ClearSign Technologies reports 196% revenue growth to $133,000 in Q2 2025, driven by spare parts sales, while reducing net loss by $200,000 year-over-year.

OPERATOR - (00:01:40)

Good afternoon. Welcome to ClearSign Technologies 2Q 2025 earnings conference call. At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation. Should you require operator assistance during today's call, you may press STAR zero on your telephone keypad. It is now my pleasure to turn the floor over to your host, Matthew Sellinger. Please go ahead.

Matthew Sellinger - Moderator - (00:02:14)

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's 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. On the call with me today are Jim Deller and Clearsign's Chief Executive Officer and Brett Hines, Clearsign's Chief Financial Officer. So at this point in the call, I would like to turn the call over to Brett Hines. So Brett, please go ahead.

Brett Hines - Chief Financial Officer - (00:03:35)

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 was driven in large part by spare parts orders to our existing customers and a boiler burner sale to an 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 million-dollar 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 re register 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 Deller - Chief Executive Officer - (00:05:57)

Thank you, Brett 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 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@mselingermirgroup.com.

UNKNOWN - (00:06:34)

So. With that, Matthew. Great, Tim.

Matthew Sellinger - Moderator - (00:06:37)

And thank you ahead of time to our investors that have sent in questions. We really do appreciate that it helps us sort 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 months. Is this anything to be concerned about?

Jim Deller - Chief Executive Officer - (00:06:56)

A 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 to 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 five, 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 the company to grow in the future. From my own personal perspective, this has been significant changes. I am very pleased with the current board situation. I'm really looking forward to the future.

Matthew Sellinger - Moderator - (00:07:45)

Great. With that housekeeping done, Jim, it's been about three 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 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?

Jim Deller - Chief Executive Officer - (00:08:06)

Certainly. I understand there has not been a lot of order announcing press releases out. There's been significant uncertainty in the market. No orders have gone away. But we have seen timelines delayed. We get to the other major projects. We've had a lot of very significant work actually going on. I think the major is we have two very large process burner orders that are for household-name refiners and chemical companies. The first of those, the 20 burn 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 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've 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 those 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 startup 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 products especially focused on our diversification initiative.

Matthew Sellinger - Moderator - (00:10:07)

Okay, fantastic. You said developing new projects. 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?

Jim Deller - Chief Executive Officer - (00:10:26)

I can. 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 enhance. It's already got clear sign burners. But for us to enhance our own burner technology in to enable their furnace to operate more effectively to meet their needs. 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.

Matthew Sellinger - Moderator - (00:11:48)

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

Jim Deller - Chief Executive Officer - (00:11:59)

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.

Matthew Sellinger - Moderator - (00:12:20)

Okay, fantastic. So we're in August 2025. So approximately two 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's at today?

Jim Deller - Chief Executive Officer - (00:12:37)

Yes, I can. I think the first thing, as you noted, the order was or the grant was received in August, two 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. 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 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 and 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.

Matthew Sellinger - Moderator - (00:13:42)

So this project is getting industry attention as well?

Jim Deller - Chief Executive Officer - (00:13:46)

Very much so, yes.

Matthew Sellinger - Moderator - (00:13:47)

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?

Jim Deller - Chief Executive Officer - (00:14:16)

Yes, certainly at a high level. We work with Zeeco almost daily from their marketing team and their 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 that feedback. We've worked with them and developed their marketing materials. But we've recently we do follow up with them. They are pursuing ClearSign opportunities with their customers. As with 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. We've got a quote to pursue to an order yet but they are pursuing orders and talking to their customers about the the Z coastline burners.

Matthew Sellinger - Moderator - (00:15:08)

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

Jim Deller - Chief Executive Officer - (00:15:28)

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 Heater midstream heater down on the US Gulf coast that continues to 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. We've had a lot of feedback from our customers and others we've talked to in the industry that there's actually another market within the midstream industry for us at a slightly higher Knox level. It'll be a reduced price burn or a reduced scope, but there appears to be a gap in the market that I believe that's going to be very good or clear sign. So we're marketing this as a M25 burner that's going to be developed from the M1, to meet that new need or because we 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 out. I'm actually very excited about what this will bring for Clearsign. I think it could really get us into a whole new segment of the market.

Matthew Sellinger - Moderator - (00:17:06)

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

Jim Deller - Chief Executive Officer - (00:17:15)

The M1 simply is a single-digit NOx burner that is perfectly suited for the customers that have no other alternative than putting an FCI 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 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 much bigger market that we can add to our portfolio. So this is a targeted product for a slightly detuned for the midstream market.

Matthew Sellinger - Moderator - (00:18:32)

Yeah, I think we might have referred to it on a previous call. Some analogy of the fact that instead of needing a Ferrari, maybe you'd need a Ford F150.

Jim Deller - Chief Executive Officer - (00:18:40)

Yeah, we'd love to sell Ferraris, but there's a whole lot of people who want a Ford F150.

Matthew Sellinger - Moderator - (00:18:43)

Yeah, 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 resurgence of interest remained?

Jim Deller - Chief Executive Officer - (00:18:58)

It has definitely remained. And I'll expand this. I've talked in the past also about our systems projects which will roll and 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. In addition, 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 has got the first has already come back to us to progress a second. What we're also seeing those burners go into existing flares. They're retrofitting 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.