think it delivers -- it provides a platform for us to develop into new areas and to really develop that burner and getting that news out to the clients is going to be very important. So for everyone looking out, look out for a lot more promotion. We'll be engaging with the key technical people with our customers. We expect to be putting news out on social media, especially, but a lot of promotion around the burner. b think that's got a great potential for ClearSign's future.

All right. Referring back to the first time you mentioned there, Jim, the 26 burner order. I know we don't give guidance, but if that shifts, I'm going to go and lever what could that Q4 -- what could our Q4 look like?

Yes. Thank you. I think we answered this. We talked about sales before, but we've given ability to do back of the envelope math, and maybe stick with that, I think, conservative pricing for our burners we stated it's 100,000 per burner. There's 26 burners in this order. We've recognized a little bit of this revenue from perhaps testing, but very much the vast majority is still left to be recognized.

So I'm not going to go through the math. But basically, it's comfortable easy to say, I think that shipping these burners will be well north of $2 million in revenue to be recognized by year-end when they ship.

That would be a great quarter, Jim. So with that, I'm done with my questions. Operator, we're going to turn back to you, and we're going to open up the call for some questions, please.

[Operator Instructions] The first question comes from Sameer Joshi with H.C. Wainwright.

Congrats on a great quarter and it looks like the next quarter will also be good. I think Matthew asked a lot of the questions that I had. But just I would like to step back and look at the type of orders that you're receiving. You have the M Series, the flare product, the sensor product upcoming. It seems that the process of receiving these orders and deploying these particular products is quite different from the process burners where it would be -- you would have to wait for a substantial period of time before a burner would be deployed. Does this help you in like understanding your 2026 expected revenues better and timing and cadence of quarterly revenues over the next 4, 5 quarters?

Sameer that is a great question. I think the -- the key point is, obviously, the process burner orders are substantially bigger than the M Series or even the flare orders. The 2 that we talked about on this call, 32 and 36 burners, but mean a lot more meaningful in terms of total revenue. But as you point out, the duration of those projects is significantly longer.

So the way that I see it, the long-term process burner orders and that business is based on my expectations going to be the -- clearly, the biggest product line for ClearSign, especially in the stage of development we're at right now, the revenue flow is going to be lumpy. We are chasing those orders, but there's going to be a significant duration before the total revenue comes in.

That's where -- from a revenue perspective, we're really looking to and promoting products like the M Series and the midstream and even the flares and the sensor will be the same, that they are projects that turn much more quickly through the sales process and especially through the execution process.

So they -- as I see it, they will fill in the gaps of the -- in revenue while we build up the pipeline of those big process orders in time. I expect to have a significantly greater number of process orders in various stages of completion so that, that revenue from those process orders will smooth out. We will still continue to get the quick turn orders and the spare parts and everything else that we do. I think as we go through this growth transitioned, the 2 different types of product, the quick turn and those longer orders, right, both fill in different parts of our revenue picture.

Yes, understood. So given the success of these products that sort of fill in the revenue build up while the process burners are chugging along. Are there new opportunities for new -- other kind of products? I think the sensor product is one of those, which you probably would talk about. But are there other products that could be developed by the company or are under development by the company?

I certainly believe that there is potential. Obviously, we -- if we roll something out, we will bringing that to the front. But I think especially, I'll go back to my comments on the outcome of the SBIR program. The underlying burner structure that we developed in that program is extremely versatile. And I think that 4 different process applications gives us great opportunity to expand into other applications in the process field.

And always, as we develop the M25, we're always talking for our customers, we're trying to understand their needs and the gaps in the market and looking for opportunities that play to ClearSign's strengths. And can both be -- provide for good products for our customers and, of course, good products for ClearSign. So I certainly expect to develop more products in it and is a great focus of ours.

Understood. And then just one last one on the regulatory front. Of course, it seems the California and Texas regulatory action or pending deadlines are beneficial for the company. But at the federal level, is there any risk of headwinds as a result of EPA reducing or walking back some of its requirements. Do you have any visibility on what steps the EPA might take over the next year that could result in some headwind for your sales process?

Yes. So it's difficult to talk in absolute what could possibly happen. But from what we have seen and going back over my career, the regulation of NOx emissions is a criteria. It's fundamental to the EPA regulations. And we've not seen that be subject to political pressure to the same extent as more recently in the United States, we can point to decarbonization.

So we're seeing increased regulations in Texas coming out now that's being driven by the EPA. So I do not expect any headwinds on the NOx side. And then when we look at carbon, I mean, that was always a long-term development, especially when we start looking at things like hydrogen as a fuel, we are seeing inquiries now that are very interested in the optionality and our burner's capability to burn hydrogen as a fuel. I think part because it's a longer-term need and also because our clients are global. And while there may be short-term political deemphasis of decarbonization in the United States, that is not the case in other countries around the world and our clients are global.

[Operator Instructions]

Great. Operator, while we wait, I'm going to go ahead and read a couple of questions. I thank you to our investors for sending questions in ahead of time. We do -- we very appreciate that, and those also help us with the messaging of the actual content of the call. We hope to be able to address every question that was sent in.

Jim, one question I have is it dovetails a bit into what you were talking previously there with Sameer. We do see a potential reduction in larger scale hydrogen projects, will this or could this affect the development of, let's say, the 100% hydrogen burner?

I mean -- okay. So I think there's a few parts. First, the quick answer is that burner development from our side is done, especially from the development of the technology, as I described earlier. But I think importantly for ClearSign and even the big consideration when we embarked on this project, developing a burner that runs across that fuel range is extremely valuable in the market today.

On an oil refinery, they have a wide range of gas mixtures that make up their fuel gas. The off gases that come off the refinery process get pushed into the field gas stream. And even today, we have burners that run on oil refinery fuel gases that are in excess of 80% hydrogen. So the burner we've developed under the DOE program specifically is extremely robust. And as we showed the chemical client that we've talked about, I think the industry knowing that a burner will operate on 100% hydrogen and 100% natural gas gives them great confidence that that's a very robust and reliable product for use in their refineries no matter what the fuel gas composition they run in.

So from my perspective, I'm actually not concerned about the -- or not concerned from a business sense about the deemphasis of decarbonization for our burner business because my primary interest in developing that burner was to develop a burner that was going to be an excellent product for the refining and chemical industry in its form today. And if we've got the optionality for the future of hydrogen, then that is icing on the cake.

Here's another one. And thank you to the investors who sent this in because you're obviously an astute listener. It was mentioned that spare parts were part of the revenues this quarter, and I believe spare parts were mentioned as the chunk of the revenue last quarter. Can you talk about what this might mean for the business -- this portion of the business going forward?

I can. So just in general for everyone in the burner business, the spare parts is a very important part of the business. It's based on the installed equipment. And as you get more equipment out, it will become an increasingly large part of our business. The nice thing is it's also very consistent. It tends to turn very quickly, and it tends to run with a high profit margin, which, of course, we like. Just to put some perspective, Brent, the -- this last quarter, we had -- what was the spare part in that mix? Do you remember the...

We had about $300,000 of a $1 million.

All right. So even now, we're getting a very significant steady income from spare part sales with the equipment we have out in stores right now. And as we get more income out there, that is only going to increase, and we'd expect it to increase proportionately to the amount of equipment that we have out in the field. So I look for this to be a very meaningful and high-margin revenue stream for ClearSign as we grow.

Great. Okay. One more question here. We're now hearing more and more orders from Texas and the Gulf Coast. What do you believe has led to this shift? And is this a general shift to that region?

It's a good point and a good observation. When you say shift that region, I define that differently. I don't see the business in California dropping off. And in fact, with the process burner order we talked about today, I think the California business remains strong. I do think what we're seeing, though, is a significant pickup in what is our -- the largest refining and petrochemical market in the U.S., which is the U.S. Gulf Coast. We've got the 26 burner orders shipping down there. We talked about the 36 order going down there today. I think there's a number of factors behind that. One is just our acceptance in the industry. This is where a lot of those users are based.

We've also talked about the regulations. The California regulations have been -- the new regulations have been in place for some time. The Texas regulations are almost complete. We believe the formal proposal has been submitted by the Texas Board. It's just waiting on the EPA to approve it, but the industry is aware that there are new regulations and potentially more fees on the near horizon. So we believe -- I don't know that, that is the driver, but we think that, that is also possibly playing into the uptick in interest that we are seeing. And we are seeing interest beyond these 2 orders. We do have significant interest across the U.S. Gulf Coast expanding actually beyond Texas.

I have no more questions. Operator, I'll put it back to you.

There are no further questions in the queue. We've reached the end of the question-and-answer session, and I will now turn the call over to ClearSign's CEO, Jim Deller for closing remarks.

Thank you, operator. And thank you, everyone, for your continued interest in ClearSign and for taking the time to participate today. Look forward to updating you regarding our developments and speaking with you on our next call. In the meantime, please keep checking for development on our websites. And for more behind the scenes updates, please follow us on LinkedIn, and we have also recently reengaged our ClearSign X accounts, so there's another social media post to check. Thank you all for your time.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Good afternoon. Welcome to the ClearSign Technologies 2Q 2025 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, Matthew Selinger. Please go ahead.

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation Second Quarter 2025 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.

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 described in ClearSign's filings with the SEC, including those discussed under the Risk Factors section of the annual report on Form 10-K for the period ended December 31, 2024. 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, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer.

So at this point in the call, I would like to turn the call over to Brent Hynes. 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 on Form 10-Q was filed today with the SEC.

With that, I'd like to give an overview of the financials for the second quarter of 2025. For the second quarter of 2025, the company recognized approximately $133,000 in revenues compared to $45,000 for the same period in 2024. This year-over-year increase in revenues is driven in large part by spare parts orders to our existing customers and a boiler burner sale to our existing customer.

Now for the full income statement. Our net loss decreased by approximately $200,000 compared to the same period in 2024. This year-over-year decrease was predominantly driven by $155,000 reduction in research and development expenses, as compared to the same period in 2024. Our decreased research and development expense was driven in large part by reduced product development work.

Now, I'd like to shift the focus to cash. Our net cash used in operations for the second quarter was approximately $511,000 compared to approximately $1.5 million for the same period in 2024. This $1 million favorable year-over-year reduction was predominantly driven by customer cash collections during the quarter. As of June 30, 2025, we had approximately $12.3 million in cash and cash equivalents, with approximately 52.4 million shares of common stock outstanding.

I want to explain our registration statement on Form S-1 that was filed on Tuesday, August 12, 2025. This filing was simply an administrative task to reregister our outstanding redeemable warrants issued in our underwritten public offering in April 2024. It is important to note, we are not offering or selling any new securities in this filing.

From an overall financial perspective, we believe our current working capital positions us well to scale our business. We also believe our working capital gives our customers and suppliers confidence to do business with us in the long term.

And with that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on the call today and your interest in ClearSign.

For the call today, Matthew will lead a question-and-answer session, we will go through the different business units much like our previous calls. We will end with an outlook for the rest of 2025 and then open up the call for question-and-answer from our investors. Many of you may have seen this, but you can send questions in ahead of time to our Investor Relations at [email protected].

So with that, Matthew?

Great, Jim. And thank you ahead of time to our investors that have sent in questions. We really do appreciate that. It helps us kind of formulate some of the path of the materials that we'll go over here.

So Jim, very recently, there have been some announcements about Board transitions over the last couple of months. Is this anything to be concerned about?

The short answer is no. A lot of this has been covered in previous calls, so I won't go over that. A quick update. Leading up the last AGM, we had one of our prior directors step down. Following the AGM, we did dissolve the special committee and following that, an additional 2 of our prior directors did resign. That enabled us to reduce the Board size back down to 5, which leaves us with one position open that we will fill in due course, but there's no rush to do that.

What I can say is the Board has been reconstituted with new members, who are energized to help ClearSign, and for the company to grow in the future. From a personal perspective, this has been significant changes. I'm very pleased with the current Board situation. I'm really looking forward to the future.

Great. So with that housekeeping done, Jim, it's been about 3 months since our last call. Frankly, the company has been quiet in terms of news. Now with that, there seems to be a perceived impression of a lack of progress, right, with a lack of news. Can you talk about what's been going on behind the scenes that people don't see day-to-day?

Certainly. And I understand there has not been a lot of order announcing press releases out. There's been significant uncertainty in the market. We -- no orders have gone away, but we have seen timelines delayed. To get to the major -- we've had a lot of very significant work actually going on.

I think the majors, we've 2 very large process burner orders that are for household name refiners and chemical companies. The first of those, the 20 burner order out in California. We've been working on that project. We've actually been out on that job site over the last week overseeing the installation.

That project finally is about to start up, we believe, in the next couple of weeks. We're very much looking forward to getting that installation up and running. That will be a very significant reference for us. And from the time of what we've been doing, the 26 burner order for the Gulf Coast chemical company, we've gone through the testing on that. This was a technology stretching project.

We believe we have met all the requirements. We're through the burner testing phase. We met all the criteria. We're waiting on a couple of signatures to authorize us to move into the manufacturing phase, but we expect to be doing that shortly. We expect to have those burners built and shipped this year, which will drive the revenue for that project.

Just a note on that project, the original timeline was for first burners to be installed and started up by the end of 2026. The Texas Commission on Environmental Quality has extended the timeline that client has to get the heaters up with the new technology. So, I believe right now, that start-up will be early 2026. I don't have an exact date at this time.

Just generally for the period, the quote work has been strong. We've actually spent significant time as well developing our new products, especially focused on our diversification initiative.

Okay. Fantastic. And you're developing new projects, so there was an announcement very recently about an advanced engineering order. And to some people that may be kind of nebulous. What does that mean kind of advanced engineering? Could you give more color about that announcement we just put out?

I can. And I'm prepared to -- so this announcement was put out August 7. We are a technology company. We have world-level engineers, and tools like our computer modeling capability that enables us to bring new products to market and to push the technology forwards. A big part of doing that is always getting the first adopter customers to take these new products and install them in their equipment to get that first operational reference out in the field.

And to be frank, that was the reason why we put this announcement out. The announcement is for the engineering. We have a customer who is looking for us to help them with the productivity from one of the heaters. We have the capability to do that. We're able to explain what we're doing, and this order was for the computer modeling for us to basically -- it's already got ClearSign burners, but for us to enhance our own burner technology to enable their furnace to operate more effectively to meet their needs.

So, this was driven by a customer demand. It gave us the chance to develop new technology and assuming everything goes forward to actually get an installation that solves the customer's problem and for us allows us to bring a new technology or an enhancement to our own technology to market at the same time.

And it's probably a -- a good emphasize that, this isn't an R&D project. I know to dovetail on what Brett said, R&D spending was actually down. This is an actual order and from an existing client. Is that correct, it's a previous client?

Yes. Yes, this has been a very frequent client of ours, one we've got a very good relationship with. They came to us with a challenge that they're having to increase the throughput of one of their heaters. And this order and this technology is something that we are working with them to deliver to them to solve that problem of theirs.

Fantastic. So, we're in August 2025. So approximately 2 years ago, back in August 2023, there was a DOE, Department of Energy hydrogen burner development project. So, can you give a status update of where that project is at today?

Yes, I can. I think the first thing, as you noted, the order was -- or the grant was received in August, 2 years from that date is actually now. We do have an extension to that project. So that project is going ahead. It's actually in the final stages. It's progressing very well. The culmination of this project is we have a brand-new burner. We have a large burner and a small burner design. They are in manufacture right now and scheduled for installation and demonstration in the Zeeco test facility in the coming months.

Just to add to that, I'm actually very excited about this because these burners have -- give us the ability to operate through the range of the refinery customer fuel gases. And we received a lot of interest from the industry from household name end users in these burners. We are in discussions with them to actually come in and see this -- witness testing of these Department of Energy burners in the Zeeco test facility.

So this project is getting industry attention as well?

Very much so, yes.

That's exciting to hear. The other topic I want to move into and probably on top of a lot of investors' minds is we had an exciting development back in December and then the co-branding launched a few months after that, so just back in March. And this was the agreement with Zeeco to start marketing and selling the co-branded burners. Now you've previously said that, this is going to take some time to ramp up, maybe 9 to 12 months. Can you give any color on kind of the relationship and what you're hearing from them?

Yes, certainly. I mean, at a high level, we work with Zeeco almost daily from their marketing team and the sales team, obviously, through to their engineering and their testing team. They are just minutes away from our office.

The sales team are out promoting our burners. We've got their feedback. We've worked with them and developed their marketing materials. We've recently -- we do follow up with them, but they are pursuing ClearSign opportunities with their customers as a lot of the opportunities that we chase in general, whether it's through Zeeco or through our other channels, even directly, they do take some time. So there's nothing through to the point that we've got a quote pursuit to an order yet, but they are pursuing orders and talking to their customers about the Zeeco ClearSign burners.

Great. So, I'd like to shift to the M-Series product line, which we focused the past couple of calls, I think, fairly extensively. This product line is focused on the midstream. When it was released, there was an initial flurry of orders, and I believe some additional inquiries and quotes. What are we seeing here with this product line?

That has continued. We've continued to see strong interest from the midstream sector in general, both for the M-Series and outside of that. The first installations -- the first installation we had is into a Tulsa Heaters Midstream heater down on the U.S. Gulf Coast. That continues to offer operate flawlessly. The most recent M1 that we've sold has gone to another heater manufacturer, Devco. That is out and due to start-up later this year in the coming months. And the inquiries for the M1 burner have continued to be strong.

But in general, the midstream industry has been a very buoyant industry for us. And we've had a lot of feedback from our customers and others we've talked with the industry that there's actually another market within the midstream industry for us at a slightly higher NOx level. It will be a reduced price burner, a reduced scope, but there appears to be a gap in the market that I believe that's going to be very good for ClearSign.

So we're marketing this as a M25 burner that's going to be developed from the M1 to meet that new need because we've had a number of inquiries for it. We've had a lot of customers asking us, do we have a burner product to help them in this slightly not so low NOx market. We have a product out. We've got quotes. I'm actually very excited about what this will bring for ClearSign. I think it can really get us into a whole new segment of the market.

Let me explore that briefly. So M25, so would that be, for lack of a better term, kind of a D2 version of maybe the M1?

Yes. The M1 simply is a, call it, a single-digit NOx burner that is perfectly suited for the customers that have no other alternative than putting an SCR on the heater. It's a very high-value product that solves a high technology need for the customers. What we're seeing is that product is not needed everywhere, and there is a substantial market that needs a good low NOx burner, but not one of that pedigree. And there is a -- appears to be an opportunity for us in the market, where we can provide a burner to meet that slightly lower spec need as well.

And I believe, this is actually a much bigger volume part of the market. That's why I'm so excited because we've got to adapt ClearSign. So, we have products that make sense in all of the combustion technology areas that make sense for us.

And I think just streamlining only on that very high-tech ultra-low NOx segment isn't in our best interest when we have a much bigger market that we can add to our portfolio. So, this is a targeted product for a slightly detuned burner for the midstream market.

Yes. I think we might have referred to it on a previous call, some analogy and the fact that instead of being a Ferrari, maybe you'd need a Ford F-150.

Yes. Yes, we'd love to sell Ferrari, but there's a whole lot of people who want Ford F-150.

Yes. Got it. Okay. On the last call, we discussed flares having a resurgence of interest in our target markets. What's the status of those orders? And has this kind of resurgence of interest remained?

It has definitely remained. And it's -- I'll expand this. I've talked in the past also about our systems projects, which will roll in -- really follows on from the flares. But getting back specifically to the flare burners first.

Our first of the new flare design is out in the field waiting to be installed. We're expecting to be out there and having that installed later on this year.

And additionally, we have a second order from that same client that is currently in the first phase, which is the computer modeling. We're expecting that to roll into a detailed engineering order in Q4. And of course, we're expecting from that an equipment supply order to come out early into 2026.

So, the client that's got the first has already come back to us to progress the second. What we're also seeing those burners go into existing flares, they're retrofitting the flare, the burner part of existing flare bodies. We're also getting our inquiries not just to supply a replacement burner, but to supply the entire flare system.

So that will be the burner and including the surrounding vessel and structure that goes with it, which expands our scope greatly into what we're starting to call a system rather than just a burner. We're pursuing those. And when we look at what we're doing with the flare, I think the crux of the technology is we have the ability to burn a very hard to burn fuel gas.

Typically, in the industry, you would have to buy natural gas to help you burn that hard to burn gas to make it burn completely. These are waste disposal systems. We can burn that without the clients having to build to -- purchase the additional natural gas. That is a significant cost savings for them, which gives us another value for our customer. And we are able to then build on that in other applications and supply complete systems that would look like a thermal oxidizer as an example.

And we have good traction in discussions about that type of product. I'll be clear for everyone, these are proposals. These are not orders, right? There's no guarantee of the time line, or that these will come in. But we have sufficient traction and engagement with the customers to talk about these that we're actually getting quite excited and see this as a real likely development of the ClearSign business.

To put some numbers around this, the flare replacement burners with the engineering and the typical supply are going to be in the region of $200,000 to $300,000. When we get into the systems projects, whether it's the flare style or the thermal oxidizer style, each unit there will be in the region of $0.5 million to $1 million ballpark. So, it's a significant enhancement to the ClearSign product line.

Just to look at what that does, and I'm talking about the value of proposals that are given out. We talked a little about this on previous calls. Looking at the flare proposals, year-to-date this time last year compared to this year, because of the increased interest and especially the increased scope of these orders, we're looking about 10x the value of proposals out for this, right, for flare and systems product line together.

Okay. Great. And I'll hold you to that, Jim, I do have a question about kind of proposals and pipeline. So, I will circle back to that here later.

Yes, certainly.

Yes. Previously, we also announced that we're going to be installing the first commercial installation of the sensor project, the ClearSign Eye, in a refinery of a super major. Where is that project? And any other color with this product line?

Certainly. So, this -- first of all, the sensing technology we have, just for anyone not familiar, allows the presence of a flame on the pilot in a burner to be confirmed. So, this is a critical part of a lot of the control systems that go into our refinery heaters.

The order we have is for a super major household name refiner, one of their refineries down on the Texas Gulf Coast. They have asked us to provide these sensors on a demonstration basis to fit onto every burner in one of their heaters. Those sensors are almost complete in fabrication. They'll be ready to ship later this month. We're actually really just waiting on the client to confirm their installation schedule.

In terms of development, we're expecting about a 3- to 6-month evaluation period for them to get a good feel for the reliability and the performance of these sensors.

Incidentally, we also have a request for a commercial proposal for another heaters worth of these sensors for that same refiner for a different facility. We expect that to progress. It's really parked until we've gone through the evaluation period of that first installation.

In parallel, we have another installation of the sensors going into a Los Angeles refinery this time for them to be fitted on our own burners in a heater down in L.A., and those will be out later on this year. So that will give us a demonstration site in L.A., one in Texas, one on regular burners and one on ClearSign burners.

And in fact, the DOE burner that we talked about shortly before, one of the end user clients coming in or planning to come in to witness that burner has also asked that there'll be a chance for them to see our sensor in operation.

So, we're building one that we will install on that burner operating in the Zeeco test facility, and to be able to show that to whoever comes in to see those burners, in addition to showing that to -- Zeeco as one of the world's biggest burner manufacturers.

So basically, there's going to be multiple demonstrations of the sensor in the field. Is that correct?

Yes. By the end of this year, we should have -- or we expect to have 2 complete heaters of burners fitted with this sensor in commercial operation, and the demonstration unit in the Zeeco test facility.

And is this product helping demonstrate to industry that we are a technology solutions provider, and this is opening other doors for us?

I think that's fair. Actually, one -- as you bring that up one point, we've had one major refiner customer actually approach us to meet with their engineering team and present the sensor that actually led to conversations about M1 burners for their midstream heaters. So, I think definitely, the more we broaden our portfolio of products, the more opportunities we get to go and make sales calls and to answer questions.

And as you do that, of course, you talk about everything you can do and you get to find out the multiple ways you can help the customers, more than just that one specific reason that they bought you in. So having more different technologies to talk about is definitely a help from a sales perspective.

Okay. And Jim, I told you, I was going to hold you to this, and I think it's a good time to segue now about pipeline.

In the last call, I think you were able to quantify the pipeline saying at that time, it was 2x the amount of proposals from the previous year at about 5x the project value from a year previous. Has that changed in the 3 months since the last call?

Yes. I've actually gone back and looked at this data. That level has held. We've been consistently receiving quotes and proposing projects at that rate. And what's exciting is we've -- some of these now are requests for burners for super major refineries for typical projects, where we're actually being included as a requested technology to evaluate by the heater manufacturers going to those projects. So rather than us finding a client in need, now we've got clients building new heaters that are asking for our technology to be considered in the proposal of those new heaters. That is a big step forward for ClearSign, something I'm very excited about.

Right. So, we're already halfway through the year. What do you see looking forward to the rest of the year? And again, what do you feel will be potential market catalysts? And when I say market catalysts, I'm talking about industry, not necessarily financial.

So, we've got a lot that's on the horizon. I mean, we've talked about several of them already. Right? The LA heater start, we've been waiting for this heater to start up. It's been delayed and delayed now for over a year.

The burner has been on the ground getting that up and started is going to be a very significant reference. This is a major refinery. It is 2 major heaters in that refinery, right? It is way bigger than any other installation that we've had before, and that will be coming up in the next month. We'll be out there on the jobs starting that up.

I think secondly, the Gulf Coast order, the heater manufacturing involved in that order Birwelco is probably the leading heater manufacturer or certainly one of them in the world. Just the knowledge of what we've demonstrated in those burners and being able to prove what our burners can do is very significant. And as we go through the manufacturing and delivery of those burners in the start of early next year, I mean, those 2 references are the type of projects that we've been chasing for years to get references out of that significance in the market.

On top of that, I mentioned we've got our new technology flares out. The next one is about to start up. We are -- I think we've got a reason to be quite expecting that we will have a systems project coming up on the horizon, just showing that we can deliver technology of that scale will be really big at the M1.

And the second one started and particularly the -- getting into that Dune higher volume M25 market will be, I think, significant for ClearSign from a revenue perspective and just getting into a much broader market than the low NOx niche. So there's a lot that we're looking forward to that I believe has got -- really got the potential to trigger the growth of ClearSign.

Just to know, and I'm not saying these with any quantifiable expectation on the industry, but there is -- the Texas Quality Commission of Environmental Quality is talking to them, they're expecting the regulations in Texas to be changed and the clients, they may be facing some fees for low NOx burners that may generate the need or change the finances to lead to more opportunities for ClearSign to help them down. So, I don't know what the effect of that will be, but that -- it's something on the horizon that's going to affect probably our biggest potential market down there on the U.S. Gulf Coast.

And just in general, from talking to customers, we've seen uncertainty. I think the tariffs, what we heard is there's also a concern of reciprocal tariffs that's causing delays, also uncertainty about the need for environmental requirements that's, I think, having a delaying effect on the orders.

I do believe that things will settle down, we'll get back close to normal. So, you call it glass half full or glass half empty. I think that -- I'm actually looking forward to that smoothing down, and I believe that, that will have a positive impact for ClearSign, as we get back closer to normal.

Okay. And before we segue in opening up for other questions from investors, Jim, any other commentary you'd like to give before we move into the Q&A from investors?

Yes, I would. I mean, just speak to myself, I'm actually very encouraged about the start-ups and the references and the technology developments that we've made over the long term, especially the developments and advancements we've made over the last few months. And I want to recognize the -- just the team here at ClearSign and the engineering. This has taken a lot of work. It's not a 9 to 5 job. This is something that's taken focus and grit and dedication to get through and to get done.

And at least for myself and anybody else in the best way, I'd like to recognize the effort that the engineering team here at ClearSign have put into getting these new technologies out in the market in the form that they are today. I really believe that these are going to set the foundation for the growth of ClearSign in the future. So yes, I just -- I'd like to personally thank you for the team and really just to recognize the effort that they've put in over the last few months.

Great. Well, it sounds like, again, the continuation of the expanding product line. We talked about in the last call, expanding channels, right? And hopefully, we'll start to see some of that coming more to market traction here very soon.

Absolutely. Great.

Okay. So, with that, we will open it up, operator, for some other questions.

[Operator Instructions] And I'll pass the floor back to the management team.

Great, Operator. I'm going to go and read one of the first questions here. There are a lot of questions about -- Jim, a lot of questions about Zeeco. Maybe it makes best sense here is; who is Zeeco? And what is their motivation you feel to work with ClearSign?

Yes. I think that's a very observing question. Zeeco is a very big factor in the ClearSign business. To be frank, we moved the business from Seattle to Tulsa and a very big part of the reason we did that was to be in the center of the industry and to be very close to the partners that we need to work with. And Zeeco is definitely the leading amongst those.

So those of you who don't know, Zeeco is a global combustion equipment company. Their revenues are somewhere in the order of a billion with a B. They're present on every continent. They manufacture around the world. Very importantly, for us, they have the, I believe, the world's biggest industrial test facility that is here on the outskirts of Tulsa, just minutes away from our ClearSign office. They also have a very large and sophisticated manufacturing capability that has been accredited and is known throughout the refining and petrochemical industry is a very, very trusted manufacturer. Both of those are essential elements of a combustion equipment provider.

So for ClearSign, working with Zeeco provided us a way to bring our technology to market with the credentials and these must-have capabilities that are provided through this relationship with Zeeco.

When we set the agreement up with Zeeco, the mission was very clear. We wanted to come up with an arrangement that was going to be very profitable and had enormous potential for both companies. Bear in mind, Zeeco is a billion company. We had to be relevant to them.

The ClearSign product line in the NOx levels that we provide basically extends the Zeeco portfolio, right? It puts another product in their product line and extends the capabilities of burners offered under the Zeeco name down into a range that actually competes with a selective catalytic reduction system, which is the other alternative in the market. So, it gives ClearSign additional capability.

When they got to the point that they agreed to basically carry the ClearSign technology under the Zeeco name. That was a huge milestone for us. It introduced us to the Zeeco sales team and very much, I believe, will put ClearSign on the map for a much bigger audience within the market going forward.

So, for Zeeco, you're asking what's in it for Zeeco. Clearly, there is a financial incentive. There's a lot of margin in the high-end ClearSign products sufficient for a mutually beneficial arrangement with Zeeco. And that is their motivation for promoting and growing the ClearSign business, in addition to the extra commercial conversations that they can enter into because of the extended capability of the Zeeco range as that includes the ClearSign technology.

:p id="D02" name="Matthew Selinger" type="D" /> Great. Operator, can we go ahead and prompt again?

[Operator Instructions]

In the meantime, Operator, I'll go ahead and address another question here we had e-mailed in. Jim, we do have a number of questions about CFD. And how is the company -- and I know you addressed this in some of your prepared comments, but how is the company utilizing CFD for some of the current product lines in the day-to-day business? And maybe even explain what CFD is.

I think the -- yes, I think the latter is important. So CFD is obviously an acronym. It's Computational Fluid Dynamic modeling is the full name. In essence, what this is, is it is a simulation or a model that we can build on a computer that allows us to predict the flow of gases and the interactions and turbulence and chemistry and the heat dissipation and thermal transfer, basically all of the physical things that occur in the complex flow field inside a heater and inside a burner.

It allows to -- if you think of a combustion system, the CFD basically gives the ability to have a computer-generated MRI that allows us to see what's going on inside the heater and inside the burner.

From a technology developer, having that insight is incredibly important. It allows us to optimize our designs very quickly. And in terms of product development, the first stage obviously are coming up with the concepts and the theory from the engineering team, but we can then translate that into computer models and compare the different proposals and systems, see how they're working, optimize them rapidly. And then the final stage will be taking that final version out and building a physical version for testing or first installation.

For ClearSign, we truly have world-class engineers, and we have a world-class computer modeling capability. And I believe this can be seen. We have burners like the M1 that was developed and taken from the CFD modeling out and built and installed in a heater and worked without any modification. The order that we announced last week was August 7, was enabled by our ability again to model and to get that detailed information on the flow fields inside the heater and actually develop new technology given the insights that, that computer modeling can provide. So, it's a significant part of what we do.

Recruiting Matt Martin, our Chief Technology Officer, was a great cue for ClearSign. He brings that world-class skill and experience to ClearSign, and he has become a very big part of the team here.

Okay. I've got another one. This one is probably here for you, Brent, and just came in. Can you confirm the sequential cash balance maybe from Q1 to Q2?

Yes. Great question. So, for Q1, our cash and cash equivalents was about $12.8 million. In Q2, it's about $12.3 million. That is a $500,000 difference. That's cash used in operations. The difference there is really driven by customer cash collections.

As we've said in the past, cash doesn't always go after revenue recognition. It comes in before revenue recognition. So, a substantial amount of cash from projects in process and projects that we've completed and was delivered in Q2.

Matt, if I can, I'd like to just add a little to that, and Brent can still have a speak at that too. But we announced the major orders that we get. What is part of these numbers, we do receive a lot of aftermarket orders, service orders, engineering orders for -- I've talked about computer modeling. We don't announce those orders, but we do have a fairly steady stream. And those orders are also quick turning.

Often, they're building replacement parts for equipment we have in the field or they are engineering studies that we can turn quite quickly. So we do have ongoing work, even though the -- back to the start of the call, the press releases we put out, there's not been a lot of orders announced.

In the last few months, we have received orders of on their own but are less significant, but there is still significant work being done and orders and receipts being received.

So with that, Operator, I'll turn it back to you.

[Operator Instructions] And I am seeing no questions in queue at this time. And as such, I would now like to pass the floor back to the Chief Executive Officer of ClearSign, Jim Deller, for closing remarks.

Thank you, Operator. 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. For those of you interested, we will be at the H.C. Wainwright Conference next month in New York City. In the meantime, please keep checking in for developments on our website and for more behind-the-scenes updates, please follow us on LinkedIn.

So with that, thank you very much, and we look forward to speaking to you next time.

Thank you. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. Thank you once again for your participation.