Earnings Call Transcript - CLIR Q3 2025

Operator, Operator

Greetings. Welcome to the ClearSign Technologies third quarter 2025 earnings conference call. Please note that this conference is being recorded. I will now hand it over to your host, Matthew Selinger. You may begin.

Matthew Selinger, Host

Good afternoon, and thank you, operator. Welcome, everyone, to the ClearSign Technologies Corporation Third Quarter 2025 Results Conference Call. During this conference call, the company will make forward-looking statements. Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs and prospects. These statements are based on judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call include, but are not limited to, whether field testing and sales of ClearSign's products will be successfully completed, whether ClearSign will be successful in expanding the market for its products and other risks that are described in ClearSign's filings with the SEC, including those discussed under the Risk Factors section of the annual report on the Form 10-K for the period ended December 31, 2024. Except as required by law, ClearSign assumes no responsibility to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. So on the call with me today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. So at this point in the call, I would like to turn the call over to Brent Hinds. So with that, Brent, please go ahead.

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 last week with the SEC. And with that, I'd like to give an overview of the financials for the third quarter of 2025. For the third quarter of 2025, the company recognized approximately $1 million in revenues compared to approximately $1.9 million in the same period in 2024. This year-over-year decrease in revenues was driven by our activities in the prior year. Recall, during the third quarter of 2024, we shipped a large order with multiple burners to a California refinery customer. Aside from the comparison and revenue numbers, I believe it's also important to note the difference in the year-over-year order volume. Last year's Q3 revenue was predominantly driven by one large order. And recall, this order accounted for approximately 50% of our 2024 annual revenue. Whereas juxtaposed with this year's quarterly revenue, this year's Q3 revenue was driven by our execution of several orders from our backlog, which has also grown year-over-year. To be more specific, our Q3 2025 revenue was generated predominantly by delivering multiple spare parts orders, delivering a midstream order, delivering a flare order, finalizing a CFD analysis for another flare order, providing engineering services and completing a customer witness test at the Zeeco test facility for our large 26 burner order. This also highlights the fact that our diversification strategy is adding incremental revenue to our top line. Now for the full income statement. Our net loss increased by approximately $274,000 compared to the same period in 2024. This year-over-year increase was predominantly driven by the decrease in sales volume discussed earlier. However, I'd like to point out a silver lining in this year-over-year change. Our Q3 2025 gross margin increased approximately 6.1 percentage points compared to the same period in 2024. And it's not just an isolated event to Q3. Our year-to-date Q3 2025 gross profit margin increased 5.3 percentage points compared to the same period in 2024. We believe this year-over-year increase in margin reinforces our overall long-term strategy to target margins between 40% and 45%. Now I'd like to shift the focus to cash. Our net cash used in operations for the third quarter was approximately $1.8 million compared to approximately $1.4 million for the same period in 2024. This $400,000 unfavorable year-over-year change was predominantly driven by our change in net loss discussed earlier. As of September 30, 2025, we had approximately $10.5 million in cash and cash equivalents with approximately 52.5 million shares of common stock outstanding. From an overall financial perspective, we believe our current working capital positions us well to scale our business while also providing our customers and suppliers a level of confidence to do business with us for the long term. And with that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Colin James Deller, CEO

Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on the call today and your interest in ClearSign. For the call today, Matthew will lead a question-and-answer session, where he'll go through the different business units much like our previous calls. We will end with an outlook for the remainder of 2025 and into 2026. We will then open up the call for Q&A from our investors. Many of you may have seen this, but you can send in questions ahead of time to our investor relations at [email protected]. So Matthew?

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes. Thank you. I think that's right. It is very pleasing to see that the increase is coming across our major product lines. I think there are some high-level drivers that are behind this and playing to our favor. The key one, I think we've said this for a long time, just getting equipment out in the field, getting the customers to trust what we do is very important. We are getting equipment out. And in particular, we've got some very large orders that are well in progress, and those are being seen. And I think that, that is playing into this uptick, especially in the process burner orders where we've seen orders and many inquiries from major customers that are watching our projects. There are ongoing regulatory pressure. There's new regulations being worked on in the Texas Gulf Coast area, a key market for us. And in the California regions where there's a lot of industry South Coast and San Joaquin Valley, those regulations have been in place for some time, but the due dates are coming up, and we are seeing inquiries from customers to meet their obligations under those. And I think finally, as we've got more products out there, we spend more time our products are evolving, they're maturing. And I think the same initiative I just getting installations out there. We're getting a lot more interest from our clients because they are becoming much more acceptable and usable for them.

Matthew Selinger, Host

I want to ask a similar question. Thank you for your insights on the macro level. Now, can we discuss the product lines, starting with process burners?

Colin James Deller, CEO

Yes, the macro dynamics, particularly concerning the process burners, are significant. We have major orders and are making progress through testing, which is being noticed in the industry as our products develop. This information spreads rapidly within our close-knit community. The recent orders we announced, one from California and one from Texas, are influenced by the regulatory environment in those regions. For our process burners, there is a substantial financial incentive for our clients since the cost of installing a selective catalytic reduction (SCR) system is much higher than that of a burner solution. As clients grow to trust our solution, we believe it is by far the most efficient choice. For context, we estimate that an SCR installation on a major heater could cost between $40 million and $60 million, whereas ClearSign's solution will be significantly less expensive, making it a major financial consideration for customers when selecting ClearSign to meet emission requirements.

Matthew Selinger, Host

And how about in flares?

Colin James Deller, CEO

So, regarding flares, this is actually our fourth order with this customer, which shows their familiarity with our products. Their prior experience clearly influences their decision-making, and we believe they may place more orders in the future. Additionally, regulations in California are specific to NOx emissions, which vary by region. However, with these regulations in place in California and now in Texas, ClearSign has a very valuable product.

Matthew Selinger, Host

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

Colin James Deller, CEO

The M Series is different, especially the market that we've sold into with these last couple of orders. The M Series burners are really targeted on the gas industry and the midstream gas. This is a very big growth sector of the energy industry, especially with export LNG. So there's a lot of new equipment being manufactured and sold in this area. And for us, what's particularly interesting is a lot of the equipment that's out and installed is being upgraded, bought into compliance, minimize the downtime. So that leads to a very strong retrofit market. We developed that M25 burner based on that feedback. We've got a client that does that retrofit work wanting a good burner product. Based on their input, we develop this burner. There's a lot of proposals out there, but these 2 orders are great examples of why we developed that burner. So that's a more unique driver for the M Series and the gas business in general.

Matthew Selinger, Host

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

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes. I mean this client has a very good understanding of our technology. They've been engaged with us on major testing and demonstration of our burner as part of that project. That's important because this work is not usual. With that background, this is a major customer, we believe that they have a genuine interest in the potential use of ClearSign technology throughout their fleet going forward. And that was a major consideration when we agreed to do this particular project. It's not something we would do for everyone, but this was a very specific case. And that relationship and their understanding of our technology was a very big factor in us undertaking this work, and it is complete and went very well.

Matthew Selinger, Host

Okay. You just mentioned that it's been completed, right? So this project was announced, and the testing has already been finished. Is that correct?

Colin James Deller, CEO

It is mostly accurate. The demonstration has been completed. We are still finalizing a test report, but the work is done. To provide some background on this burner, we have undertaken a significant project funded by the DOE and the SBIR program to develop a new burner technology that can operate on 100% natural gas as well as 100% hydrogen. We have been working on this for nearly 2 years, and it has progressed extremely well. The final product of that testing is currently undergoing its last physical assessment at the Zeeco test facility. That burner is installed and has been demonstrated at a Gulf Coast chemical plant. The advantageous aspect of having a burner that can switch from 100% natural gas to 100% hydrogen is that it allows for extremes in burner operations. This chemical client had diverse global fuel requirements, and that burner is ready to meet those needs. We were able to successfully demonstrate this burner, which is a result of the DOE SBIR program, and it performed exceptionally across all product lines, meeting every requirement. This has proven to be an efficient and effective way to showcase our new technology to a prominent client and highlights the value of the SBIR program.

Matthew Selinger, Host

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

Colin James Deller, CEO

The project is nearly finished. The technology development and engineering are done. The burner satisfied all the Department of Energy requirements, as well as our own, which were likely more rigorous than the DOE's. It demonstrated its versatility, robustness, and ease of use during demonstrations for the Gulf Coast chemical client, which is a significant opportunity for us. What remains to be done with the DOE project is that our goals and the DOE’s expectations involve not just creating a single burner to showcase this capability but developing a variety of burners for future use. We are currently testing a smaller version of the burner, which is in the early stages at Zeeco. This is necessary to confirm the scaling criteria so we can produce a complete range of burners based on that DOE design. In simple terms, the challenging part is complete—the burner technology has been developed. We just need to validate the scaling criteria. Once that's done, we can finalize this and introduce a new product line. Observing the performance of this burner excites me about its potential and the opportunities for further applications and various technologies in the future.

Matthew Selinger, Host

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

Colin James Deller, CEO

Absolutely.

Matthew Selinger, Host

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

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

Overall, that's what the client evaluates. As we've observed with other projects, the first step is usually to purchase this in phases. Therefore, this order represents the initial engineering phase based on our proposal for the complete delivery of this business.

Matthew Selinger, Host

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

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

That's correct. Yes.

Matthew Selinger, Host

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

Colin James Deller, CEO

That's correct.

Matthew Selinger, Host

How about a little more detail on this order?

Colin James Deller, CEO

So this one was announced September 17. As you said, it's the same structure. We bid the entire project, the entire scope. And again, the client has given us the initial order for the engineering to kick this project off. The drivers behind this are a little different. NOx is definitely a part and a consideration of this project. This is also an unusual mechanically structured heater and standard burners would not fit. So we believe that a significant part of selecting ClearSign for this project were also our engineering capabilities, our ability to develop a burner to fit into this heater and deliver the right frame profile and with the CFD modeling and the engineering to make right to show the customer and to simulate that working in a heater. I think this speaks to the strength of the engineering that we have here at ClearSign in addition to the technology.

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes, those are great questions. We would like to mention the customers as well. The truth is that in the purchase order contracts we have with most of these clients, there are strict disclosure requirements that prevent us from revealing their names. This is typical in our industry, and it explains why we can't disclose them. However, in our press releases, we carefully describe the companies. The descriptions you mentioned, whether it's a global super major or any well-known petroleum or chemical company, are chosen to give investors a good understanding of the customer's significance and status. While we can't name them, if it's a global super major, you can get a good sense of what that customer entails, even without specific details.

Matthew Selinger, Host

And how many super majors are there?

Colin James Deller, CEO

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

Matthew Selinger, Host

And we're working with how many...

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes. If it is a global chemical company, you will recognize that it is a well-known name, and we strive to accurately describe their scope and scale.

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes. This is primarily aimed at the midstream industry. We have various levels of technology. The M1 can deliver emissions well below 5 ppm, surpassing any known emission standards. Following customer feedback, we created the M25 specifically for retrofit applications. Both burners have received positive feedback, and most of our current orders are for the M25. This allows our customers to effectively retrofit heaters with a reliable burner that reduces emissions. The design is meant to replace an existing burner with a ClearSign burner, upgrading the heater, which has proven very successful. We still have several proposals active, and we believe there are additional projects being quoted with our burners that we are not aware of. Once we provide a proposal for a certain burner size, clients can use it for other projects as well. It's common for us to engage with customers about projects we weren't initially aware of and incorporate our technology as those projects move closer to becoming a reality.

Matthew Selinger, Host

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

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

The entire process is more efficient, especially with this type of client as we usually have standard purchase order conditions. The order to delivery cycle is significantly faster once we have built the burner and have the drawings in place. Typically, we can turn these orders around in about 10 to 12 weeks from the quote to delivery. While we are still using the same ClearSign technology at the core, the order process differs from the previous orders we discussed, which involved engineering, testing, and multiple stages, along with bespoke products for all the process heaters. These are designed to be standard burners that we can produce quickly, allowing our clients to operate efficiently and pursue a larger volume of opportunities.

Matthew Selinger, Host

Okay, great. Continuing with the topic of multiple orders, I want to mention that we received our fourth order for flare from our customer in California, who is a producer there. What is driving this, and what is happening with the flare product?

Colin James Deller, CEO

Yes. I think 2 major points on the drivers. First is there are certain regions of the country that we have a NOx emissions limit on continuous flare and California is one of them in at least most regulated areas of California, especially where the oil fields are. And the second is just the clients' needs. So this is an oil-producing customer. As part of that process, there is an off-gas that comes out from the wells that client has to dispose of responsibly. If they cannot dispose of that gas, it actually can limit the production rates from the field. So they need more flaring capacity that they have to do in a manner that meets the regulatory requirements to enable them to maximize their oil production. So this could potentially limit their oil production if they don't have the flaring capacity to meet their needs.

Matthew Selinger, Host

Interesting. I believe you've mentioned this in previous calls, Jim, that this isn't just a basic flare, correct? This is a more complex type of project and product?

Colin James Deller, CEO

Yes, 2 parts. I mean our flares are quite sophisticated because we do maintain the emission regulations that is normal across most players. We're quite unique in that field. For this one, in particular, I have talked about systems projects and expanding the ClearSign scope on previous calls and our ambition to get into bigger projects where we can leverage our technology and then include the vessels and the equipment that surrounds that burner basically to multiply the size of our scope. This order is actually a long way of that process. This is not truly 100% of the supply of the flare, but we are replacing major components of an existing flare. And we're probably up in the 75% to 80% of that flare range. I don't normally give revenue numbers, but to emphasize the point here, a typical flare burner will be $150,000 to $200,000, somewhere in that range. With the other parts for the flare that we're able to sell here, we're up in the region of $0.5 million for this 1 particular order. Thinking more generally for the systems projects, this is probably the bottom end of what a systems project will be, and they've certainly got a scope to go up above $1 million per piece. But the intention is to take a special ClearSign burner and then leverage that to supply the scope of the product that that burner fits into rather than just selling the burner have somebody else build that scope. There are certain products where it makes sense for us to actually sell the whole thing, which allows us to expand our revenue significantly.

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes.

Matthew Selinger, Host

Okay. This is a new kind of reasoning that I don't think our customers or investors fully understand.

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

Certainly. As we anticipated, this project is progressing. The sensors have been shipped, installed, and are functioning within the client's team. We have received very positive feedback from them. Additionally, we now have opportunities to offer these sensors to this client for a sister refinery, which is promising and reflects their positive experience so far. We are also installing sensors on ClearSign burners at another site, marking a first for us. I am very encouraged that we are gaining traction with the sensing technology.

Matthew Selinger, Host

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

Colin James Deller, CEO

It's going really well. Reflecting on what we've discussed today, the DOE testing and the testing for the Gulf Coast chemical company is a great example. That testing was extensive; they have the world's largest test facility and have provided us with significant access to develop our products there. To highlight, the validation of the demonstration project for the chemical company involved the broadest range of fuels that I have ever tested in my career, and I have been involved in numerous burner tests. They had to move in fuel tanks and rearrange the fuel system for the test burners, which they did willingly. They were proactive and ensured everything was in place. The testing went smoothly, with the burner performing exceptionally well, and I want to commend the Zeeco team for their tremendous effort in running that furnace, setting it up, and ensuring everything was consistently operational throughout the testing process. Additionally, they are fabricating our burners, and right now, our biggest burner production line is active at the Zeeco shop. They have been very supportive of the ClearSign business. I’m pleased to share that we have begun receiving proposals and requests from Zeeco’s sales team, which is a positive development for us.

Matthew Selinger, Host

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

Colin James Deller, CEO

Yes, there isn't much of the year left, but we have some specific objectives. The primary focus is on the 26 burners being manufactured at Zeeco, which are on track for shipment by year-end. We also have a flare project in California that is about to start. Shipping those 26 burners this year is our main priority. Looking ahead, there are numerous quotes, including many for the M Series, as well as for flare and process burners. I'm eager to see more traction and orders from these opportunities. We've already discussed the two process burners that are currently in the engineering phase, and I anticipate progress on these projects, leading to testing and eventual equipment orders. Personally, I'm excited about the burner developed from the SBIR program. Although it's subtly different from our previous burner, its function and design could have a significant impact on the industry. This innovation offers a platform for us to explore new areas and getting that information to our clients will be crucial. We plan to enhance our promotion around this burner, engaging with key technical contacts within our customer base, and expect to share updates on social media as well. I believe this holds great potential for ClearSign's future.

Matthew Selinger, Host

All right. Referring back to the first time you mentioned the 26 burner order, I know we don't give guidance, but if that shifts, I want to understand what our Q4 might look like.

Colin James Deller, CEO

Yes. Thank you. I think we answered this. We talked about sales before, but we've given ability to do back of the envelope math, and maybe stick with that, I think, conservative pricing for our burners we stated it's 100,000 per burner. There's 26 burners in this order. We've recognized a little bit of this revenue from perhaps testing, but very much the vast majority is still left to be recognized. So I'm not going to go through the math. But basically, it's comfortable easy to say, I think that shipping these burners will be well north of $2 million in revenue to be recognized by year-end when they ship.

Matthew Selinger, Host

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

Operator, Operator

The first question comes from Sameer Joshi with H.C. Wainwright.

Sameer Joshi, Analyst

Congratulations on a successful quarter, and it seems that the next quarter will also be promising. I believe Matthew covered many of my questions. However, I would like to take a step back and discuss the types of orders you are receiving. You have the M Series, the flare product, and the upcoming sensor product. It appears that the process for receiving and deploying these orders differs significantly from the burners, which typically require a long wait before deployment. Does this clarification assist you in better understanding your expected revenues for 2026 and the timing and flow of quarterly revenues over the next four to five quarters?

Colin James Deller, CEO

That is a great question. The key point is that the process burner orders are significantly larger than the M Series or flare orders. The burners we discussed on this call, specifically the 32 and 36 models, will contribute much more to our total revenue. However, as you mentioned, the duration of these projects is much longer. I believe that over the long term, process burner orders will become the largest product line for ClearSign, particularly at our current stage of development. Revenue will come in unevenly as we pursue these orders, and there will be considerable time before we see the total revenue. Therefore, we are also focusing on products like the M Series, midstream, flares, and sensors, which move more quickly through both the sales and execution processes. These products will help fill the gaps in revenue while we build our pipeline of larger process orders. I expect a greater number of process orders at various stages of completion, which will help smooth out revenue from those orders. We will continue to receive quick-turn orders and spare parts as well. As we transition through this growth phase, both types of products, the quick-turn and the longer orders, will address different aspects of our revenue framework.

Sameer Joshi, Analyst

Yes, I understand. Considering the success of these products that help generate revenue while we wait for the process orders to come in, are there new opportunities for other types of products? I believe the sensor product is one of those, which you might discuss. But are there additional products being developed or that could be developed by the company?

Colin James Deller, CEO

I believe there is significant potential. If we launch something, we will make it known. I want to emphasize my earlier comments on the outcomes of the SBIR program. The burner structure we developed in that program is highly versatile, and I think the four different process applications we have create great opportunities for expansion into other areas. As we develop the M25, we are always in conversation with our customers to understand their needs, the market gaps, and opportunities that align with ClearSign's strengths. Our goal is to provide excellent products for our customers as well as for ClearSign. Therefore, I expect we will continue to develop more products in this area, which remains a key focus for us.

Sameer Joshi, Analyst

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

Colin James Deller, CEO

Yes. So it's difficult to talk in absolute what could possibly happen. But from what we have seen and going back over my career, the regulation of NOx emissions is a criteria. It's fundamental to the EPA regulations. And we've not seen that be subject to political pressure to the same extent as more recently in the United States, we can point to decarbonization. So we're seeing increased regulations in Texas coming out now that's being driven by the EPA. So I do not expect any headwinds on the NOx side. And then when we look at carbon, I mean, that was always a long-term development, especially when we start looking at things like hydrogen as a fuel, we are seeing inquiries now that are very interested in the optionality and our burner's capability to burn hydrogen as a fuel. I think part because it's a longer-term need and also because our clients are global. And while there may be short-term political deemphasis of decarbonization in the United States, that is not the case in other countries around the world and our clients are global.

Operator, Operator

It was always a long-term development, especially as we consider hydrogen as a fuel. We are currently seeing a lot of interest in the versatility and our burner's ability to utilize hydrogen. This interest is driven both by the long-term need and because our clients operate globally. Although there may be a temporary reduction in focus on decarbonization in the United States, this is not the case in other countries around the world, and our clients are international.

Matthew Selinger, Host

Great. While we wait, I'm going to read a couple of questions. Thank you to our investors for sending questions in ahead of time. We really appreciate that, and those also help us refine the messaging of the content of the call. We hope to address every question that was sent in. Jim, one question I have relates to what you were discussing earlier with Sameer. We are seeing a potential reduction in larger scale hydrogen projects. Will this or could this affect the development of something like a 100% hydrogen burner?

Colin James Deller, CEO

I think there are a few important points to address. First, I want to clarify that our development of the burner technology is complete. This burner, which can operate across a wide range of fuel types, is particularly valuable in the current market. In oil refineries, there is a diverse mix of gases used as fuel. The byproducts of the refining process are often integrated into the gas stream. Currently, we have burners that function with refinery fuel gases containing more than 80% hydrogen. The burner developed through the DOE program is very robust. As demonstrated to our chemical client, the industry can be confident that our burner will operate effectively on both 100% hydrogen and 100% natural gas. This reliability ensures that it can be utilized in refineries regardless of the gas mixture. I am not worried about the reduced emphasis on decarbonization affecting our burner business. My main goal was to create a high-quality product for the refining and chemical industries today. If we also have the potential to adapt for hydrogen in the future, that adds additional value.

Matthew Selinger, Host

Here's another one. Thank you to the investors who sent this in because you're clearly a keen listener. It was noted that spare parts contributed to the revenues this quarter, and I believe they were highlighted as a significant part of the revenue last quarter. Can you discuss what this might indicate for the business going forward?

Colin James Deller, CEO

I can. Generally speaking, spare parts are a crucial aspect of the burner business. They depend on the equipment already installed, and as we increase the amount of equipment in the field, spare parts will represent a larger portion of our business. The advantage is that this segment is also quite stable, turns over quickly, and yields a high profit margin, which we appreciate. To provide some context, Brent, what was the spare parts contribution in the last quarter? Do you recall the details?

Brent Hinds, CFO

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

Colin James Deller, CEO

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

Matthew Selinger, Host

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

Colin James Deller, CEO

That's a great observation. When you mention the shift in that region, I interpret it differently. I don't see any decline in the California business. In fact, with the order for the process burner that we discussed today, I believe the California business is still strong. However, we are experiencing a significant increase in our largest refining and petrochemical market in the U.S., which is the Gulf Coast. We have 26 burner orders being shipped there and have mentioned a 36 order going to that region today. Several factors contribute to this, one being our acceptance within the industry since many users are located there. We've also discussed regulations; the new California regulations have been in effect for a while, and the Texas regulations are nearly finalized. The formal proposal is awaiting EPA approval, but the industry is aware of upcoming new regulations and potential additional fees. While I'm not certain this is the primary driver, it may indeed be influencing the increased interest we are observing. Additionally, we are seeing significant interest beyond these two orders, with interest expanding throughout the Gulf Coast and not just limited to Texas.

Matthew Selinger, Host

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

Operator, Operator

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

Colin James Deller, CEO

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

Operator, Operator

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