Earnings Call Transcript - CLIR Q2 2023

Operator, Operator

Good day, and welcome to the ClearSign Technologies Second Quarter 2023 Conference Call. 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.

Matthew Selinger, IR Group

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation Second Quarter 2023 Results Conference Call. During this conference call, the company will make forward-looking statements. Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs, and prospects. These statements are based on judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call include, but are not limited to, whether field testing and sales of ClearSign products will be successfully completed, whether ClearSign will be successful in expanding the market for its products and other risks that are described in Farzan's public periodic filings with the SEC, including the discussion in the Risk Factors section of the 2022 annual report on Form 10-K and the quarterly report on Form 10-Q for the quarterly period ended June 30, 2023. Except as required by law, ClearSign assumes no responsibility to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. So, with me on the call today are Jim Deller, Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So, at this point, I would like to turn the call over to CFO, Brent Hinds. Brent, please go ahead.

Brent Hinds, CFO

Thank you, Matthew, and thank you to everyone joining us here today. Before I begin, I'd like to note that our financial results on Form 10-Q were filed with the SEC on August 14. Now I'd like to give an overview of the financials for the second quarter of 2023. The company recognized revenues of $150,000 during the three months ended June 30, 2023, as compared to zero revenues for the same period in 2022. Revenues for the three months ended June 30, 2023, were generated predominantly from our engineering feasibility study. For the six months ended June 30, 2023, we recognized approximately $1 million in revenues, which is the highest reported revenues in our history for any given year or six-month period. These revenues were generated predominantly from our process burner product line. Now I'd like to switch the discussion from revenues to cash. Our net cash provided by operations for the three months ended June 30, 2023, was approximately $46,000. In the same three-month period last year, we used approximately $1.8 million in cash. This quarter's operating cash activity was a milestone for the company. For the first time in our history, we added cash to our balance sheet through operational activity. Now I must stress a cautionary note about this milestone. Most of this cash came from our customers for projects that have yet to be fully completed. We structure our customer contracts to receive a substantial portion of cash before completion and revenue recognition. All things being equal and no other changes. This milestone is a temporary occurrence driven by timing. However, we do not believe that this is an insignificant milestone and that it is a meaningful marker of our progress. As of June 30, 2023, we had approximately $8.5 million in cash and short-term investments. Now let's switch gears and shift to discussing our profit and loss. Our net loss for the three months ended June 30, 2023, was approximately $1.5 million compared to approximately $1.6 million for the same period in 2022. This was a modest year-over-year improvement. We saw a modest year-over-year improvement in our net loss for the six months ended June 30, 2023. We reported an improvement of $222,000 when compared to the same period in 2022. It is important to note that both of these improvements in our net loss were driven by gross profit from sales of our products. In other words, we are not seeing notable shifts in our cost structure, but we are seeing the effects of notable shifts in sales. Now changing our focus to equity. As of June 30, 2023, we reported approximately 38.6 million shares of common stock outstanding. We have confidence in our financial position and balance sheet. And with our quarter-ending balances, we have more than 12 months of runway in working capital, and that is without cash from any other sources. With that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Jim Deller, CEO

Thank you, Brent, for the financial overview. I'd like to thank everyone for joining us on the call today and for your interest in ClearSign. It has been a while since our last update, and I'm happy to share our progress with you. Before I begin, I want to congratulate Brent on his recent promotion to Chief Financial Officer. Brent has undertaken an expansive transformation of ClearSign's accounting functions that is not visible from the outside. This has made our processes much more efficient and also provides an accounting and control system that is structured to enable future growth. On today's call, I will review our business segments, starting with process burners, and discuss both the hydrogen brand development project as well as our other in-process projects and pipeline. Then I will touch on the progression in our boiler burner business and then provide an update on our business in China and the developments there. We also have developments with our collaboration partner, Narion Corporation, who is developing applications using our sensing technology, and we'll give more insight into this progress. Before I go into detail on our individual product lines, I want to give a little high-level insight into our operations over the last few months because we make announcements of sales, grant awards, and other significant events. There's really only on these calls we get to give some insight into the cooking that goes on in the kitchen. We have completed the engineering design of burners for two different heaters and tee those up for customer testing in the – the first burner is fabricated and scheduled to install in the test furnace next week to begin the testing process. We have also completed the design and fabrication of the three boiler burners, two in California, one of these is installed and awaiting commissioning, and the other is scheduled to ship to the customer site in the coming days. And the third is for the chemical plant in Texas. This burner is completed and ready for collection by a customer. On top of this, there's been a lot of engineering and design progress in preparation for our hydrogen burner project. We have structured ClearSign to be highly scalable. But as these are the first commercial orders to be processed, there has been a significant amount of front-loaded engineering and development and also in coordination with our fabrication vendors to iron out our production processes. We believe that this is a feature of early production that we expect not to occur as we rescale our consistent order flow. These first boiler burner orders and first large-sized process burner orders are very significant for us, not only in terms of establishing our technology in the market as a trusted vendor to our customers but also in demonstrating our ability to complete full-scale commercial orders. So, while the first part of the year was heavy with announcements of initial commercial sales, both in process burners and boiler burners, understand that there is a lot of work in executing these first sales to pave the way for future growth, both in getting our products in the field but also in getting our project flow, scalability, and coordination dialed in. Concurrent with this work, the operations team is also engaged in the consistent preparation and follow-up support of customer proposals. With that said, I'll move on to our process burner segment. Many of you will have seen our announcement regarding the receipt of the Phase II SBIR Grant from the Department of Energy for a 100% hydrogen-capable ultra-low-NOx burner development and commercialization project. The award was confirmed late in the day, August 25, and our announcement was made Tuesday morning this week. This grant is for up to $1.65 million and follows the previous Phase I grant for $250,000 that allowed us to demonstrate the capability of our technology to achieve very low emissions over fuels ranging from zero to 100% hydrogen. This testing was completed in the facilities of Zeeco Inc., our collaborative partner, and served as a successful proof of concept demonstration. The second grant is for up to two years and will fund the development and commercialization of a full range of burners that will enable the reduction of NOx emissions to the levels required to control ground-level ozone in critically polluted areas. We believe that these burners will be a necessary part of the adoption of the new hydrogen economy and use of hydrogen fuel for industrial heating. The anticipated outcome is to achieve reductions in the industrial emissions of both carbon oxide and nitrogen oxides without the need of catalytic cleanup devices and hazards and costs of ammonia and the catalysts that accompany them. As we have highlighted previously, the current available burner solutions are able to reduce CO2 but the byproduct is much higher NOx. Our novel burner enables zero CO2 by burning pure hydrogen and creates NOx emissions so low that they compete with SCRs in the single-digit parts per million range. From a compliance perspective, our customers will still be required to maintain under the NOx emission limits of the operating permits when adding or switching to hydrogen as a fuel gas. We anticipate that the increase in NOx emissions resulting from the use of hydrogen will result in the need for a significant number of industrial and commercial burners to be replaced. There has been a notable interest in this project and product line, and we're already in discussions with potential customers and other stakeholders regarding the future deployment and in particular, early adopter opportunities for this new hydrogen-focused burner technology. This project is just getting started, but we have been planning for this in anticipation of this news. The first phase of our activities is to complete the detailed design of the first prototype production-type burner and then set this up for testing and optimization. We will provide updates as we pass significant milestones in this program. Turning to the projects in our production pipeline. Just to remind everyone, we have orders in production that will replace burners in four multi-burner heaters situated in two different refineries in California. Regarding the order for two heaters that was released back on May 18, this order is for two multi-burner heaters, which encompasses 13 burners in total. The audit is a repeat order from a customer, who was an early adopter of our technology in Southern California. Also, as we have mentioned and is quite important, this customer came back to ClearSign after initiating an alternative option to install a traditional selective catalytic reduction or SCR, NOx control system and inherent complexities associated with such a system. Additionally, of note regarding this project is that the fuel gas includes hydrogen, which can make up to 80% of the volume. So, this supply will give us not only two valuable installations validating our technology but also installations demonstrating our capability to control NOx emissions from fuel gas that contains high concentrations of hydrogen as expected to be an increasing need and of increasing value in the future. The fabrication of these burners is initiating, and delivery to the client is expected in the first quarter of 2024. We very much look forward to completing this project and seeing these burners in operation. Our other 20-burner California project is also progressing well. As we updated previously, the final witness testing went as planned, and we are now in final stages of completing computer modeling of the flow patterns inside the customer's heater and also preparing for the fabrication of the burners for delivery to our customer site. We are scheduled to be fully complete with the manufacturer and delivery of our burners early in 2024, which will largely complete this order. At this time, we do not have confirmation whether the sites shut down during which these burners will be installed will be undertaken in 2024 or 2025, which is dependent on our clients' plans and scheduling. Bear in mind that there are a lot of activities included in these refinery shutdowns, so the planning process is complex and dependent on many factors. We will be able to invoice and receive payment upon delivery of the burners, and only a small part of the purchase order will remain until installation. For those that are interested, we have posted a summary version of this test data and report on our website as we believe the data and details are informative to specialists from the industry, investors, and other stakeholders alike. As part of our promotional activities, we plan to use these burners used for the witness demonstration and to host an industry open house at our partner's Zeeco's facility. The burners that we used in the burner testing were not part of the final production batch and will not be included in the shipments in California. These burners will be kept for demonstration purposes for potential customers and stakeholders. We have additional customer demonstration events planned for the coming months. As I have said in the previous call, these burners demonstrate NOx emission numbers significantly below the five ppm guarantee and robust performance throughout their operating range. This is important because in this industry, while we have presented and promoted our burner technology, for most industry people seeing in person is believing. I'll now move on to developments in our boiler burner product line. On the last call, we spoke about our first three boiler burner sales, two into California and one into Texas. These will be our first installed customer orders of ClearSign Core burners between California, which are for five, two boilers branded and sold as rogue burners. This is meaningful because it provides the start of a developing installed base and the process of getting our products out into the field. We will actually have five deployments. As with the first sale, we also deployed the 500-horsepower boiler from our partner, California Boiler. And we have just early this month, commissioned another smaller 125-horsepower rental boiler, again, fitted with a ClearSign Core Rogue burner in Oregon. The first rental boiler, the larger 500-horsepower was set up and has now been in operational service for several weeks and operating smoothly as expected. Some of you may have seen our posting and posting from our collaborative partner, California Boiler, and their subsidiary, Road Combustion on LinkedIn regarding this. This first boiler order was sold into a medical and business waste services company and was sold by our partner, California Boiler into the San Joaquin Valley Air Pollution Control District of California. This new boiler complete with the rogue burner is now installed and expected to be commissioned and put into service next week. We look forward to having this operational and providing our first firmly installed commercial reference site. The second order was also sold into the California market to a national provider of recycling services. Our burner and the new boiler into which it will be fitted will be part of a recycling plant upgrade that will increase energy efficiency for one of this customer's nationwide sites. We believe that this second burner in particular will truly set the bar for boiler burners. This burner is larger and is in the size range requiring sub-2.5 PPM NOx emissions, a capability that we believe is unique to ClearSign burners. All other solutions for NOx emissions at this level require the inclusion of an SCR and associated capital costs and ammonia handling that go with them. The new boiler at this site is being supplied by Hurst Boiler Company, the largest manufacturer of fire tube boilers in the United States. This burner will ship to California from our fabricator in Tulsa in September and is expected to be installed and commissioned in the fourth quarter this year. We visited the first boiler company with California Boiler back in late July as part of our marketing and sales program. This gave us the opportunity to see the boiler in production and also provided a good opportunity to discuss strategic sales avenues and approaches to promoting our burners into new boiler installations across the country. The third boiler burner sale was unique in the fact that it is our first application of our boiler burner technology into a non-boiler heater and very importantly, our first sale into a heater manufacturer who has included our burner as they've chosen a solution to meet their customers' needs. Also, it was our first sale into Texas. After California, we anticipate that the Texas Gulf Coast region will be the next large market for us. Lastly, the sale is also the first for these global chemical companies and the first in the industrial chemicals sector. This burner is fully fabricated and ready to ship to the job site. As we have said before, we are very encouraged by the early boiler burner orders and installations in multiple markets this year. But we are also encouraged by our list of outstanding proposals and look forward to adding to this list. We do believe that these early deployments will be a catalyst for additional orders, both through the provision of references to which prospective customers can refer and gaining confidence in our technology as they do and also through the promotion of our solutions and general awareness of our technology in the industry that we expect to result from the peer-to-peer and business-to-business communications within the industry and businesses related to it. We believe also that providing a simple, cost-effective, and ammonia-free solution to the new Near Zero NOx requirements will be recognized by other air districts within and outside of California and provide references they will develop modifications to their clean air regulations. Now turning to China. Our President of Asia, Manny Menendez, is back in the country now. He has two main objectives in the near future. The first is to complete the commissioning of the 500-horsepower boiler and burner installed on the site of our collaborative partner, Shuangliang, and then completing the government certification process. The 500-horsepower burner is expected to complete certification in the fourth quarter of 2023. As we have mentioned in the past, Shuangliang is one of the largest boiler companies in the world. For them to contribute the assets and manpower that they have to date is a direct reflection of their perception of how potentially market-moving our technology is for the Chinese market. On the assumption that the fire fluid horsepower burner model gets certified, both ClearSign and Shuangliang are in agreement that we will eventually have an entire size range of boiler burners to offer them into the Chinese market. To put this range into perspective, the rental boiling operation in California is a 500-horsepower model. The burner being installed into the new Hurst boiler or a recycling company is a larger burner or 1,200 horsepower, while the waste services boiler is a smaller 300-horsepower model. We believe we are well positioned to scale up or scale down our burner designs and that we can do this to fit this large demand segment in China. The second activity is the promotion of our technology and our joint integrated boiler burner package with Shuangliang in the regions of China that have recently implemented new low NOx requirements or areas that are in the process of doing so. The likely first visit will be to Shenzhen with Shuangliang to promote our joint capabilities and unique offering to both customers in that area and also the local government officials responsible for administering the new air quality standards. As we said in the last call, Shuangliang has not gone through all of the investment, effort, and disruption with the anticipation that they will sell a handful of ClearSign burners. Shuangliang has much bigger aspirations. On July 13, we issued a press release announcing developments with our collaborative partner, Narion Inc. Narion is a specialist company developing applications of our sensing technology outside of the flame sensor, ClearSign Eye, that we are promoting ourselves. In a notable development announced July 13, Narion was awarded a $250,000 SBIR grant to develop a sensing and controlling technology to solve a major need of improving efficiency by reducing the steam consumption of large flares in the refining and petrochemicals industries. The objective of this technology is to ensure the complete destruction of waste gases from refining processes, but importantly, also to do this in a way that is energy-efficient, which would reduce the CO2 footprint of flowing operations and reduced the clients' fuel costs. This work is underway, and we will provide updates of significant developments in the future. With notable customer orders in production and startup across both of our major product lines, we are at a significant transition point in the development of ClearSign. Achieving an installed base and sufficient operational time for our customers and the engineering companies and consultants who support them to recognize and trust the efficient and ammonia-free NOx controlling solutions we provide is a major strategic objective in that path to four commercial operations. Our technology is being recognized by air regulators and we are seeing an influx of inquiries, some for boiler burners at a corporate level rather than individual sites. Our growing recognition is also evidenced by the reception we received at such prominent boiler manufacturers as Hurst Boiler Company. With this change in our outlook, we see great potential in expanding our strategic marketing resources, culminating in a press release we issued on August 1, announcing that Ms. Tina Oby Unachukwu has joined ClearSign as Director of Customer relations and business development. We are delighted to have found and attracted a person of such outstanding talent and experience as Tina. For experience, most recently at Baker Hughes includes a stellar record of developing strategic initiatives, expanding business footprints, and growing sales. That, combined with her entrepreneurial drive makes her a very welcome addition to our ClearSign leadership team. Tina has truly hit the ground running, and I very much look forward to working with her as we grow the ClearSign business. Before moving to the concluding phase of this call, I want to reflect back on one detail of our financials that Brent alluded to and is not readily apparent from the financial tables in the 10-Q. The second quarter of 2023 was our first cash-positive quarter, excluding capital raises. We did receive some benefit from the timing of accretions, but nonetheless, we see this as a mark of our commercial progress. So, looking forward to the rest of the year 2023, for both our major product lines, we will be busy completing and starting up the three boiler burner orders currently in progress. The two in California ClearSign will act in support of California Boiler and their subsidiary Road Combustion. For the hydrogen in Texas, we will work directly with our clients and our chemical plant end user. We also have significant work to complete with our process burner collaborative partner, Zeeco. This includes conducting the customer witness demonstration for the burners to retrofit the two heaters announced this past May 18 and then the manufacture of those burners and also the remaining manufacture of the burners for our first two California heaters that order was first announced in March 2022. In addition to this, we will finally conduct a demonstration of our process burner technology to key stakeholders in the refining and petrochemical industry. We will also be developing the new commercial hydrogen burner as the first stage of our just announced SBIR-funded technology development program and look forward to setting up the first testing phase of that project. I look forward to working with Tina and the California Boiler team to develop our marketing and sales strategies to take advantage of the operating reference installations we greatly anticipate in the coming months. We are, of course, also promoting our process burner technology and greatly look forward to having our current orders in operations starting in early 2024 and leveraging these to assist our sales and business development activities. Our eyes will also be on China, anticipating both the certification of the midsize 500-horsepower boiler burner and also our first sales and marketing efforts with Shuangliang and introductions to the government and business officials in the regions of China requiring compliance with the new low NOx emissions regulations. On the Investor Relations side, we have released a new updated Investor Day, which is now included on our website and was included in our recent 10-Q. With that, I'd like to open up the call for questions. Please, operator?

Operator, Operator

Our first question comes from Sameer Joshi with H.C. Wainwright. Please go ahead.

Sameer Joshi, Analyst

Brent, congratulations on the promotion. Just a few clarifications from the order flow and the expected deliveries during 2023. The two California burners and the Texas burner, are they expected to be delivered during 2023 or are these revenue recognition opportunities for 2023?

Jim Deller, CEO

Okay. Hi Sam. Thanks for the question. Yes, the boiler burners in production at this time are scheduled to all complete and they will ship, we're expecting them all to start up this year.

Sameer Joshi, Analyst

Okay. And just another clarification on that. I know your process heater burners are multiple orders. Are these boiler burner orders like single boiler burners or multiple burner orders?

Jim Deller, CEO

Sameer, that is a great question. The three orders that we are in the process of completing and then shipping to the job site and actually starting up at present, those are three single burner orders. However, looking forward, there are more multi-burner opportunities in that market segment.

Sameer Joshi, Analyst

Yes. I mean what is interesting is one of the Texas burner is actually going into a non-boiler application, if I heard it right. Can you talk a little bit about that application and the scope or the opportunity set there?

Jim Deller, CEO

I can share that the end-user has not given us permission to disclose their name. However, this application is intended for a chemicals company. Unlike a boiler, this is a process heater. The burner was sold to a well-known manufacturer in Tulsa, Tulsa Heaters Midstream, which has a significant range of heaters for various market sectors, particularly gas processing, and in this case, for a chemicals plant. The burner is designed for a boiler but is mounted horizontally in this heater as a single burner. This configuration is similar to a 5G boiler, which makes it a suitable choice. Additionally, the emissions we can achieve at this site are comparable to those from the 5G boiler, allowing us to meet very low single-digit NOx guarantees, which aligns with our expertise.

Sameer Joshi, Analyst

Okay. On the process heater burner, again, another clarification, the two refinery multi-burner orders. Are they 13 each? Or is it 13 combined for the two orders?

Jim Deller, CEO

No. It is one order of 20 and one order of 13.

Sameer Joshi, Analyst

Thank you for clarifying the 20-burner order. Moving on to the grants received by Narion and yourself, what role does ClearSign play in the Narion project? Is there any benefit for you? Will you receive a portion of the funds or will you need to invest some of your own money to support this initiative?

Jim Deller, CEO

Okay. And long term, the reason that we have formed a relationship with Narion is certainly for the financial benefit of ClearSign. It probably helps for others listening as well. We've not talked about Narion a lot in the past, but Narion is a specialist company based in Seattle. We formed a collaborative partnership with them because they have expertise in technology and market areas that are not core to our expertise within ClearSign but in which our sensing technology can have a very significant role. So, we've partnered with Narion to enable them to develop and commercialize applications in areas outside of the typical combustion industry, which is the core business of ClearSign. So, the grant that Narion has received is going to fund their research and development of this sensing for flare applications. It's going to be executed entirely by Narion. There is no cash outlay from ClearSign's side. It helps them fund the project, but the end result of this project, assuming they are successful, will be a product that contains the ClearSign sensor and will result in a licensing arrangement from ClearSign to Narion to allow them to use our technology, and that will provide revenue to us.

Sameer Joshi, Analyst

Yes, makes sense. It's sort of an investment in terms of time and a little bit of money at this point. On the other SBIR Phase II grant for the hydrogen, I know Zeeco was involved in Phase 1. Will Zeeco continue to be our partner for that effort in Phase 2?

Jim Deller, CEO

Yes, absolutely. We have received support letters from Zeeco during the application process, and we will keep collaborating with them. They've been a fantastic partner for us. The project focuses on developing the commercial product line, which involves scaling it up and demonstrating that burner across various sizes, including larger models. Utilizing the multiple test furnaces at Zeeco is a vital aspect of this project.

Sameer Joshi, Analyst

Understood. And then the last question on China. You're expecting certification of some form by the end of this year, fourth quarter. Is this expected to be sort of a blanket certification? Does this pertain to the district heating opportunity that we have spoken about in the past?

Jim Deller, CEO

Could you repeat the last part of your question, please?

Sameer Joshi, Analyst

Yes. So, I think in the past, we talked about a lot of municipal heating or district heating in China. Does this pertain to that?

Jim Deller, CEO

Okay. Let me provide the details one at a time. Yes, I confirm that we expect to complete the certification process this year. For timing, the burner has already been installed. We aim to finish the firing this month, but it usually takes some time for the Chinese government to process and issue the certification certificate. We anticipate that this will take about two months. However, we are aware that COVID has affected processes in China, but we are optimistic that we will receive that certification by the end of the year. Our strong goal in China is to develop a full range of burner sizes, not just the burner itself but also our partnership with Shuangliang. We are collaborating with them to provide an integrated boiler burner package. Shuangliang is one of the largest boiler manufacturers in China, which will allow them to sell a NOx compliant boiler at their client sites. The burners we are developing are 5G boiler burners, and we have shifted our focus in China due to new NOx regulations now being enforced in industrial regions. We've previously mentioned Shenzhen on the South Coast, where there is significant demand for boiler burners from our perspective. This is a high-volume market, and we already have proven products operating in California. We have demonstrated that we can manufacture them, and they've been source tested by third parties, giving us operating experience. This makes it easier for us to commercialize this product in China now. With the regulatory changes and the growth potential of the 5G boiler burner business in California, we are prioritizing this product line. However, we still maintain our relationship with the Beijing District Heating Group and have the water tube boiler burner planned as well. This is mainly a strategic shift so we can seize this emerging opportunity that we believe will be highly beneficial for us.

Sameer Joshi, Analyst

Understood. The water tube opportunity is still present, but this new opportunity is more immediate and significant. Did I get that right?

Jim Deller, CEO

Yes.

Operator, Operator

The next question comes from Robert Kecseg with Las Colinas Capital Management. Please go ahead.

Robert Kecseg, Analyst

Yes. I wanted to maybe simplify on the sales. Is there some way that you could report a sales order backlog? So, it maybe kind of simplifies it for the investors. In other words, perhaps what backlog we have estimated for this year and so far, what would be approximately estimated for the following year 2024 at the present time.

Jim Deller, CEO

Sorry, go ahead. I cut you off. I didn't mean to. Sorry.

Robert Kecseg, Analyst

Oh, you cut me off. You couldn't hear me?

Jim Deller, CEO

I thought your question was continuing. I didn't mean to stop you.

Robert Kecseg, Analyst

No. I just was asking about the possibility of order backlog reporting. It's great to hear the individual orders and stuff, but to kind of summarize maybe for investors, I didn't know whether that would be possible to say, like a 2023 backlog and what we're looking at now for 2024 backlog of just sales revenue estimate.

Jim Deller, CEO

Certainly. I believe it’s most effective to provide you with the necessary tools. A typical average price for our burners is around $100,000 each. We typically disclose the number of burners in our order announcements. The process burners require a considerable amount of engineering work, which can add over $200,000 to that price. This approach gives you a straightforward method to estimate the order values as they come in. Additionally, you can monitor the recognized revenue through the queues, noting the difference with our work-in-progress backlog. Looking ahead, there are numerous variables in the market, making it unreasonable to provide a specific expected number, particularly at this point in our forward-looking sales forecast. I am optimistic about what we observe with both the process burner and the product line. However, I believe it’s not sensible to provide future projections right now. Nonetheless, I hope those round figures help you gauge the value of our booked orders, and the queues will show the recognized revenue on a quarterly basis.

Robert Kecseg, Analyst

I wanted to mention something during the call. While it’s not directly about our products, I learned from an industry executive that in China, they completed 82 new coal power plants in 2022, and they plan to build over 90 more in 2023. I found that to be an impressive figure. I'm curious if this has any relation to their growth or if it expands our market. I understand our equipment isn’t used in coal power plants, but I’m considering how it might connect with our efforts in heating, which we've been trying to develop.

Jim Deller, CEO

Yes, it's challenging to connect that directly to our activities. However, I believe it's a valid point. We've discussed the Chinese market extensively, explaining our strategy and investment there. Sometimes the distance makes our reasoning less apparent. The investment scale you mentioned highlights the size of the industry in China, which helps us grasp the potential of that market. While we operate in a different sector, specifically coal-fired power generation, observing the significant energy demand and acknowledging that the smaller boilers we offer also contribute to energy in China illustrates the vast opportunities we see in that region.

Robert Kecseg, Analyst

Yes. And I just want to say how pleasing it is to know how valuable sales are to us that you're able to find somebody with Tina's background and experience. And I hope in the future after she's been around for a while, we could hear some of her perspective of what she's experienced in our market after being there for a time.

Jim Deller, CEO

Yes, Bob, thank you for that. We were very excited to find someone of Tina's caliber. To attract somebody like that is very gratifying to us. She's hit the ground running. I'm looking forward to working with Tina in the future.

Operator, Operator

Our next question comes from Kevin Dunn of Private Investor. Please go ahead.

Unidentified Analyst, Analyst

I've been a long-time listener and this is my first time asking a question. I've been following your company for about five years. I remember when the stock went over $5, but I didn't have any money to invest at that time, so I had to convince my mom to buy some shares. Shortly after, the stock price dropped to $1 following an ExxonMobil test. The reason provided was that there wasn't enough time for the 2022 turnaround, and with 2023 almost over, should we anticipate a turnaround in 2024? Honestly, I'm not entirely sure what a turnaround means.

Jim Deller, CEO

Yes, I think it's a fair question. So, the ExxonMobil testing was predominantly a validation of our technology. They went through the operating conditions of what we believe are all of the Exxon refineries and basically took the highs and the lows of all their operating criteria and asked us to demonstrate our burner over that range. That testing was completed successfully, and we demonstrated that to Exxon. The initial purchase order we had for the testing was pending following that testing. Unfortunately, the timing and the schedule of that shutdown and that plan on the heater, that was the focus of that initial testing, changed, and we've not been able to continue that project. That said, we do maintain relationships with Exxon. We are in constant communication with them. We certainly look forward to working with them in the future.

Unidentified Analyst, Analyst

I follow you closely and every day I search for hydrogen news on Apple News. I came across an article discussing a coal power plant in West Virginia being converted to 100% hydrogen. The article mentioned that Zeeco was involved, and considering the manufacturing timeline, I believe your plan is to have this operational within about a year. Should we anticipate an order soon? I understand they were using graphite, and they managed to produce hydrogen with a byproduct that would be burned in this former coal power plant.

Jim Deller, CEO

I believe that's part of the hydrogen production process. We collaborate with Zeeco, which is a global company and the second largest in the world. They have many product lines that we do not cover.

Unidentified Analyst, Analyst

It's 100% hydrogen, I thought that was your…

Jim Deller, CEO

Yes. The DOE grant is specifically aimed at developing burners for processes, which will serve as heaters for oil refineries. If this is intended to replace a coal-fired power plant, then they may be considering power station burners, which are large and quite different from the boiler burners that ClearSign currently does not produce.

Unidentified Analyst, Analyst

Okay. Next question. There's also a second super major European company that has had equipment installed for over a year. I don't know if it is Shell or another company, but is there a conflict of interest with these big oil major's business model? I think that the main thing holding you back is the cost of hydrogen. I've heard about blue hydrogen and green hydrogen, but there's also something called white hydrogen that occurs naturally underground. Wouldn't they be the ones to discover it? Would they share this information? I wonder if it could be found in the ultra-deep region. Specifically, I recall another exploration project, The Davy Jones, which had very high expectations but was eventually plugged and sold to Freeport-McMoran. I'm just curious about your thoughts on this.

Jim Deller, CEO

Kevin, I honestly don't know anything about that, and it's not really appropriate for me to speculate.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Deller for any closing remarks.

Jim Deller, CEO

Thank you, everyone, for your interest and for taking the time to participate today. We look forward to updating you regarding our developments and speaking with you on our next call.

Operator, Operator

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