Good afternoon, and welcome to the ClearSign Technologies First Quarter 2024 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. And I would now like to turn the conference over to Mr. Matthew Selinger of Firm IR Group. Thank you. Please go ahead.

Good afternoon, and thank you, operator. Welcome, everyone to the ClearSign Technologies Corporation first quarter 2024 results conference call. During this conference call, the company will make forward-looking statements. Any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's projections, expectations, plans, beliefs and prospects. These statements are based on judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The 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 describing ClearSign's public periodic filings with the SEC, including the discussion in the Risk Factors section of the 2023 Annual Report on Form 10-K for the period ended December 31, 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. On the call with me today are Jim Deller, ClearSign's Chief Executive Officer; and Brent Hinds, ClearSign's Chief Financial Officer. At this point in the call, I would like to turn the call over to CFO, Brent Hinds. So, Brent, please go ahead.

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 May 15. With that, I'd like to give an overview of the financials for the first quarter of 2024. For the first quarter of 2024, the company recognized approximately $1.1 million in revenues compared to approximately $900,000 for the same comparable period in 2023. The increase over the prior year was predominantly driven by two separate performance obligations for two separate customers. One was a shipment of multiple process burners to California refinery. The other was a sign off of a CFD study. Now CFD stands for computational fluid dynamic. Gross margin for the current quarter was 39.7%, compared to 11.9% in the same comparable quarter in 2023. The gross margin increase was primarily driven by the margin on our products shipped to California, specifically our process burners. Now recall, in the prior year comparable quarter, our margins were primarily driven by a burner performance test, which typically earned lower margins compared to product sales. Now let's shift our focus to the income statement as a whole. Our net loss for the first quarter in 2024 was approximately $1.1 million, which is a favorable decrease of approximately $300,000 compared to the prior year comparable quarter. The decrease is directly correlated to our overall increase in gross profit and increased sales volume. Now I'd like to change the topic to our balance sheet, but more specifically, cash. Our net cash used in operations for the quarter ended March 31, 2024, was approximately $1 million, compared to approximately $500,000 for the same comparable quarter in 2023. The difference is driven by customer collections in the current year quarter. Now for clarity, our customers are current on their payment schedules. It's just the natural lumpiness in our customer billings that's what caused the difference. The cash balances at March 31, 2024 was approximately $46.6 million. And please note, our recent equity offerings are not included in our March 31, 2024 cash balance. The net cash raised in our recent equity offerings amounts to approximately $8.7 million including the overallotment option that was exercised in full on May 10. If you are interested in learning more about our recent equity offerings2. With that, I'd like to turn the call over to our CEO, Jim Deller. Jim?

Thank you, Brent, for the financial overview. As always, I'd like to thank everyone for joining us on the call today and for your interest in ClearSign. Before I start, I'd like to welcome David Maley, a newest addition to the ClearSign Board of Directors. David joined us just days after our last call one month ago. David is a seasoned investment executive with broad experience, specializing in microcap business, finance and compliance. I welcome David to the Board at this exciting time for the company and look forward to working with him in collaboration with the other directors. On the call today, I will review our business segments starting with our process burners and then move on to boiler burners. I have some comments relating to our sensing partnership with Narion Corporation. I will then discuss the outlook for the rest of the year. I'll also note that our last call was not that long ago back on April 24. And I do suggest that anyone not familiar with our last 2023 year end call also refer back to what was presented then. I'll now turn to the developments in our process burner line. Yesterday, we announced the final source test results for the second heater from the two heater order at Kern Energy, who until now we have not been able to name. As I've stated previously, these are our two most significant processes of retrofits to date. They are the two largest and also have fuel gas that varies significantly and with a hydrogen content ranging from 0% to 80% of the fuel's volume. These heaters are side by side, one fitted with eight burners, which is completed first and included in our press release on January 17, announcing the successful third-party performance test. And the second…

[Operator Instructions]

Great. Operator, I'm going to -- I'm not seeing any questions. I'm going to go and read a couple that we received from e-mail earlier. Jim, you mentioned in your comments, the sensor technology in the area in particular, could you kind of give us an overview of where that project is at? And what it might look like for a commercial project -- excuse me, product for the company?

Yes, certainly. Yes, we said that and I appreciate that question. I think it makes sense to take a step back initially. At Narion and to explain how we engage with them. So we has ClearSign, we have a unique sensing technology that we have promoted and developed as a flame sensor for use in burners and especially burner pilots. But we're also aware that it has applications outside of our core strengths as ClearSign and it makes sense to work with someone who has expertise in other areas to develop the technology for them. . Eddie Kwon the owner and CEO of Narion has expertise in the aviation industry and very good connections in field and research that support that. The relationship with Narion is that they are basically -- with us, they are developing technologies that use the ClearSign sensor. They're working with partners and industries and also research organizations to develop that technology. And at the point they have a commercial offering we will work out a licensing arrangement with Narion for the sale of those products or the ongoing licensing of those products. Back to the time line question basically, you'd appreciate developing technologies for industries like aircraft is a long-term process. There's a lot of vetting the path to development has many hurdles to pass. So it is a -- it's a long-term prospect. What's interesting to ClearSign is that whilst we understand that this is a longer-range product development path, the potential market is absolutely vast. If you think of the aviation, the commercial jets, the industrial jets or military applications and Eddie is working on a lot of other projects as well. So this is a -- it's not a technology that we're going to be seeing revenue in the next 24 months. We need to be clear about that. But the interest is that the work that Eddie is doing is self-funded or funded through grants. It's not funded by ClearSign, and it is a potential path for ClearSign to have a licensing interest in some highly valuable products into an extremely big market at some time in the future.

Great. Here's another question, Jim. In terms of projects in queue -- we -- there's been a bunch of projects announced. Could you kind of walk us through what was left in queue? And then secondly, beyond that, what it looks like potentially kind of going forward, it's almost like a backlog currently? And then if you could talk about kind of the pipeline, so a two phase question.

Yes, I can. And obviously, when we get to the -- looking at future orders, we need to be careful, they're not one until they're one. So I'm not able to give specific numbers or timing. But let me fill in that question the best that I can. . So regarding walking from now forward, we have just a couple of weeks ago, we announced the receipt of an engineering order for burners going into Kern Energy for two additional heaters on that site. So bear mind, this is a repeat order there ready have two heaters now working with ClearSign Technology and now they're rolling out the next two. While it is an engineering order that it's quite normal to release orders in that way. And for those who progress to the full testing and manufacture and supply of burners for that project. We have the very large 2.5 BPM NOx boiler burner starting up in the next few weeks, adding California. That's going to be a big milestone for us. And we have -- on the boiler side, where we're talking about that, we also have the first of four boiler burners going out for the juice processor processing company in California. On the new technology that I've talked about, the horizontally fired process heater, we do have significant interest in that. This is on the sales side. So I cannot go into details, but we're really encouraged by the engagement we have. And I really believe there's going to be a significant product line for us going forward based on the interest that we have. I talked about the two current orders that we have recently received on the process burn, we do have some significant interest. I mentioned we also have interest for a project out in Europe. Again, I cautioned on this is a sales interest. It's by no means an order that we have. So at this point, we can't say if we're going to win it or not. But the -- at this point, the interest is certainly significant rather than just a casual inquiry. And we also have some other engagements on that same front here domestically, which we believe are very exciting.

Great. Last question. And you did touch on this in some of your prepared remarks, but could you give maybe an overview of kind of the commercialization of the hydrogen project/burner? And then what is SoCalGas, is there still their involvement in that?

Certainly, -- so if anyone is not aware, we have a $2 million Department of Energy, SBA SBIR Grant that is funding the development of a hydrogen burner. We had a Phase 1 grant initially, under which we prove the technology and demonstrated that the burner concept worked. This later ground is to take that and develop it into a full range of commercial burners. . We're in the early stages of that second phase of work. We have designed and manufactured the first version of our commercial burner and install that in the test furnace at Zeeco. The results of that were very pleasing to the extent that as it is, I believe the version of the burner is actually a usable burner and can actually be a good solution for some of our customers to date. We are continuing to work on that burner there's further refinements that we envision and things that we've learned about this burner both from the fire testing and from the computational modeling that we're carrying out internally, we believe we have a path to make it much less in cost to reduce the size of the burner in the client's furnace and to actually improve the operation of that burner further. But even when I talked about the schedule for that burner, given what we've seen today, I think it's a good solution, as I said for opportunities and the main reason for that is the big project of introducing hydrogen to plants, if you like is really a very big chicken in their conundrum, right? Our clients do not have hydrogen as a fuel gas to burn today, yet they cannot introduce hydrogen as a fuel gas until they have the technology to burn it. So what we have here is…

Did you mention SoCalGas' involvement?

Yes. Thank you, Matt. The -- going back to -- SoCalGas. I mentioned the Department of Energy Grant. That grant is for the development of that technology or that product line the interest of SoCalGas and their commitment was to sponsor the deployment of that resulting technology into their client base in Southern California, they're part of the Los Angeles Link or Angeles Link, hydrogen hub. So as part of deploying the hub, they need their clients to be able to burn hydrogen to get our technology installed always getting those first installations is the hardest. So having a basically a sponsorship behind those installations to accelerate the adoption or the first adopters of this new technology into their client base is extremely valuable for us and that is the basis of the commitment from SoCalGas.

Great. Operator, I'm seeing no more questions.

Thank you. There are no further questions over the phone. I would like to turn the conference back over to Mr. Jim Deller for any closing remarks.

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

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