ClearSign Technologies Corporation (CLIR) Q1 2017 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the ClearSign Combustion First Quarter 2017 Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Matt Selinger of Three Part Advisors. Please go ahead.

Thank you, Amy, and greetings again everyone, and welcome to the ClearSign Combustion Corporation first quarter 2017 results conference call. During the course of this conference call, the Company will make forward-looking statements. We caution you that 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 the judgments and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The risks and uncertainties associated with the forward-looking statements made in this conference call include, but are not limited to, whether field testing and sales of ClearSign products will be successfully completed, whether ClearSign will be successful in expanding the market for its products, and other risks that are described in ClearSign's public periodic filings with the SEC, including the discussion in the Risk Factors section of the 2016 Annual Report on Form 10-K. Investors or potential investors should read these risks. ClearSign assumes no responsibility to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. Now, on today's call will be Steve Pirnat, ClearSign's Chairman and CEO; Brian Fike, ClearSign Controller and Jim Harmon, Chief Financial Officer. So, with that, I'll now turn the call over to Steve Pirnat. Steve?

Thank you and welcome to the first quarter results call. As many of you may have seen today's press release, we announced the resignation of CFO Jim Harmon. I wanted to take a brief momentum to thank Jim on behalf of the company and the Board for his 10 year in service which predates our IPO. Brian Fike, ClearSign's Controller will assume Jim's duties until a permanent success is appointed. Jim will provide consulting services to the company in order to assist with a smooth transition of responsibility. As a brief background, Brian has been with the company and working with Jim since January 2016 after 15 year career at Darigold which is a $2.3 billion dairy manufacturing co-op of approximately 500 members. Brian helped install ClearSign's current accounting system and is very familiar with ClearSign's day-to-day operations. He has quickly developed an effective working relationship with ClearSign's leadership team which is essential with a startup company like ours. We feel, we are in good hands with Brian. And with that I am going to turn the call over to Brian to go over the financials. Brian?

Thank you Steve, and thanks to everyone for joining us this afternoon on this call. Before I turn the call back over to Steve, I want to review the results for this quarter as they have been reported on our Form-10Q. I am pleased to report that we recorded product sales of $360,000 during the first quarter from the insulation of our duplex technology in two well head enclosed flares for a major California oil producer. This is a portion to follow on contract that we announced during the third quarter of 2016 for $900,000. We expect the remaining three flares to be completed in the next three to six months depending on the availability of the customer's equipment. The gross profit of the recorded sales was $109,000 for as margin of 30%. As we build sales momentum and experience with the product, we expect these margins to approach 50% depending on the size and scope of the total contract. I’ll let Steve provide some more color in a moment on our sales pipeline. For the quarter, we incurred a loss of $2.4 million compared to a loss of $2.6 million for the same period of 2016 and a loss of $2.3 million for the last quarter which ended December 31, 2016. I should note that we adopted two new accounting standards during a quarter, one related to revenue recognition and the other related to lease accounting. We adopted these as early as permitted, so as to minimize their impact on our organization. The revenue recognitions standard functionally resulted in no change to our previously adopted completed contracts method of accounting. The lease accounting standard resulted in a capitalization of our two facility leases, resulting in fixed assets and corresponding lease liabilities approximately $470,000. There was no effect on our previously reported results. During the quarter we successfully close on equity shareholders right offerings a unit consistent of one share of common stock and one warrant with a two year term and a $4 exercise price. This offering brought in $8.6 million in net funding to the company. As to our cash resources we had about $7.5 million at the end of the quarter. And with that I will turn the remainder of that call over to Steve?

Thank you, Brian, for the financial update. I'm pleased to report the continued progress ClearSign is making within core markets and further opportunities we're seeing through increased customer inquiries among existing and new customer both domestically and in Europe and China. They are excited times ahead for ClearSign and I believe the next 12 to 18 months will prove to be a meaningful inflection point in our business, supported by our innovative patented disruptive technology and our focus on building continues customer confidence and validation by successful installations in our core market. My principal objective for this quarterly call is to draw [ph] our investors with a greater clarity and context of the progress ClearSign continues to make and the enterprise value being created through the proactive actions of the ClearSign team. As I said before success drive success, as previously announced we continue to get additional orders from several existing satisfied refinery customers in California. We also received our first water tube boiler order and a significant additional order for another Once Through Steam Generator from Aera. This latest Aera contract was for their first permitted OTSG unit using our duplex technology. Prior units were operating on experimental permit, thus this is significant because we're now on a path to have our technology classified as best available control technology or BACT from the local regulators. ClearSign units are ready perform at better than the required emissions levels for BACT designation and this new installation will help drive the use of duplex technology on future units. While we've not had any direct discussions regarding additional sales at Aera, we understand management is looking to eliminate the current environmental fees being paid by them and they had multiple units which will benefit from a duplex solution. Regarding additional OTSG customers, we have received an enquiry and request for bid from another large enhance oil recovery clients for the supply of our duplex OTSG technology. Of interest, this is the same customer that has given us a contract to retrofit five enclosed ground flares, which was announced last quarter. While we're talking about OTSGs, we continue to see delays in the project for a non-disclosed client in Western Canada. As you recall we received a paid engineering contract to design a solution for this client, but have not yet got an approval to install it in one of their operating sites. This delay has been a result of several factors, the most significant is the recent acquisition by this undisclosed client of one of their major competitors, which postponed our demonstration project. We also understand that further uncertainty about future environmental requirements in Western Canada may have delayed this action further. On the regulation front we continue to experience interest form environmental regulators on the potential adoption of our technology for refinery and boiler burners as well as enclosed ground flares as our technology provides an economically attractive solution for achieving low emissions performance. Frankly, we expected to have a press release last week indicating regulatory interest in a collaboration for a demonstration and validation test with a major California refinery. We were actually very pleased to hold off issuing this press release until July while the regulators agreed to seek approval for funding the demo project. We've already gotten commitments from several refineries who are interested in participating with us. Of course, this is a very exciting opportunity for ClearSign and the refinery operators who may now collaborate in a meaningful way to validate our innovative American technology to cost effectively solve emissions challenges. I will mention that a similar project previously announced for a major Southern California refinery is still under consideration and it would likely be a great fit for this demonstration project. While we have no specific indications as to the current implementation timeframe for these projects; we expect something to still happen this year. Also as previously announced, our previously announced demonstration of our Duplex Plug & Play burner is back on track. It had been delayed in part due to the recent acquisition by Delek of their sister company Alon. The new combination Delek-Alon Refinery should be a great new customer for ClearSign; again, we expect this project to be completed by 2017. Regarding new products, we've received a significant inquiry from a major production and exploration company in California. Based on our previously successful installation and retrofit of their five enclosed ground flares, we've been asked to bid multiple unit project for which will consist between five and perhaps as many as 40 enclosed ground flares. ClearSign will provide their own enclosed ground flare design in order to better incorporate the features and performance of our Duplex technology and eliminate the design problems we experienced with the original flare supplied by other OEMs at that time. Depending on the final scope this would be a multi-million dollar project for ClearSign over the next year or so. We've been conducting lab test for a new fire tube boiler burner design which we expect will provide sub five ppm NOx without the requirement for costly fuel gas recirculation. This performance while state of the art for small fire tube boiler burners is very consistent with the performance we've already achieved on large water tube boilers and represent a huge potential market both domestically and internationally. Preliminary interest among boiler OEMs around the world is very keen. We're optimistic we can achieve this best in class performance, and testing continues in our lab in Seattle. Beyond the expanding opportunities for refinery burners and the emerging interest in our low emission enclosed ground flares and OTSGs we're seeing strong interest in our technology in Europe and China. China holds particular interest since there is a critical need for our disruptive technology to resolve their overwhelming environmental air quality problems; both Europe and China provides significant market opportunities for ClearSign. We're encouraged by the interest among various potential licensors, strategic partner, potential strategic investors, all of whom recognized the potential impact ClearSign's game changing technology could have on their local markets. Needless to say we are having active and ongoing dialog with potential partners and OEMs both domestically and internationally. This interest in opportunity is very exciting for ClearSign. Finally, let me again thank Jim Harmon for his contribution as CFO and his willingness to support us as we may need from time to time for a smoother transition. Also, I would like to thank our shareholders for their commitment to the company and our unique technology. I believe we are approaching a significant inflection points in our business. We are seeing dramatic increase interest among customers potential licensors and strategic investors in our technology and I feel we are very close to a major breakthrough on all of these areas. This is an exciting time to be at ClearSign and I can say after two and a half years, I'm more excited about getting up and coming to work than I've ever been before. At this point, I’ll be pleased to answer some questions.

Thank you Mr. Pirnat. [Operator Instruction] The first question is from Lou Basenese, Disruptive Tech Research.

I guess maybe just little clarity, it's sounds like the big potential with the flare customer, can you confirm, whether that’s a competitive bid situation or if you're just the only one [indiscernible] bidding into that project?

Currently, we are the only one who could meet the customer's emissions requirement and that was based on as I alluded to our demonstrated success with the previous units. So again, right now they had asked us to bid a minimum of five and depending on what the geology predicts, it could be as many as 40 additional flares and we are pretty excited about that.

So these just -- because -- so these are new potential flares, so they are not retrofits then?

That’s correct and actually a good distinction Lou, because of the retrofit was a smaller unit contract, this particular project will require us to build a complete flare. And as I alluded to we have a keen interest in doing that because we believe that our own flare designs will allow us to optimize the performance of the duplex technology and avoid some of the challenges we faced in the rectal fitting of the original flares because of the flares that were purchased by this client originally has certain performance problems that were inherent in that design. So this will give us a clear sheet of paper solution, which I think will benefit the customer as well as ClearSign.

Okay and not sure that you could give what an ASP might look like for a new flare, but could you at least confirm that the expected margins would be the same, you guys have guided at least 50% gross margin, is that still consistent, even on new installation?

Let me be blunt, I can tell you exactly what each one costs because we quoted it, but I would prefer not to since it's an active fit. And I think as Brian alluded to in his comment, I think depending on the final scope and complexity, we expect the margins to approach 50%, but again it depends on the final scope and complexity of the project. In simple terms Luo, to be clear, the more the duplex technology itself constitutes the percent of the contract more likely it will be 50%, if the customer request us to buy ancillary equipment from a third party, that would tent to reduce the margin, because you're buying and reselling something else, that make sense.

It does and then I guess just a follow question on Aera as well, it sounded very encouraging that they've moved from experimental permits to actual operating permits. Just curious why you might not be having direct conversations about multi unit orders, because if I remember correctly they're under a time sensitive differed pricing agreement, is that correct?

They are, couple of reasons, they've had a change in leadership there, they had key guy retire, person that we worked with before and that doesn’t necessary mean anything specifically other than, they are not ready to sit down and say, this is how many units we need, and this is when we need it. And we're ready to go tomorrow, we have the capability and of course a keen interest in retrofitting the dozens, literally dozens of units as you know that are currently paying fees, and we could eliminate those fees with our technology. But bluntly, I got to wait for them to tell me when and where, otherwise I would speculate if they have another occasion and I tend to be more wrong than right. So just as a rule here, when they tell me exactly what they need and when they need it, I will issue the press release.

Okay and have they given you’re a timeline for this most recent order, when they like that installed, just any kind of guidance there?

That one they want as soon as possible.

And then lastly, just to Jim there, just wanted to thank him for his hard work and I've enjoyed talking with him for last several years, but just curious if he might be able to comment, I've noticed in the last couple of calls, he is been increasing very optimistic about what's going on at the company and just curious why chose now to retire, when you're so close?

I appreciate kind word, Luo. I've been with the company for six years and it's the time where I wanted to transition to another opportunity, don’t know exactly what that is, by the way, but it's been an extensive period of time. Transition like this are always difficult, as the saying goes, there is no good time. Brian has come along to the point where he can satisfy all the needs of the company, Steve explained we are in good hands there and I have the opportunity to provide a lot of support over the next year in accordance with the consulting contract that I've signed. So that parts all good. For myself, too got other things going on in my life. I was going to actually enjoy a little bit of the summer here and [indiscernible]. Now the other side of all this is, yes, I remained faithfully running the company, Steve talked about some of the bigger things that are coming down the road, and I think we're moving in a good direction there. As you pointed out and I pointed out several times, I fully participated in the rights offering, I'm fully invested in the company and I don't plan to going anywhere anytime soon. So from an equity standpoint I'm in.

The next question is from Robert [indiscernible]. I may have mispronounced that, I apologize.

I wanted to ask about potential more verticals, what about electric utilities, they're such a big demand for natural gas, source of fuel for electric utilities, that's a big one, they certainly come under all the scrutiny as everybody else does for environmental issues, what's the prospect for something happening there?

Well there it's a natural extension of what we're doing with water tube boilers, I mean electric utility will have a large gas fire water tube boiler, and it's just a question of scaling what we have. Once Through Steam Generators of Aera, let's pick a number, 60 million btu's an hour, so even a small utility would probably be 10 times that. It's all very achievable, but we haven't done it yet. And separate in a part I'd say a lot of times the transition for a gas fired utilities tends to be a conversion of the coal fire plant, so the requirements for just installing gas versus coal are fairly a low bar for the operating utility. That said and as I alluded to the real opportunity for us in the power industry is the places like China and in Europe. So we're pretty keen on, as you pointed out scaling this to a larger size boiler and we've had some discussions with the larger boiler companies in that regard. But we're bootstrapped in our way up to the technology and I just wanted to demonstrate some success on some of the smaller units before we get there and it's just in my view kind of the path along the way.

And then the other thing is since some of these companies that you're dealing with now are pretty large, seem to be large kind of synonymous with slow because of that's just, they're big and slow. I was just wondering what kind of confidence we can have to get enough cash flow going by the end of the year, by the time the $7.5 million is gone, I think that's what really -- I'm speaking from the standpoint of the market, saying, I think the market is concerned about that, and with the experience so far and the slowness or delay so forth is understood, I get [multiple speakers] question?

No, it's a good question and certainly one that we're focused on. I think extrapolating a little bit on what we see the opportunities to be on these ground flares and what we see to be the -- opportunity to be for Once Through Steam Generators, we see a lot of stuff in the pipeline, that's near term, that's the next 12 months that we expect to convert into business. So it's certainly not what's outside the realm of possibility that we'll have some significant orders and we'll have them sooner rather than later. Again and as I mentioned briefly to Luo, our point of view has always been work hard to get the business and announce it when you have it. Because suggesting when it's going to recur and how big it's going to be and how much margin it's going to be involved. At this stage, our development that’s a pretty high risk, when I say high risk it's a high risk fairly uncertain projection to make, and what I am suggesting certainly for the next six months, as we got enough things that we expect to actually happen that we can report that this probably not a real value in saying, hey it's going to happen in July or August, why don’t we just waiting until July and August then see it materialized.

Well, I am going to say, since the players have come into being, it's an example of something that was a little bit quicker as far as exposure that they got from the customer that you are dealing with. I am just saying as different vertical, it seems to be a little bit faster to be able to get a turnaround decision in installation, that’s what I was talking about other potential vertical [multiple speakers].

And let me make an important distinction because I think you really going to the key point there, the first year or two I was here and we call customers and said hey, we really like to try this. In this case this customer is calling us up once a week saying we really need this flares.

Right.

So you know, the whole process is different, and this is also a very large customer, but now their need and their urgency about getting delivery and the fact our technology is uniquely capable of meeting their requirements, puts a sense of urgency with them. And I see similar opportunity with the OTSG, the Once Through Steam Generators market where as we move from the an experimental permit to an operating permit, the regulators will declare us best available control technology, which means the operators will be pushed harder to install our technology to meet their environmental permitting requirements. And those are the kinds of things that we are hoping bring a quicker momentum to the order flow for us. And the and I haven't really talked about this but, I see a lot of things in the pipeline that weren’t even available to us a year ago in Europe and in China as a result of some of our business development work. And in both of those cases there is just people who are -- want to fly to Seattle, they want to come into our test labs, they want to see our fire tube boiler burner working, they want to a range to try out and an arrangement by which they can license the technology. So it's all pretty exciting and the reason I am not being more specific is, frankly, when you are negotiating a license agreement with a couple of people, you better off playing your cards a little close to your vest.

Sure. One other thing just came to mind to me now was, you are working within those certain regulatory jurisdictions there in California and of course whatever the jurisdiction is in Texas, are you better to stay in those jurisdiction with different customers because you're under that regulatory body to speed the process, or is there nothing lost in going to another jurisdiction because that’s where the customer has their equipment?

Well, I can get your point, because we are a relatively small company, we tend to triage the opportunity. So no question, in Harris County, Texas where the emissions issues are severe and the regulatory environment is favorable to our technology, that would probably be a place where we will continue to focus. As is Southern California, Central California, those are places where the regulatory pressure on the operating companies is well suited to our technology. As opposed to -- what you're saying is, as opposed to some place, a place like Nebraska, where regulatory regime is not so sever. That’s clearly what we're doing, but in compliment for that three is a lot of pressure in China, in the City of Beijing to dramatically emissions in the district heating environment, because the pollution is terrible and President Xi leaves in a high right building in Beijing and he looks out his window, he prefers not to see soot. And in the case of places in Europe like the Netherlands or the UK or France they have some pretty ever environmental regulations that in many cases they near the kinds of stringent air quality that you see in Southern California. And because of our success as I said earlier success breeds success, the industry finds out that we’ve done well in places like Southern California and people in these other markets seek us out. So back to your basic question, what makes me think the momentum and the speed of market momentum will increase, I think first couple of years we were really knocking on people doors trying to get them to consider the technology and try it and that it had been demonstrated. We're not two years down the road and two things are clearly true, people are calling us and two, we've got 10 installations where it works. So we're not necessarily in a situation where we have to prove we can validate and demonstrate the technology successfully. And I've said this a few times, you got to call my wife agree with this, there is nobody who is less patience then I am.

And is there any back stock of extra funds consider to be available in the event that you need to stretch more time with the money that you have by, and I'm getting to the point of saying that, we don’t want to spend as much dollars on the ECC? Now that you really kind of have that as kind of extra?

I think to the broader question, the potential for some of these orders materializing and to supplement our cash position are as I explained, I guess we always have options with respect to funds, but it would be a fairly complicated and evaluated decision. So I don’t know whether I want to comment right now on where we will get alternative funds, or what the timing of securing those funds would be. And just to the side, we're still doing some testing on ECC, but it's not a whole lot of money. So given the potential cutting off the spending on, and as small as it is wouldn’t be something I'd consider to be, a violable way to say cash.

The next question is from David Brown, Private Investor.

First of all gentleman congratulations on many accomplishments in the past couple of year actually for the whole ClearSign team, not just the people on the call. The way I see it, the company is currently set up for really tremendous success, so kudos to you all for that because we have four large verticals and pregnant deals in each one of them with significant TAM in each one. So the frustrating part is, you've all alluded to, is that we've this very nice set up that's gotten even better over the last six to 12 months, but the orders remain frustratingly slow and I guess the other part and this is kind of my question, or my first question is that the company also seems to be getting far less recognition and respect from the broader market and from institutional investors then I think it deserves. So I guess my question then is what is the company doing to remedy this situation, so that the market cap grows and there's a lot more recognition of what you all of accomplished?

Well I'd say we reach out through trade press and we talk to investors and I spend a lot of time talking to analysts and the kinds of things that are just fundamental to your question, but bluntly, and I think one of the analysts kind of alluded this, that as soon as we see which I'm expecting will be sooner than later our first multi-million dollar, multi-unit order I think the stock price will adjust to more accurately reflect the value of the enterprise and that's just -- it's event driven and some of these things that I've spoken to have to occur and they will occur and if I hang up and they happen Tuesday, I'm going to feel like a really smart guy. If it takes two weeks, I'll probably get three or four calls asking me, what's taken so long. But I accept all of that, I mean I accept the fact that its management's job to make stuff happen faster. It's not the shareholders job to be patient.

My second question is that given the relatively tiny current market gap of below $60 million it seems to some investors that the company could be takeover target and some of us kind of fear this as we see the prospects of being great, but what would stop a larger fish from saying, oh, we're going to give $300 million to the shareholders and we're buying up ClearSign Combustion right now?

Well what would stop them would be the shareholders not accepting $300 million for their shares.

Right.

I guess I'll pass on asking the question, but if somebody offered us $300 million, would you take it?

I would be happy about it myself, but I just fear that some people would say, oh that's an easy quadruple or more of my holdings and so some -- there might be some quite tempted folks.

No, no, that's a fact that you answered, that's a fair answer. I think just given you a fair answer I think the shareholders themselves would have to decide what that would mean, but frankly I think there's a lot of long term value in the company as it's been said before this is an industry changing technology that's going to fundamentally change the way combustion is administrated and executed for decades, and then what's that worth. And it would be probably worth noting that we get interest from large strategic partners and potential licensors that see in that way. We are not there yet, but it would be inaccurate for me to suggest that people aren’t talking to us not about buying the whole company, but if that having a preparatory exclusive relationship with us in certain markets for certain parts of our technology, of course.

And I would assume that would be another way in which the company's stock price and market cap would adjusted if there with a large licensing deal signs, that was significant?

Yes, I mean all of those things are really opportunities, they are opportunities that are a lot closer my feels of view today than they were 12 months ago for the all the reasons that I just articulated. And that combine with the possibilities of strategic investors, anywhere from Europe and China and even in the United States, all of those things are in play. And frankly, to our -- as a shareholder, they're all exciting to our shareholders.

Indeed and I am very excited that’s why I wanted to, despite the what the market cap is right now, just congratulate you all because the set up us really truly in my eyes, fantastic right now.

Yes, well thank you.

[Operator Instruction] Next question is from Richard Deutsch at National Securities.

Steve, I've been calling ClearSign as you well know for two or three years, and I watch this thing move from lab experiments which in the early days were announced as you achieved each milestone and your stock reach into the double digits. Since that level of success, your stock has fallen down to below where you started and yet you seem to be in multiple ways having many shots on goal to become not just a company with increasing shells, but actually industry standard, because I don’t see any competition that's emerged in last couple of years that fulfills the customer requirements [technical difficulty] does. Do you see any comparative products out there in this field that are possibly competitive with your technology?

There are people who are trying. There are some, for example, Boiler Burners, that could be applied to Once Through Steam Generators that can producer NOx that close to what we are doing, but no one can do it without FGR and the energy penalty for FGR is for the fuel gas recirculation is very, very high and quite frankly we are now being asked to look at retrofitting some of these technologies to use our ClearSign because of the inherent energy saving. So the answer currently is no. I always maintain a certain level of healthy paranoia about what my competitors can do, because there are some pretty smart guys working at these companies. And that obviously is good for a couple of reasons; One, they are smart enough to know how good our technology is and maybe they'll want to license it rather than trying to figure out how to do what we already can do that they have not yet been able to do.

Alright and you also actually failed to mention something that in my research among industry people comes up very high on the list separately from pollution control and that’s the safety deployment, [indiscernible], coking, maintenance improvements at our technology brings forward, is that not something you're getting any interest then or just you got so many things to talk about its kind like left on the shelf [ph].

Not to disagree. but to remind everyone, we're certainly reminded this that the original initiatives behind Delek interest in our technology was not because of low emission, but because of the flame impeachment in and coking problems, they had, they're actually seeing it hear [indiscernible. Jim's this still kicking under the chair saying I used too many acronyms. And so the ability to resolve operational problems independently of NOx is a very key attribute of our technology and I think we maintained and this is a number we got from several industry experts that 20% of the opportunity for us to retrofit burns and heaters is not due to emissions, but due to the fact that they got mechanical flame impeachment related problems and I would say that’s conservatively the case. And that’s again one of the reasons we were anxious to get the Delek unit in and operating, because that will be a great installation to show people how we solve the flame impeachment problem in the case of this particular heater, they have other heaters that have this problem. So I think you make a good point as always Rick and there is an opportunity as we show in our various disclosures that the technology is emissions play, but it also improves operational performance and efficiency, it does all three things.

Okay and I'll leave question before I go back into the queue and this would be the almost biggest things that we can cover right here and that’s your discussions with the Chinese. Two things; number one, there is different levels of discussion and there is different potential outcomes. So number one, just how serious are these people, are they curious or are they serious? And the second thing is going back to the financing, would there be any likelihood that there would be some upfront money if you were able to conclude a deal before the end of the year, that would extent your runway further out to allow the market capitalization to get into gear.

In this order, I think the people were talking to, we believe are very serious. I think having dealt in China in the combustion business with my former company and the rotating equipment business before that for 20 years, I think you bring a good point. The reality of it is, I think we've been pretty diligent about distilling out people in China that really have a keen interest in our technology. So I think the people we're talking to are serious. Relative to being able to bring money into the company either through a licensing deal or a strategic investor, I'm absolutely certain that will happen in China from some form or another relative to the timing quite bluntly you can bring it in faster if you want a fast deal, you bring it in a little more slower if you want a really good deal.

This concludes the question-and-answer session. I'd like to turn the conference back over to Steve Pirnat for closing remarks.

Okay, if there're no further questions, I'd like to thank everyone once again for attending today, and for your ongoing support and enthusiasm. Thank you, Amy.

Ladies and gentlemen this concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.