ClearSign Technologies Corporation (CLIR) Q4 2024 Earnings Call Transcript

Good morning and welcome to the ClearSign Technologies Fourth Quarter and Full Year 2024 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Matthew Selinger of Firm IR Group. Please go ahead.

Good afternoon and thank you, operator. Welcome everyone to the ClearSign Technologies Corporation fourth quarter and full year 2024 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 risk 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 risks 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. On the call with me today are Jim Deller, ClearSign's Chief Executive Officer, and Brent Hinds, ClearSign's Chief Financial Officer. At this point, I would like to turn the call over to Brent Hinds. So Brent, please go ahead.

Thank you, Matthew. Thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-K was filed with the SEC on March 31. With that, I'd like to give an overview of the financials for the fourth quarter, and full year of 2024. For the fourth quarter of 2024, ClearSign recognized approximately $590,000 in revenues, compared to $1.3 million for the same comparable period in 2023. The year-over-year difference in revenues was driven, by a decrease in business activity. During the fourth quarter in 2023. We shipped eight process burners and completed two customer witness tests, for our California refinery customer. Whereas during the fourth quarter in 2024, we shipped two boiler burners and executed a process burner engineering study. Now keep in mind this process burner engineering study, led to a follow-on purchase order of 26 burners, as noted in our November 27, 2024 press release. For the full year of 2024, we recognized record revenues of approximately $3.6 million, compared to $2.4 million in 2023. This is approximately a 50% increase year-over-year. This increase was driven by overall year-over-year increase in business activity. 2024 revenues were predominantly generated, by the shipment of 25 process burners to two separate California refineries, whereas in 2023 revenues were predominantly generated from the shipment of eight process burners, and three separate customer witness tests. Our gross profit margin for the year ended 2024, was approximately 31.1%, compared to 34% during the comparable period in 2023. This year-over-year decrease in margin was a direct result of our large 1,200-horsepower 2.5 ppm boiler burner installation. Since this was the first installation of the boiler burner this size, we incurred greater than expected startup costs during the first quarter of 2024. Now, I'd like to shift focus from revenue to cash. Our net cash used in operations for the year ended December 31, 2024, was approximately $4.4 million, compared to approximately $3.2 million for the same comparable period in 2023. This $1.2 million year-over-year decrease was driven by $1 million decrease in contract liabilities, which basically represents monies received from customers, prior to revenue recognition. Now turning our focus from cash, to the full year income statement. Our net loss for the full year 2024, was approximately $5.3 million, which is an increase of approximately $100,000, compared to the same period in 2023. This increase in net loss, was due in part to a one-time non-recurring expense of approximately $400,000 related to our decision to place our China entity into a dormant status. Now I need to note that yesterday on April 1, 2024, we received a letter from NASDAQ stating that we no longer meet the minimum bid price of $1 per share, as set forth in NASDAQ's listing rules. According to the rules, we have been given a period of 180 calendar days, or until September 29, 2025 in which to regain compliance. To regain compliance, our common stocks closing price must be at least $1 per share for a minimum of 10 consecutive business days, during the 180-day cure period. As of December 31, 2024, we had approximately $14 million in cash and cash equivalents, with approximately 50.2 million of shares of common stock outstanding. From a financial perspective, we believe we are well positioned to meet current customer demands, deliver on our project pipeline, and scale our business to profitability. 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 for your interest in ClearSign. We're going to use a similar format today to the previous call. We have received overwhelming positive feedback from this change, and believe this provides a more engaging and a similar conversation. Matthew Selinger will lead a question-and-answer session where we will go through the main content of this call. Much like the last call, we will cover developments in our product line, but I'll also talk about some general themes, and strategies that we are implementing, and reference this to our sales and product line updates, providing some insight into overarching ambitions, and progress of a more strategic nature. We will end up with an outlook for the rest of 2025, and into 2026, and then as always, open up the call for Q&A. A quick note regarding the Q&A. In addition to calling in, if you wish, you could also send in questions ahead of time, to our Investor Relations at mselinger@firmirgroup.com. Go ahead, Matt.

Great Jim. Let's get started. So as Brent mentioned, ClearSign just recorded a record revenue year. Could you give a little more of what this was comprised of what led to this?

I can. Before we start, if I can, I think it's good to just to look back a little, if we look back to 2021, but we came in at just over 600,000 in revenue as Brent mentioned, or it dropped slightly in 2022. Then as Brent mentioned, we're at $2.4 million in 2023, and then closed out last year at $3.6 million. So last year's revenue was predominantly due to the large refinery burner process order that we shipped out to Los Angeles. That was 20 burners. Those burners are still there on the job site. We're expecting them to start-up in the - early in the third quarter of this year. The installation shutdown has been a delayed on site, but in addition to that project we had some burners shipped out to Kern Energy, who continued to be a good customer of ours. And then there are also some misdemeanor boiler burners that rounded that out.

Great, thanks so much. So in your opening comments, excuse me, you mentioned some higher level themes and strategies. So before we get into the individual product lines, let's kind of start with that, if you don't mind. Could you give a little more, say a little more about some of these themes and strategies, you're talking about for 2025 and 2026?

Certainly and this actually started some time ago. But I think it's time to start explaining what we are looking to do, as we expect some of these results to roll out. So going back to when I joined ClearSign back in 2019, our first objectives at that point were to prioritize and commercialize the technology that we had, as what we called low hanging fruit. That was the oil refinery process burners and the boiler burners. But we gave ourselves a mandate to develop that technology into a form that the clients would need, and the clients could use and would be easy for them to install and for the operators to run with. But in addition to that, we also realized that we had to develop channels to market, and be able to provide these products and technologies in a manner that the customers were used to buying them. What that entailed is or resulted in us forming a collaborative agreement with Zeeco, Inc. Zeeco - those of you who don't know, Zeeco is the second largest burner manufacturer in the world. And as part of the refining burner supply, it is a requirement that the burners are demonstrated at full scale in an industrial test furnace to prove the emissions and the operation requirements to the customer. And also typically that the products are manufactured in a shop that, has been validated and meets the certification requirements of the refining customers. So we had to come up with a way to deliver products with that capability. And we did that by forming a relationship with Zeeco. On the boiler burner side, you have to have a customer that provides service to, also you have to have a partner that provides service to customers. And we did that through a relationship, with one of the leading service company in California, California Boiler. They take care of the customers. They formed a subsidiary called Road Combustion. And with our technology and Road Combustion providing the controls, they actually deliver the ClearSign technology into the boiler market - marketed as a road burner. So that, I mean that's a summary. But that gave us the ability to get the products recognized in the market, to make initial sales and to start the growth of our business. And as reflected in the revenue, right. Jumping forwards to today and more recent times, we recognize that there is much bigger opportunity for ClearSign. We have the ability with our patents and our staff, to develop technology that's applicable to much bigger markets. And that we can broaden the regions that we sell into, the scope of our orders and actually diversify our portfolio while staying true to the core competencies, and the skills of ClearSign. So that is what we're starting to roll out now.

Right. So - in summary, and I think we'll kind of hit on this throughout the call, because high level themes are diversifying product lines. Sounds like diversifying within those product lines, and continue to leverage sales channels. Is that correct?

Yes, that is on the sales channels. In addition to partners like California Boiler and Zeeco, that we sell a lot to third-parties. For example heater manufacturers, as we sell to them, they include our products in their future offerings, and will bring orders to us. So as we sell to new heater companies, part of that expanding our sales scope, is getting more helic companies familiar with our equipment, actually selling to more customers. They continue to be a sales channels for us going forwards. A - Matthew Selinger: Fantastic. So let's dive into the product line. So starting with the process burner line, there have been a lot of developments recently and you touched on this. You mentioned the name Zeeco obviously in your comments moments ago. Could you touch on that the most recent announcement with Zeeco and what that means for the company?

Yes, I can. And this was key for us. The announcement was late last year when we, as I mentioned, we first formed the relationship with Zeeco. The initial requirements were to have access to the burner testing, and the manufacturing capabilities of Zeeco. But as we discussed our collaboration, the long-term vision for both of us was that ClearSign refinery process burners, would ultimately become a Zeeco product line. But at the time back in 2019, we recognized that the time it wasn't right to launch that then, because of the newness of the new ClearSign technology. Coming forward to last year, and the progress that we've made and the orders now, obviously what Zeeco has seen and ClearSign, we have reached a point that for both of us we believe that it made sense to go and move our relationship to this next level. So the announcement was just that. We announced a co-branded Zeeco, ClearSign burner line. Zeeco have now included ClearSign as a page in their own website. We've developed joint marketing materials, and over the last few months we have conducted teach-ins to the Zeeco sales team. Because part of this arrangement is that the very large Zeeco sales team now has ClearSign technology as an offering that, they can discuss and present to their customers.

So you're basically saying that, with the product maturity it was deemed that this is the right time, and now the co-branded product has been launched. Is that correct?

That's correct.

Okay. Fantastic. And is there any sort of initial feedback, you can give in terms of these teachings, or working with Zeeco?

I mean it's early days yet, but - I've been in the teachings, I was part of them. And the development was met with excitement with - as Zeeco sales team. We had a lot of discussion following the presentations. They seemed very enthusiastic. And then beyond that, even just looking at our team here working with Zeeco, for example, the marketing teams, the collaboration and the urgency that they have put together the materials, and got the website ready as an example has been very pleasing. So I'm very enthusiastic and excited about this development.

That's a great development, Jim. So also very recently in terms of the process burner line, it was announced that the debut of the M-Series. Can you give a little background of what the M-Series is, maybe what it's designed for and what differentiates this from our traditional product line?

Yes. Thank you, Matt. So the, I think before we should get into the M-Series, it's probably worthwhile talking about the midstream market. So we talked a lot about the refining market. The midstream is really the gas processing and the transport part of the petrochemical business. There is a, a different style of heater and a different heater manufacturer that works in the segment. We had the opportunity back in 2023, I believe the announcement went out in April 2023, to put a, what was then a modified boiler burner into a midstream heater, sold by a company called Tulsa Heaters Midstream here in Tulsa. And that heater is based down in a petrochemical company down on the U.S. Gulf Coast. That burner ran well in our heater. It met the low NOx emissions. That was the reason for ClearSign burner being selected. Following that we got a lot more engaged in the midstream industry. We sold all those two names you might recognize now of Exotherm and Devco. And we also recognized that this was a big opportunity for ClearSign, especially if we could develop a burner optimized for these midstream heaters. The another part of the story is we hired Matthew Martin, our Chief Technology Officer back late 2023, as part of our plan to grow our capabilities and grow our technology, and after hiring Matthew Martin. We invested in a computer modeling system. What that does is it, or one of the things that does is it allows us to test in a simulated fashion a great variety of different product types and product arrangements. And with that we're able to completely reimagine the structure of the ClearSign burners. We've essentially kept the same mixing and chemistry that allows us to get the low NOx that we do. But we're able to completely rearrange the burner, to come up with a very different shape that, made it much more efficient to operate in the midstream heater. To cut the story short, we modeled that in the computer. We optimized the design, creating drawings from that, took it to manufacture and built that burner right out of the computer modeling. Worked with Tulsa and Midstream to install that burner down in Texas, Gulf Coast. And it just ran. It gave 2 ppm NOx in a much more efficient manner. It ran up and down just to be fine. It was a great success in terms of a burner roller. It has been a very exciting development for us for Tulsa and Midstream and for everyone that has seen it.

And then on the heels of that, there was an order announced that created a second burner going to Devco process heaters?

Yes, very quickly after the results of that installation came out, obviously we have an NDA. We showed that to Devco. They turned around and placed them all at four, and for one of their projects.

So then, you've been out talking with customers about this new product line and the efficiency savings. Can you give any kind of color of what the market is, feedback, if there's been some proposals, things like that?

Yes, I can. I mean everywhere we show shown this burner, it has, it's got really good reception. We've also been able to do that with Tulsa and Midstream. They have obviously seen our burner operation. The customers that buy the heaters, are also the customers that buy our burners. We've actually been able to make joint presentations with them. The burner has been very well received, and it's early days yet. I don't have any developments to announce right here, but based on the reception, we're very excited about what this can do, and the - through these conversations. The scope of this midstream industry, is vast and varied. So it's a great opportunity for us, to get into different regions, and to diversify ourselves away from just the off loan off refining part of the industry.

Is it safe to say there's been a bit of buzz in the industry about this?

I think that's fair, yes.

Okay. And then can you give any more color what we might foresee the future of this product line?

I can. I really haven't talked about plans, so be aware. This is not done yet. But the - I'm a technical guy by background, understanding the way this burner works, I believe it has a potential to convert into a very good boiler burner. I think there's potential to modify into a refinery process heated burner, for certain applications. Also I believe that this burner getting 2 ppm NOx exceeds the requirements of many of the opportunities out in the market. Then we have the ability to take some of the components out, simplify the burner, still come up with what very good NOx in the industry, but come up with a great burner for a much broader segment of the market that doesn't need the super low NOx that particular ClearSign technology does. Basically expanding our market into a much more commodity part of the industry. But still with a very high value, because of the NOx and the efficiency that this burner can deliver.

So in a sense you could detune it, so it's not as high performance. So let's say someone doesn't need the Ferrari of burners and you'd have a larger addressable market?

Exactly. Yes, you're going back to a standard family car.

Fantastic. Let's then go to kind of orders in the pipeline. And when I talk about orders in the pipeline, this is on the kind of our traditional process burner business. Can we talk, you referred to some of these, Jim in terms of order going to the Gulf Coast. Could you kind of give an overview of what we're seeing in terms of our current process burner pipeline?

Yes, we can and I think it's important, because it ultimately this is the kind of backbone of revenue, and forward-looking revenue. So we've probably have talked. We've got 20 burners out in California that are shipped, they're waiting to install. Those are scheduled to install and start-up early in Q3, of this year. We previously announced as well, there's a four heater order for a Fortune 500 chemical company down on the Texas, Gulf Coast. Those burners are currently in the testing phase, soon to be demonstrated to the customer. They are also scheduled for fabrication and also scheduled for installation as start-up early in the third quarter this year. So that's going to be a busy period. Kern Energy continues to be a great customer of ours. They have some heaters there that, we are hoping to support them, and upgrade the burners in the near future. But we do not have those orders yet, I want to be clear. But that is a project that we are talking about, and there's other work with Kern Energy, and there's some other projects we're talking about. I think one thing of note, a bit more forward-looking is, we are starting to get involved in the initiating technology discussions, for some big like mainstream global refinery heater conversion. So this is early days, but at the start of a project there's normally an assessment of the technologies available, a chance to present them right at the scoping, or the feed phase of the studies. We have not been involved at that stage before. It's typically a 18-month to two-year, or even longer process for that to those projects, to get through to actual orders. But it's very important to get engaged at the time. And the fact that we're being asked to be included, and these like global customers are understanding what our technology can do for them, and that we've got the credibility to be included in those conversations. I think is very significant and from my perspective, very pleasing.

That's great to hear. Let's shift to boiler burners now. I think early last year, there was kind of a spate of orders in the boiler burner sector, and then followed by the ICF report, which highlighted the efficiency of the boiler burners. But since then it's been a bit quiet. Can you give a little color on what's going on, what you're seeing in the boiler burner market?

I can, and I probably don't have a lot of detail. We've obviously tracked and dug into this, and the general information we're getting is just that, market has been slow at least the past six months, especially in California. There's just not been much activity. I think on the good news is, the last few weeks we started to see an uptick in inquiries, and sounds like there are some projects, which are being talked about again. So that's very encouraging. I think also just while we're talking to boilers, I want to note that we did announce the start-up of our 1,200-horsepower 2.5 ppm NOx burner for a recycling plant up in Bakersfield. That was significant. I believe that burner is unique in that performance level, especially in that size range. And getting that done and passing the performance test, was a big milestone for ClearSign. I think, it's worth noting that in addition to that, although it's in the technically in the midstream sector, we did sell and start-up our biggest burner ever with Devco in a midstream heater down on the U.S. Gulf Coast. But that burner was actually a boiler burner. We just able to fit it into the midstream heater, to meet the specific needs of that customer. We now have boiler burners running from a smaller size up to I think about 90 million BTU, is a very large size boiler burner.

Great. So we've been able to diversify within kind of our boiler burner product line itself, just by multiple sizes, so we can address multiple markets. Is that correct?

I think that's right. At least - we filled out the range from rather very small commercial boilers up to almost some of the biggest applications you will see.

Okay. Great to hear. So I'm going to shift here again. We most recently heard about two product lines that we haven't heard from in a while. Those being flares and then sensor. So let's take the former there. There was a recently announced flare order that we that we put out. If you could give a little color on that, and maybe talk about that order, and then we'll talk more about what we're seeing in that sector. Because in the quote you put in that release that, you're seeing kind of more activity and interest. So we could divided to both of those.

We are, so generally for anyone not familiar with what a flare is, a flare is basically a waste gas disposal device. It has a burner inside it to burn the gas to carbon dioxide and water. And the flares that we sell, that burner or flame part is enclosed within a large cylindrical vessel that can typically be 30 feet tall, maybe eight to 10 feet wide, somewhere of that size. They vary in size, but that's the general size of this equipment. So the order that we have recently made a couple of announcements on was actually a flare sold, by a different company. It didn't work. It did not meet the emission requirements. And the customer came to us to help out. We can do that. We have the technology. The first order was for engineering. We completed the engineering and demonstrate to the customer how we could solve his problem. He turned around and placed the fabrication order, which are now in the process of completing. So just to put some numbers to this, because it's not a standard burden, all in all, this project will be about $250,000 for ClearSign. It will enable us to take our technology, put it into somebody else's flare body, and show this customer what we can do and give them a reference in the industry.

What's another, it's another demonstration that we're showing our technology can provide advanced solutions?

It's a great demonstration and its installation actually was a very, we can't mention the name, but the installation of a very key, a key customer up in Northern California.

And let me dive into that second part of the question then. What do you, you kind of, kind of infer a bit of a resurgence or re-interest in the sector. Can you kind of give a color what we're seeing?

I can. So, we're starting to see a need for low NOx players, which is not traditional in the industry, but it's starting to be required. With our intellectual property and with the capabilities we have, we can also develop a burner element of a flare that's capable of burning some very hard to burn waste gases. Typically within the industry, the operators will be required to blend some natural gas. Into those waste gases, to enable them to burn completely. Because as this is a waste disposal system, they're just buying gas to burn it, which gets to be very expensive. We can burn these gases in some cases with minimal, and often with no supplemental gas. That basically allows us to meet NOx emissions, and to save the clients a lot of money. So we're starting to see requests and opportunities, for this part of the flaring market. But back to the overlying theme, of what we're doing to grow ClearSign, and looking to the future. Having that special burner technology allows us to not only sell the burner, but as it's part of a much bigger system, to sell the rest of the system and the flare structure with it, or in the case of an oxidized, or thermal oxidizer that might be a horizontal vessel. It's the same premise that we can put our burner inside that vessel. But then ClearSign can sell a high value system, rather than just the burner element. From a commercial perspective, that takes a $100,000 or $200,000 burner sale and turns it into a system project that, could be valued between $600,000 and $1.2 million apiece. So it allows us to greatly expand our scope, leveraging our very special burner technology.

So that's an exciting development. I mean, so you're talking basically from us potentially moving from selling just components to larger systems?

That's right. And I think for everyone to be very upfront clear, we have not sold any of these yet. We have engineered these systems. We do have proposals out for this type of technology, and we are engaged in conversations, but they are only in that negotiation phase. I don't want to mislead anyone. And having or expecting something to come in, in the next week.

Well, it's an exciting opportunity. So then we recently saw that there were four ClearSign eye sensors placed at a super major refinery. So again, another product we haven't heard from in a while. Could you give a little background on what - on this trial that we needed a trial? And then let's dive into the sensors?

Yes, and trials fair. So this, we've talked about sensors in the past. We have not talked about them for several calls. So the announcement was a, in essence of a free sample to the customer. But we believe it's significant. First of all, for a refinery even to install even free equipment, is a big undertaking on their part. They have to shut down, they have to do engineering, they have to install cabling and controlled equipment. We have been refining the sensors over time, even though we haven't been talking about it, and also talking to customers, which led to this opportunity now to install it. But if I can, let's take. I'd like to fill in the gaps, and explain what these sensors do for anyone not familiar with, because they're a very different product to our burner products. So in a refinery heater, the burners provide a big flameless he dealt heater. When you turn the gas onto those burners, you've got to have a small flame there to light that gas, so that the flame starts. That small flame comes from a device called a pilot. And to indicate to the operator that it's safe to turn the gas on, you will typically have a sensor of some type to prove, or to confirm that that flame is in place. Now this is often taking place from under control system, but it's that sensor that goes on the pilot, and confirms the presence of a flame that we are providing. All right. There are well established technologies in the industry that do this. There's some optical sensors that look up, and we'll see the pilot flame and any flames beyond it. So they're effective, but they're not good at specifically indicating just the pilot flame. And there's a very commonly used piece of equipment called a flame rod that mounts to the burner pilot. The challenge with those is that the end of the flame rod, based on its name, actually pushes into the flame. They do burn up, and they have frequent maintenance problems, which either leaves a client without any flame indication, or requires very frequent maintenance, which is costly for the customers. And that maintenance need is actually what drives the excitement, when we've talked about our sensor. The clients, because the difference with our sensor, is it does mount the pilot, so it is discreet and identifies only the pilot flame. But the sensing head of the sensor, is not in the flame. It sits about an inch below the flame in the core zone. So it's expected to be a much more durable, and reliable piece of equipment.

Okay. Let's talk about the market on this, some numbers here. Jim, what is the addressable market, do you believe in terms of these sensors? Maybe touch on, maybe our sales price and what are the - what does a typical order look like?

Yes. So, this is not only a different a technology, it's a different project from a commercial perspective. So the one thing I really like about the sensors, is it is not applicable to only low NOx regions, or only certain regions. But these sensors are applicable to every refinery burner in the world. So the scope of where this can be applied is huge. Now not every, to be clear, not every burner has a pilot and certainly not every burner, with a pilot has a sensor. But there is an awful lot of them do. And this makes it a very big opportunity for ClearSign. The sensors are a relatively small device. They're going to be a, out of the box product first. They're all standardized. They'll sell for somewhere in the region, about $4,000 apiece. But one of the other beauties of this product line, when it's rolling is we expect them to sell in multiples into a heater supply all at once. There will be ones and threes and fives. But I expect commonly these orders to roll in the right [$0.10s, $0.20s up to $0.50s] per order. So I think there is a, it's a different business model for us, but I think it's got to take off. But it could be a very worthwhile product line for us, which is why we've been working on it for, and kept it going over the years.

That's very interesting. So the volume off the shelf, and another technology solution being sold to the same customer base that, our addressable customer base?

Yes. I think going to the right, the objective of diversification, broadly ClearSign, it's a very different part of the industry. It's not tied to regulations, it's not tied to de-carbonization. It - will smooth out revenue flow. I think just gives us another separate line of business, while still playing to our core customer base and core technology strengths.

Right. And just for clarity too, this is a ClearSign product, right. Not necessarily a [Nerion project]. Nerion's been mentioned in the past. But this is a ClearSign project?

That's correct. The sensor is manufactured and sold as a ClearSign product.

Great. I'm going to shift here, Jim, and maybe address some macros. A lot of companies are talking about some of the macros out there. One obviously in terms of supply chain, one, a lot of companies are focused on our tariffs. So are we seeing any effect of tariffs, or in our current, project pipeline or proposals, anything like that?

We are - I mean where it shows up is in the cost of goods. ClearSign burners are built largely out of stainless steel materials. That material price is affected. So we are seeing increased pricing from our vendors. Now we can also put, and have put language in our proposals, to allow us to accommodate that, to make price adjustments to the extent that we can. So we're aware of it, we're working around it. But I think it's fair for everyone, to be aware that we are seeing increased pricing at present - is all attributed to the tariffs.

Okay. So in wrapping up the call, are there any main takeaways you'd like to leave with us, kind of in summary?

There are - I mean we've, we tried to stress here and bring out is the, what we're trying to do to grow the ClearSign business, and set us up for expansion going forwards. So leveraging our sales channels, certainly pushing hard on the products we've got is important. And I think on that note, looking for benchmarks just going forward, what I'd look for is on the inside looking for sales leads through the Zeeco sales team. I think from, as an investor I would certainly be looking out, or recognize the importance of a burner sale resulting from a Zeeco lead, will be a very big first milestone on that front. I know I've said it, but I'm very excited about the M1 burners. Certainly look out for sales in the midstream industry, and our growth in the midstream industry. I would also stress, I think the importance of a slightly de-specced, or detuned burner going out into the commodity market and expanding our scope into that much larger portion of the industry. Also the development of that burner into boiler burner applications, potentially refinery burner applications. This I personally - right now we've sold one and got one burner operation. But I am very excited about the potential of the M-Series burner. I think, the concept of the systems projects, leveraging our flaring technology and the low BTU gas technology into either an oxidizer, or a flare. And the sale of some of those bigger systems, and showing the industry that ClearSign can deliver that type of technology. What we can do, given the scope of those projects from a revenue perspective, I think that would be very significant for ClearSign. So look out for that. And then finally, we've talked about the sensors and we already have another request for quote, or centers actually from the same refinery, or the same company into a different refinery. We've also been. We're also talking to another global refiner who is interested in that technology. Just haven't found it. So I think there's real potential there for that ClearSign light sensor. We're also looking for that to roll out and scale up.

All right, so in summary, we can look forward to sales from the diversified product line. We could look at diversifying within the product line, continuing to. Is that correct? Leveraging the current sales channels we've announced and then potentially expanding from component to larger systems?

I think it's fair. Expanding the scope, expanding the markets. It's broadening ClearSign. We have a strong combustion and industry knowledge. We truly have some very talented designers and engineers here within the company. It's leveraging that core competency and expanding our business, while being true to the strengths to make sure that what we deliver, are really high value and products that we can make a profit from.

Oh, great to hear. So that's all the questions I have prepared for this. So at this point, I would like to turn it back to the operator to open up for a question-and-answer session. We have also had some questions sent in ahead of time, which I will curate as well. But with that operator, please open up the lines for questions and we'll start with those.

[Operator Instructions]

The operator. Operator while we wait, I'll go ahead and read one of the questions that was sent in ahead of time, if that works.

Sure, absolutely.

Great. Jim, in regards to proposals, we've heard about proposals on previous calls, you know, what is different now than let's say, one or two years ago in terms of the proposals you're seeing and fielding?

So that's a fair question. We've talked about several themes in this call today. I've tried to be upfront. Some of the product lines, especially the system products and the reference to the engagement we have with the major refining projects, especially at the early feed stage. I've included those to help describe work that we're doing internally within ClearSign, on a strategic basis to grow our business for the future. And I said during the call, I don't want to mislead anyone, but expect that those orders are going to turn very quickly, or those proposals will turn very quickly into orders. We do have obviously active sensor quotes that, I believe have a potential to turn into orders. We do have the midstream orders. We do have some process burner work that has potential to turn into orders. But I have tried to be clear where I've referenced the proposals, and the work we're doing as an illustration of our strategic plans, and the changes we are constantly developing with the company to grow the potential of ClearSign as separate from the, what I call the tangible proposals that we are actively discussing, as something that we expect to be able to bring in to the company in the foreseeable future.

Great. Operator, please go ahead and poll again and I've got a couple others. But if you want to give instructions for polling, and then I'll segue into another question.

Sure, no problem. [Operator Instructions]

Great. Jim, here's another question here. There's been some discussion about kind of less clean air initiatives, and even some slowing of hydrogen projects. Do you feel at all this puts, for instance, our hydrogen burner at a market risk?

Yes, I mean, obviously there's been a common topic in the news, but I think it's good to be clear. The hydrogen burner and the project is titled for 100% hydrogen. And that was the driver behind the funding and the DOE awards that, we have won and fund the development of this burner. But the utility of the burner goes well beyond that. The refining customers have a very wide range of gases in their fuel gas, and those commonly swing up to at least 80% or higher. So the development of this burner is to be capable of fuels ranging from a pure natural gas up to 100% hydrogen. What that really means is this is a very fuel flexible burner that is being designed to be robust within the industry, and suitable for installation in refineries no matter what their fuel gas blend. So I am confident that this is a very practical and useful burner going into the future, really without regard to the progress, or potential timeline of any strictly hydrogen fueled applications.

Operator, please go ahead and turn over to any caller questions.

Sure. Your first caller question is from Robert Kecseg from Las Colinas Capital Management. Please go ahead.

Hello, this is Bob, can you hear me?

Hi Bob. Yes, good afternoon.

Good afternoon. Yes, I was going to bring up the point of the fact that when you came into the company there was a great success in the innovation that was made, and then as you mentioned, it took some time to be able to develop those into an actual product. So from 2021, according to your efforts, we had an innovative product developed by 2021. And so now we're many years into this and the thing that I, that I want to bring forth is that what you've explained is, there's really three things that the innovation yielded. One of those was the reduced maintenance cost on the radiant tubes. The other was fuel savings of from what I've gathered is approximately 3% or more. And then of course the much talked about reduced pollution, the reduced NOx. The thing that I would say from a sales standpoint, the innovation yielded a lot. But if we don't mention fuel savings and all we talk about is NOx, I don't think we're really, I don't think we're really giving ourselves enough credit, to generate more prospects and more sales. So I really think - in, if it's not being printed in your press releases, then I have the feeling that it isn't being emphasized by the people who are involved in generating sales. What I would ask this question of all that. Could you give us some idea of the number of prospects say at the beginning of last year to the beginning to now? In other words, give us an idea. If there's prospect growth, there's something we can hang our hat on, because in order to get these sales up to $16 million, $20 million, if you have, let's say hypothetically 15 prospects now you're going to have to generate a lot more prospects, to really materially increase the sales, because so many of them take so long, and there's things that fall through. So could you give us some idea about how many prospects we had, maybe at the end - at the beginning of last year, compared to where we are now at the beginning of this year?

So Bob, let me take, I'll answer the best I can. Let me try and unpack right some of the points you've brought up. I think addressing the right. Just your statement about efficiency. Just to point out, we put press releases out, to be honest, mainly for the purpose of keeping investors updated with the progress of the business. Those are separate from the marketing materials and the sales presentations and the conference presentations, et cetera, that we make to customers in the industry. And I give just a, right. As a quick example, we talked a lot about the M1 burner with the marketing brochures, for that burner. In the industry, we express efficiency as the excess air levels the burners operate at. That's the key driver and that's what the clients recognize. That is specifically called out on the sales brochures. But those are not the materials that are, obviously discussed in the investor form, because they tend to get very technical and the language we use is different. So I appreciate your point and absolutely agree that, it's very important to stress the values and the cost savings to the customers. But we do reference the efficiency, the operability the turndown range, the speed, the burners we bought up. Those are actually all referenced, for example, on the M1 burner sales materials. There are many facets of our burners that we reduce. I'll be honest, I don't have specifically the data that you talk about, between last year and now. I can tell you that the range of projects and the number of quotations and the different products that we're engaged in, are significantly greater now than they have been in the past.

Okay. And I just want to add, too, to the emphasis on fuel savings because, in business, if you can save money, it's - materially. It's a material thing. I just took a look at Devco's website and Tulsa Midstream, and both of them on their website, they mentioned that they were seeking fuel savings, and it didn't take me very long to find it. So I'm just saying in the press releases that you put out to us, I've only really heard about NOx. It's been NOx reduction, NOx reduction. And I really think in business, the fuel savings part of it is very, very meaningful. And I think that's just, if that's what this innovation produces, then it should be something that's really emphasized?

Okay. Bob, your comments were appreciated. I note them. Thank you very much.

Operator, I'm going to go ahead and read another question here. There's a lot of a number of questions actually around Zeeco itself and about the Zeeco agreement. One question, Jim, is about the geography the agreement covers, and then any sort of, color you can give on everybody wants into the rollout, right? How do you kind of foresee the rollout there? You can speak in general terms?

Yes. So I think at the first part our agreement with Zeeco, is so first of all it is specifically for refinery process burners, but that agreement is global pipes. So as we are marketing this as a Zeeco product and the ClearSign becomes a Zeeco product line and Zeeco is a global company, with manufacturing and servicing I believe on every continent, this gives us a global reach. Now with that said in areas like China, I am not ready to roll the refining process burners out in China. I do not want to expose our IP there. I don't think the Chinese will pay a price that makes sense for ClearSign. So I'm not saying that we are going to just push our technology out over the entire globe. But the Zeeco agreement, should we choose to, does give us that access as and when we are ready. In terms of the rollout, this is a slow turning industry, and I hate to use that word, but we will - we're in the phase right now of, I think we're well along the way with the marketing materials. We have started to educate the Zeeco sales team. I expect that they will be talking to their customers, and start to develop leads at, which point we will engage with them, and join them talking to the customers. But to roll that stage forward through the negotiations and completion of the projects, and placing of the orders just to put a timeline, I believe it is going to be into 2026, by the time that we start to see orders resulting from that Zeeco engagement. And I just be fair, I don't want to give the impression and have people disappointed, when it does not come in quicker. Because it is going to take some time just even after we engage with the customers, for those customers to go through, and just to go through their normal process of the engineering and the evaluation and actually placing the orders.

Operator, are there other questions?

There are no further questions at this time. I would like to turn the call over to CEO, Jim Deller for closing remarks.

Thank you operator. As we end this call I want to thank you, our investors for your continued interest and support of ClearSign. I do also want to thank and acknowledge all of our employees. We have a small and cohesive team that has shown great dedication, flexibility and open mindedness, as we've pushed out our business into these new areas. This has required great technical development and engineering prudence, thorough work in our sourcing and project planning. By teams developing and presenting our proposals, and even the development of new accounting processes, to support our customers in new ways. It is very much recognized and appreciated that all this has, and continues to be done in addition to the sales, marketing and engineering and product supply and start-up, and all of the operational support that make up our day-to-day operations. With that, I'd like to conclude the call.

Sorry, ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask that you please disconnect your lines.