Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation third quarter 2020 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.

Thank you, Matthew, and thank you to everyone for joining us today. Our financial results were included on the Form 10-Q the company filed with the SEC on November 13th. The cash burn for the quarter ended September 30, 2020 was $1.1 million compared to $1.6 million in the same period of 2019. This decline reflects the reductions made to operating expenses and is representative of the changes made in the company's operations since the first quarter of last year. This increased efficiency is mainly attributable to the systematic focus on prioritized projects, selective use of outsourced consultants, and a more rigorous project planning and budgeting approval process. Our cash and investment resources were about $10.6 million at the end of the third quarter of 2020 compared to $5.7 million at the end of the second quarter of 2020. Shares outstanding on September 30, 2020 were 30,043,186. On August 24, 2020, we closed a public offering pursuant to which we issued approximately 2,587,000 shares of common stock for gross proceeds of approximately $5,175,000 or $2 per share. This bolsters the company's cash position, which we believe will enable us to bring our current product developments to market. On September 30, 2020, clirSPV LLC, our largest shareholder executed its right to purchase approximately 654,000 shares of the company's unregistered common stock, also at the same price of $2 per share. This resulted in further cash inflow of $1.3 million to bolster our balance sheet. It is important to note that with our quarter ending balances, we now have sufficient working capital available to carry us comfortably into 2022, and that is without revenue from any other sources.

Thank you, Brian, for that financial overview. Hello, everyone, and welcome to the ClearSign Technologies Third Quarter Conference Call. Prior to the last call, we had just announced the signing of our collaborative alliance with Zeeco, Inc., a world-leading burner manufacturer based in Broken Arrow, city border in Tulsa, Oklahoma. At that time, we were just about to embark on the execution of our first burner order for ExxonMobil, which is also to be our first jointly executed project at the Zeeco facility and with the involvement of the Zeeco team. For anyone not familiar with this project, the scope of supply included the fabrication of test burners for setup and optimization and demonstration of the burners in the industrial scale test furnaces at Zeeco. The testing for this project is extensive and includes the setup of four burners, exactly as they will be in the ExxonMobil heater, and the demonstration of the burner operation over an extensive range of operating conditions, with a wide range of fuel gases covering the needs of all the heaters in ExxonMobil's large and complex Baytown refinery. As we have previously mentioned, the requested operating ranges are above and beyond the normal or average order. And while this adds additional demands on our technology and the extended ClearSign Zeeco testing team, this is because we believe ExxonMobil is using this opportunity to validate the ClearSign Core technology for wide-ranging applications across their refineries and not just for this one particular heater. The burners are currently installed in the Zeeco test furnace, and we are making steady progress with the testing protocol. At the completion of this testing program, we anticipate that we will have greatly expanded the operating range and developed the knowledge and tools to design ClearSign Core burners suitable for installation and successful operation in almost every fired round burner heater configuration. This is by far the most common type in all hydrocarbon processing plants. In other words, and it is pertinent to emphasize that because the breadth of the goals of this project far exceeds normal operating parameters, on completion of the testing protocol, we expect ExxonMobil and we believe the industry at large will have great confidence in the future selection of ClearSign Core technology for safe and reliable operationally efficient emissions reduction projects.

With respect to this change in timeline with Exxon for the fall of 2021, is there a concrete date or a concrete sort of timeline for this, and what is driving this shift? Do you need more testing to be done or is it just timing in terms of being able to deploy this? Any color on that would be helpful. Thank you.

The first question regarding timing, I think as many people know, the shutdowns with refineries are a very complicated process that takes all the planning and, quite frankly, I can't speak for Exxon on that. We were notified that the installation date was being changed. Regarding the testing, I mean, we are making very good progress on that. Exxon is involved with that, of course, as is Zeeco being there. The results that we're seeing are being shared almost daily, if not daily, and are extremely encouraging. This is of course a very big project for us. The scope of this testing is much broader than a typical or normal burner project. And we all went into this testing mutually agreeing on the scope because of what Exxon is we believe looking for in bonuses to deploy across their refinery, and also for ClearSign and for Zeeco wanting to really take our time and make sure that we get the burner technology ready and proven for wide-scale deployment. So I'm saying that, I really just remind everyone that we are not taking longer or making more of this testing than we expected, we actually plan to really do a thorough job of this testing because we are planning a product for wide-scale deployment. Frankly, Exxon is very involved. We are all very much looking forward to getting the burners into the Baytown refinery firing. But first of all, we've got to control what we can actually control and that's what we can do and first of all, we're going to complete this testing as soon as possible, at least we’ll get that done. We'll get it proven. We'll get that known. And that way we can get the burners manufactured and shipped down to Baytown, so they're ready for ExxonMobil to install as and when their schedule allows. Regarding the planning yard, if we have any concrete dates, they have indicated that they are now planning this for a later turnaround, but we do not have an exact date on that yet.

I was trying to also maybe get a sense of the window within which you expect to complete all of your testing and post sort of that clearance if Exxon gives the okay to go ahead and manufacture these units. Is there a timeline within which these milestones could be accomplished?

While I can't comment on Exxon specifically, I can discuss a typical burner project. With Thanksgiving approaching, I think we're near the end of the testing program for Exxon, followed by formal witness testing, which we'll need to schedule in coordination with Exxon’s travel plans. Once testing is finished and the client approves the performance, we will be cleared to proceed with the manufacturing of the burners and finalize our order, which includes delivering the goods to Exxon. The only change to the schedule is the installation date that Exxon has planned.

Then just moving on to the pipeline, with respect to the burners, sensors, the flare offerings. Can you talk a little bit about like what is in the sales pipeline now? And do you expect sort of to build on some of the recent wins you've had? Are these catalysts potentially in play for 2021? Just any color on what the pipeline is looking like and how that may sort of come through over the next 12 months.

Amit, I can talk a little bit in general. I actually appreciate the schedule for proposals in this business starts with often an exploratory or budgetary assessment by our clients. So at that point, they have not even committed to the projects themselves. They do know they have or typically, they have a need on the horizon, often that need is a need to reduce their emissions, and they will engage the suppliers of technology, potential solutions very early in that process. But the length of time and the way that they go through evaluations, I don't want to give specific data and names because there is always so much movement in the pipeline in this industry. But all I can say is we are seeing more inquiries, we're seeing inquiries come to us more than before, and we had to go and look forward, and that is very encouraging. We're seeing inquiries that are much more applicable to our technology, which is very encouraging. And we are seeing follow-on interest, which gives us confidence that the clients are seeing what we have already done and that they are taking note of that, and that's also acting as a catalyst for increased interest. So overall, I'm seeing things looking much more positive. Regarding the time frame and knowing the length of these projects, I do expect things to pick up going forward. Again, I can't quantify that for 2021, but I do expect our sales to seem to be increasingly active as we go through next year.

And then just a final question for me, with respect to China, you mentioned you're setting up a demonstration facility. I guess I have two questions on that. Are you expecting this demonstration facility to be your hub, if you will, to showcase the offering and the value proposition, et cetera? And then alongside that, who are you currently sort of having these discussions with? Are you speaking mostly with the distributors or is there anyone else in that value chain that you are engaging with? Just trying to get a sense of how that process is working for you right now.

Certainly, I'd like to provide more detail about our current situation and approach in China. To enter the market, we need to first demonstrate our product's performance and then gain certification from Chinese authorities. This certification serves as our approval to sell commercially in China. Once we have that certification, we will be in a much stronger position. We could choose to manufacture the burners ourselves and launch our own business, but we prefer to maintain an asset-light model and are looking for collaborative partnerships. Our negotiating position regarding ClearSign will improve significantly once our technology is certified and proven to outperform competitors. Right now, our priority is to reach that certification stage. Meanwhile, we are in discussions with various companies in China, and there is considerable interest among boiler and burner manufacturers, as well as end users. However, we have not engaged in detailed negotiations yet because our ability to establish a collaborative agreement that reflects ClearSign's value will be much stronger with the certification in place. The demonstration we are setting up will take place at the site of a Chinese boiler manufacturer. From the boiler manufacturer's perspective, having a deep understanding of how to integrate ClearSign's technology into their equipment could give them a competitive edge in a market known for stringent emissions regulations. They recognize this advantage.

So I was trying to intimate from your comments a little more clarity about the difference between where we're at with the water tube boiler in China and the fire tube boiler. It seemed to me from your comments, if I was reading between the lines correctly, that you are closer or you feel like it's far less complex to do the fire tube boiler, get that demonstration going and getting that to market quicker because the water tube boiler was a far larger and more complex situation and your engineers were making great progress, but then COVID happened and that's thrown a little bit of a monkey wrench. Am I reading between the lines correctly? Was that what I was hearing from your comments?

I mean, what you state is correct, but there is more to it than that. The two burner designs are very closely coupled. And we have focused on prioritization and what products we can bring to market the fastest. The fire tube boiler burner is a smaller device; the mechanical engineering is less complex for that reason. And we also have a test boiler available to us in our office in Seattle, but we can continue and make rapid progress on, even what we cannot get into China and work on the boiler tube product. So whilst we were prevented from getting into China, we switched gears and really made great advancements in our overall boiler technology by focusing on the fire tube and now we have taken that design back to China. In fact, the burner that we're building now is different from the burner that we envisioned back at the start of this year because we've made very big improvements to it. So we've modified the designs we have in China. We fabricated that burner in China. The fire tube boiler burner is not restricted to the Chinese heating season, so it means that we can continue to make progress even outside of the heating seasons. So by focusing on the fire tube design, it gave us the ability to continue to really push forward to make rapid progress in our boiler burner, even despite the restrictions and the obstacles we've incurred because of the COVID-19 pandemic. So ultimately, what we're doing on the fire tube is also advantageous to the water tube boiler burner as well down the road. But you are right that the fire tube is going to be our first product to market, no doubt in China.

And I think I was hearing, too, that your engineering has gone to the point where you basically have a one piece product or that's the hope you'll have it all finalized and fine-tuned so that you have this one piece burner that can go into either a retrofit or a brand new burner, and that can be sold and marketed successfully much more successfully. Was I hearing that correctly?

That is correct. But beyond that, we know we have this burner, we have developed it and had it running in the boiler that we have in Seattle. What we have done is basically duplicated that design and had it fabricated by our team in China, that's what our Asian President Mr. Menendez has been doing. So we've taken those drawings. We've converted them to like Chinese materials. We've had that manufactured in China. It's in the final stages of assembly right now. The next step is just to install that. But it is essentially duplicating what we've already proven in the Seattle test boiler.

So that's pretty exciting to me to hear that, because it seems like not only would it be applicable to China, which is a huge market, but it could be applicable worldwide to North America and Europe and other markets, if you have a great design that gets great NOx readings and is simple to install. So do you have any color on besides China?

It's an opportunity we're very aware of. Obviously, the biggest market right now is China and that's where we're focusing on this launch. And then the next step is to extrapolate the designs. Once we've optimized this first size, we'll be stepping up through the range to build like you don't want one boiler burner, you want a range of boiler burners. You’ve got to have, in some ways, got to be first. China is the obvious place to be first. But after that, there is no reason why it's only China. It's just China is where our team has chosen to start.

I have a question about the ClearSign Eye. I understand you may not be able to share many specifics about partnerships. However, I recall in previous calls that you expressed enthusiasm for this technology due to its significant market potential if successful. It appears that you might be the only company offering this type of solution right now. It seems you're seeking a partnership to help minimize capital expenditures since we're still a small company with limited resources. It sounds like you're looking for a partnership similar to the one with Zeeco, which would allow you to avoid large capital outlays. Is that an accurate assessment? I realize you may not be able to provide much detail.

Yes, and it's probably worth clarifying. The ClearSign Eye is our sensor technology. And I think you don't mind another clarification for everyone who's listening. We have two fields of the ClearSign Eye technology, both are potentially very expansive markets. The first, which I think is the one you're not referencing, is the pilot sensor, which is destined for refineries and petrochemical plants, and that has a worldwide market. Basically, every burner that uses a pilot in the world is a potential market for that product. That's a product that we are currently manufacturing or having manufactured for us as a ClearSign product. And at this point, it is the only true ClearSign manufactured product, and that's because it's a single design, off-the-shelf. In the big picture, it’s a relatively simple design. And that's the one that's done and in the hands of our sales team down in Texas, and that one's ready for sale. I believe the ClearSign Eye, the aerospace application, the ClearSign Eye is the one you're referring to…

Yes, that's a helpful clarification because I was a little confused. I understood that it could go into any kind of pilot application, a burner, or anything else. I'm glad to know you already have a product that's marketable in that niche. So, what you're clarifying is that the partnership is likely going to be in the aerospace industry.

That's right. Yes. The aerospace industry is obviously a very different industry. One of the advantages of forming collaboration agreements and partnerships is you can select partners who are experts in that particular field. So it clearly makes sense for us to seek a partnership with people who are expert and experienced in the aerospace equipment and manufacturing field, to get the approvals required for something on an airplane and the like is a long process. We do not want to be in a position of funding a project for many years and the capital outlay that would be involved with that, especially when it involves expertise we do not have in-house. So again, we're looking to find a company where we can leverage their specific industry knowledge and pair that with the unique capabilities of the ClearSign Eye sensor technology to solve a problem in the aerospace industry. But that will be a very different company than the companies who we have formed a collaboration agreement with forming on the burner industry. The structure of that may also be different. You're right. I can't go into specific details of who we're talking to or what that looks like. But it's the same concept, remaining asset-light, finding a partner with the correct and unique capabilities specific to that particular industry. And then one all through down the road on doing this for a reason, we also want to make sure that we've got a clear vision of when everything is done and everything is successful, how does ClearSign make money at the end of it.

And just one quick third question. And do you think that the political climate may be changing so that in North America, so that there is a higher demand for your products?

The political climate in North America is definitely changing. I can't go into detail about that, but I had a similar question some time ago concerning the previous administration. The fact is, it's primarily local airports that are pushing for stricter engine regulations and addressing their local environments. We are particularly focused on the markets in California and Texas. The regulatory bodies and their mandates in those areas are what drive the emissions-related market for us. Honestly, it's hard to determine how much the changing presidential terms will impact our business in the short term. I don’t have any special insights that others don’t have, but we always keep a forward-looking perspective.

Our next question comes from Robert Kecseg with Las Colinas Capital Management.

The question I had first was, due to this testing and whatever change in parameters and so forth that you've done. Is that something that's documented ordinarily so that if engineers from other prospective customers wanted to see that they could take a look at that and analyze exactly what took place during this testing?

Absolutely. I mean, the work that we are doing and the technology that we're developing is ClearSign's technology. And really, back to the statement I made earlier, one of the reasons that we are and have embarked on such an elaborate test program in this initial order with ExxonMobil and with Zeeco is to develop our technology so that it can be very widely used and to accommodate the needs of, as far as I recall, almost every refinery heater that uses a fire ground burner. So what we're learning is going to be reflected in our sales drawings, it's going to be reflected in the guarantees we make and the proposals that we send to our customers. Engineers from any company will get to see it and assess it, and understand how it works and how we can apply it with them to solve their problems. This is very much a development of a ClearSign technology. The opportunity to get these burners into a large scale industrial furnace, to learn how they perform together and to develop the range of products, it's just something ClearSign has had to do to take our technology from a very unique burner model into a complete market-ready product range. But that is very much owned by ClearSign that we will market and sell going forward.

And am I right in assuming that from the time that this began, I guess, it was about five weeks ago today, and I assume, I guess, that these burners have been running pretty steadily for this entire five-week period. The multiple, I guess, is a four-burner configuration. Is that right?

That's right. So the heater is set up exactly the same as the destination heater in Baytown. I think when you look at the durability of burners and the testing, one of the reasons that we have test furnaces is that as these burners get put through extremes of operation in a test furnace that you would never put them through in an operational refinery. So not only have they been quite consistently fired, they've been taken well beyond and outside the norm of what they would experience in an operational refinery.

So actually the length of time that this has taken and the degree of exercise that these burners have been put through in this test furnace, is the first time ever that the company has been able to do that with multiple burners. So what I'm getting at is, it seems to me that this greatly reduces the risk for investors going forward, because we've gotten through this milestone. Could you comment on that?

No, you're absolutely right. And I've seen the developments to our technology and how well it has been able to accommodate the extreme demands that are being put on it, both by the very tightly spacing of the burners in this test furnace and the extremes of the operating conditions, and I've been absolutely delighted with the results I've seen so far. I can't give specifics, but it has been a huge development in the ClearSign technology.

I was curious about the potential for sales regarding other SCR installations in California, especially in light of the recent order to replace SCR systems. Given the cost difference, this seems like a significant opportunity in that regulatory market. Is there any information available about other potential SCR installations that might be impacted by this technology?

This is a significant opportunity for us. Currently, there’s no database that identifies exactly these projects, but that's where we see immediate potential for this technology. Recently, we discussed the Exxon burner testing and the considerable effort we're investing to broaden the product range in response to the diverse requirements for that burner. In contrast, infrastructure projects represent the standard type of undertaking. The specifications for these projects are solely focused on what is necessary to ensure these burners operate effectively. This will progress quickly. For context, that order was confirmed not long ago with a target installation set for the first quarter of next year. Our work on the Exxon project aims to facilitate similar execution on future orders. This reflects standard operational execution. Therefore, this is a strong reference project, providing an excellent opportunity to find a client that has no alternatives and is looking to install an SCR. That is precisely the target market we are pursuing, representing immediate opportunities for our business.

I think you answered most of my question. My question was going to be surrounding the nature of the testing that would be needed for the burners for the major infrastructure plant versus Exxon. And I think what I heard, maybe just reiterate that far or less, I guess, expanding of testing and types of conditions that it's far more straightforward with those guys than with the Exxon testing. Would that be correct?

That's correct. Jeff, there’s more to consider. The significant effort being put into the testing is due to the strategic and technological development nature of this project. The infrastructure project is a typical endeavor where technology is applied to a specific function for a particular heater. In contrast, with Exxon, we are stretching the technology to serve multiple applications. Therefore, you will notice that the infrastructure order is progressing rapidly. We have taken the order, designed the burners, and they are currently being fabricated. They are slated for installation next quarter. This is the expected trajectory for ClearSign’s business once our product line is fully developed and tested. The testing with Exxon is our pathway to maturity.

This concludes our question-and-answer session. And I'd like to turn the call back over to Jim Deller for any closing remarks.

Well, thank you everyone for your time today. That completes our conference call. We look forward to updating you on our progress as events occur. Again, thank you all very much, and have a good day.

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