ClearSign Technologies Corporation (CLIR) Q3 2019 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the ClearSign Technologies' Third Quarter 2019 Results Conference Call. [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 Matthew Selinger, Investor Relations. Please go ahead.

Thank you, operator, and welcome everyone to the ClearSign Technologies Corporation third quarter 2019 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 public periodic filings with the SEC, including the discussion in the Risk Factor section of the 2018 Annual Report on the Form 10-K. 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 Brian Fike, ClearSign's Chief Financial Officer. Rob Hoffman, ClearSign's Chairman of the Board is on the call as well, and will be available for the Q&A portion. With that, I would like to now turn the call over to Brian Fike. Please go ahead, Brian.

Thank you, Matthew. And thank you to everyone for joining us today. Before I turn the call over to Jim, I'd like to review our results of operations for the third quarter ended September 30, 2019. The net loss for the quarter ended September 30, 2019, was $2.1 million, compared to $2.3 million in the same period of 2018. Shares outstanding as of September 30, 2019, were 26,704,761. Our cash and investment resources were just over $10 million at the end of the third quarter of 2019 compared to $11.6 million at the end of the second quarter. Our Q3 2019 cash burn represents a reduction of $0.25 million from the third quarter of 2018 and is representative of our continued focus on costs and achieving the best results possible from our expenditure. It is important to note that even assuming no revenues if our expenditures remain constant, we expect to have sufficient working capital available as of today to carry us to the end of 2020. And with that, I would like to turn the call over to our chief executive officer, Jim Deller. Please go ahead, Jim.

Thank you, Brian. And good afternoon, everyone. Welcome to the first results call of the newly named ClearSign Technologies Corporation. Many of you have seen the announcement regarding the name change that was issued yesterday after the market closed. In that release, we went into detail about the reasons for the name change. I will start here today by talking more about this on a border potential market opportunities for ClearSign that influenced our decisions to make this branding change. This will include an update on our sensing technology business and our marketing activities, including the development of our new website as all of these are related. Over this past quarter, we have continued to develop our technologies and optimize the configurations for use in the field. This is not only true for our combustion technology but also includes our sensor technology. As we look to the future, we believe that the potential of our sensing technology is substantial, both in burning related applications, but also in much broader markets. While we are in the early stages of developing this technology, and our go-to-market strategy, we anticipate ClearSign business expanding out of the combustion space into much more diverse and additional sectors. This is significantly different from the past vision of clarifying combustion and why is the renaming and branding of ClearSign for the future. ClearSign is foremost a provider of technology rather than an equipment supply company. In the combustion markets, it's primarily through ClearSign core, which will be embedded within the body of established combustion equipment manufacturers' products. After considering the breadth of potential markets open to our sensing technology and our business strategy and function in the market is as a technology company, the changing name to ClearSign Technologies Corporation was obvious. As the future potential of our sensing technology has featured so prominently in the decision to change the company name, it makes sense to address this technology first. Even though it is not our most significant near term path of revenue. I will note up front that a lot of what I will discuss regarding the future sensing developments are possibilities and potential opportunities and are in no way guarantee. Nevertheless, I want to take this opportunity to explain what we see in the large and diverse opportunities possible or our sensing technology. The major markets we envision for sensing technology beyond combustion include markets such as transportation. While I cannot go into details we do have some traction in this field and while this is very much in its infancy and there are certainly no guarantees of the future, we do see a very great potential with ClearSign in this market, which is exciting. Looking shorter term and with more certainty, we are much further advanced with our combustion sensing technologies. The science behind the sense of product is related to the old ECC technology that differs greatly in its application. But its most simple application our sensor provides means that affect the presence of a flame, that is whether it is on or off. This in itself is not unique. There are other well established technologies able to do this in the industry today. But all of these have significant drawbacks generally including longevity, reliability and or response time. The ClearSign sensor, which we have branded ClearSign-I have the capability of providing an instantaneous indication of the presence of a flame without the need for any components to be positioned inside the flame itself. It is also comprised of robust components that can be positioned upstream which in most cases will be below a flame in the much cooler combustion air. In terms of the capability of this technology, this application utilizes and demonstrates very little of what the technology can do but in the interest of developing our business as quickly as possible, we see this simple application as the best first manifestation to launch. Even in the simple form, the technology has received great interest from customers with whom it has been presented. ClearSign-I will be included in an ongoing project on a demonstration basis, running it parallel with a conventional flame safety equipment the client would normally install. While this is a small item than the burn, the great appeal is that this equipment is as equally applicable to traditional burners as it is to those fitted with a ClearSign core. And the benefits are not limited to environmental regulations or highly fired furnaces, but to any customer frustrated with the limitations of current flame sensing technology. In other words, the total available market for ClearSign-I on-off senses is significant. The really intriguing aspect of this technology as applied to burners is the capability to detect not just the presence of a flame, but the character of a flame, which can be related to air to fuel ratio, intensity, or instability. We believe that this functionality is unique in the industry. If this can be successfully prioritized it will enable the provision of a device that could not only detect when a flame is present or not but also give an indication when something is starting to go wrong. Giving the operator the opportunity to avoid a problem, rather than just react to it when it happens. A little like a load fire pressure warning light on the car. This capability has been demonstrated to customers visiting us in Seattle and also presented in recent technical conferences. Before disclosure, this health monitoring function, unlike the aforementioned on-off detection capability, has proven a bench scale. But the hardware to implement it is not fully proven in a full scale operational burner and it is not fully developed nor ready for commercialization yet. However, given that it is an extension, and is planned to be a continuing development from our on-off sensor, it is worth discussing in the context of it being one area of the future potential of the players on sensing technology and an insight into the role this may play in the future. We should also point out that when commercialized a ClearSign-I installed to monitor the health of a flame should have an extremely high return on investment and payback period for the customer. In most industrial settings, productivity is priority number 2 closely behind safety. And the attributes of a ClearSign-I that enable the operation of equipment to be prolonged addresses throughput head-on. Within the next few weeks, the ClearSign website will be re-launched. This will be a brand new website rather than a revamp of the old one. This website is the face of the company and reflects some of the changes we have made internally as well as our collaborative business strategy. By itself will provide new insight into ClearSign. The demonstrations and explanations of our new technology, additionally, it will be structured to reflect the new operation of ClearSign and the incorporation of collaborative partnerships and the ClearSign Core into the ClearSign business model. The new website will be customer and business-focused and will be set up to facilitate the addition of new partners and products as the ClearSign business strategy progresses. We have strived to develop this website not only to serve our customers but also our partners, including prospective partners, and our investors and the investment community at large. In addition to the development of the website and the rebranding of the company, is an increased focus on the needs for market and strategic product line development. In this, I'm not so much focused on advertising but on the methodical optimization of our product lines, the management and development of our strategic partnerships, and the direction of our ongoing product and resource development, all to maximize our future returns from the market opportunities available to us. While we watch for those costs and avoiding a significant headcount increase, we are adding new expertise to strengthen this product line management function. We have an employment agreement with a great candidate who starts with us next week who'll be based in our Tulsa Oklahoma office. Let me get back to our all-important process burner technology. In our last call back in August, we discussed the need to adapt our technology to make it easy for customers to implement and outline the path ahead of us as we commercialize our technology. This sort to establish it as the mainstream solution to restore bad heater productivity as well as to achieve emissions compliance in the environmentally-conscious regions of the world. Through this past quarter, we have been acting on this plan and have made great progress. We appreciate the fact that there has been little news released, but there has been a lot going on behind the scenes as is clear from an excellent announcement made on October 18. It is an element of this business the publicity related to orders, plans and agreements with our major customers we seek is often and will undoubtedly continue to be carefully reviewed. Frequently, the terms of our contract will have binding restrictions on the content and timing of public announcements which will have a bearing on when formal announcements can be made. While we reserve press releases for material announcements, for those interested we are providing what I will call non-material updates via our LinkedIn page and website. These have included updates of our activities, such as promotions by ASHCOR and California Boiler and details of conference activity and a presentation of technical papers covering both our technologies and sensing technologies. What makes it all mobile is very significant for ClearSign, not just because of the customer, but also because of the reason the order was placed and the multiple benefits it initiates for the ClearSign business and combustion and sensing technologies. The Exxon Mobil engineering order is the first stage in the supply of burners for a heater and a major refinery in the United States Gulf Coast. And is the next step in the progression of Exxon Mobile's assessment of ClearSign's technology as a solution for emissions compliance going forward. It is clear with my conversations with Exxon Mobil personnel, that they fully appreciate the benefits to Exxon Mobil of avoiding the need to fit an SCR, selected catalytic reduction system to many of its existing heaters and the value on benefits of a plugin not an SCR alternative. The benefits of ClearSign technology have fueled the motivation behind the already substantial investment Exxon Mobil has made in this evaluation of ClearSign technology. This project and evaluation is spearheaded by the most senior engineers in the Exxon Mobil Research and Engineering division. The effort and care they have taken is extreme and without guarantee, we are optimistic that the ClearSign solution is being seriously considered as part of Exxon Mobil's future emissions compliance plans. The only obvious value of such an endorsement by a company with the industry reputation of Exxon Mobil and the potential sales opportunities presented by us alone. The process and rigor we will follow to complete the industrial readiness of our process burner ClearSign Core technology with Exxon Mobil over the next few months is hugely exciting. But in all my business focus R&A had having such a high caliber customer telling you exactly what it wants and needs and working with you to incorporate those capabilities is extremely valuable. Our deliverables from this stage of the order are due before the end of this year. Work is well underway and on track to meet this commitment. Of course, we expect this work to develop into a follow-up order for the supplied burners for installation and has already identified multi-burner heater. Turning to our collaborative partnerships, the discussions are ongoing and progressing. We have good engagement with prospective partners who have expressed their intent to move forward with us and who have done their research regarding the technology and business opportunity for them. These parties are both in the domestic U.S.A. and international. The procedures being followed in our deliberations with the different parties vary but generally in addition to resolving how we will operate together. Some include a performance demonstration of the technology in either their test furnaces or at third party sites. In some cases, the partners are electing to invest engineering and fabrication resources to develop their version of the commercialized product encompassing a ClearSign Core for this testing. For such a substantial investment, both in terms of finances and resources demonstrates their sincere interest in partnering with ClearSign. In the cases of possible partners opting to carry out this pre-engineering and testing, it is an activity that needs to be completed along with the finalization of our contracts before we will be in a position to make any formal announcements. So keep in mind, it has been and will be a lot of continuing activity behind the scenes. In terms of a commercial launch, should this be with a partner who has already gone through pre-engineering and testing as part of his due diligence, we anticipate that the needs for further engineering and testing or in the signing of an agreement will be minimal, more akin to the reordering. In this industry, these steps are necessary and will always need to be half-completed before an agreement is struck. The main point here is that while we haven't announced an agreement, there are a lot of prerequisites being completed and that need to be completed before an agreement can be entered into and we are moving through those. We look forward to completing this process and as soon as there is a signed agreement we will make an announcement. But until then, I ask for your understanding as negotiations and selections are underway. I am cautious of disclosing information that may have an adverse effect on any final agreements that may be reached with ClearSign. I returned from my most recent visit to China just over 2 weeks ago. As a quick reminder, last heating season we were successful in achieving positive performance in the water tube boiler we have been working on. But there were still modifications we wanted to make prior to requesting certification from the Chinese approval bodies. Since then, we have incorporated some proven features from our fire tube boiler burner design and fine-tuned the details of the burner. The modified parts have been fabricated locally in China and our team members with the assistance of Chinese contractors recently completed all the said modifications and we are ready for the heating season. We also anticipate the successful firing of the fire tube boiler burner since it is operated successfully here in Seattle and the exact burner will shortly be removed from here, crated up and shipped over to China for installation in a similarly sized boiler there. Assuming successful results, the anticipated formal performance certification of both our fire tube and water tube technology by the Chinese government will be a significant step forward towards the commercialization of our technology in China. Basically, this will provide the formal ratification of our technology that our various prospective Chinese business partners require project initiation of their possible association with us, and the development of our business infrastructure. There are more details about our Chinese market opportunity in the Investor Day on our website. But the crux is that there are approximately 350,000 boilers and heating districts that are also in emissions non-attainment zones. We believe the total is close to 500,000 if we also consider industrial boilers. The Chinese government is acting decisively to achieve their clean air goals and we fully expect this to drive the conversion of these boilers to superior low emissions technology. I can also report from my customer visits, that technology is well-liked and more capable compared to the other more complex, not for using systems to play date. With the validation of our boiler burner technology in China anticipated this season, you will appreciate that negotiations and the status of our business structure in China is not finalized at this time and there are conversations and decisions underway. As ClearSign has a subsidiary, ClearSign Asia Limited based in Hong Kong, and ClearSign Combustion Environmental Technology Beijing limited, the whole own for an enterprise commonly known as a Wolfie, as a subsidiary of ClearSign Asia, we have many viable options open to us. We have expressed interest from major Chinese companies in addition to equipment manufacturers, as evidenced by the Civic and Beijing District Heating Group MOUs that we have discussed on earlier earnings reports. On my last visit, I can confirm the interest by third parties in joining us in this venture is great. Given that the testing of both our small and large burner technology is expected to be completed this season, and of course, assuming a successful result, we anticipate being able to finalize our business structure for this market in a reasonably near future. We expect to make an announcement or announcements with details of these agreements as they are confirmed. Turning the attention back domestically, we are on track for the delivery of our World Oil in the South Coast Air Quality Management District orders. Orders for the equipment fabrication and the onsite installation have been placed. At this time, we also believe the other parties involved are on schedule and we are looking forward to a successful startup in Q1 2020. This will be the first commercial multi-burner installation for ClearSign and a very prominent reference for us going forward. As part of the overall project, there will be independent third party emissions measures taken as soon as the heater is up and running at a steady normal operating rate and monthly measurements taken and logged following that. As the South Coast Air Quality Management District is a public entity, these results will be publicly available for refinery operators, investors, the public and the press. Our cash consumption and balance sheets are always on our minds, and it is pertinent to address them at this time. For improvements in our operational efficiency, we continue to reduce the rate at which we consume our cash reserves. These savings are as a result of both operational discipline and a consistent focus on our strategic goals. I want to emphasize that top priority is getting to full commercial operations quickly and we manage our cash not in comparison to time but in comparison to progress. To put it another way, we are very watchful that while we focus on not wasting money, we make sure we do not hinder progress towards our commercialization goals. As our CFO, Brian Fike stated in his comments at the start of this call, we significantly reduced that cash burn again this quarter and we currently have over a year's worth of cash on hand without considering any inflow of cash and operations, possible investments by others and our Chinese operation or elsewhere, or possible sale of the patents we are trimming in that portfolio. I want to take a moment here and thank the ClearSign team for their diligence which has made this possible. Everyone has been extraordinary in their efforts in helping us achieve our savings targets. In closing, I want to express how encouraged I am regarding the progress of our partnerships and excited about the future of the technologies that the company presents in the marketplace. With that, I'll ask the operator to open the call for Q&A. Operator, can we please take questions now?

[Operator Instructions] Our first question comes from Robert Kecseg with Las Colinas Capital Management. Please go ahead.

Hi, Jim. I was going to say as far as the collaborations go, I know that's ongoing. Do you think it will be to the company's advantage for these 2 individual refineries to go forward and come to some sort of agreement post those installations? I think that's a company's advantage.

I'll ask for clarification. Which 2 refineries are you referring to?

Exxon and World.

So the World Oil project -- at the execution of these orders the World Oil project is well underway and it actually gives the startup in Q1 of next year. So the fabrication of those burners is in progress. We are on track to meet that deliverable but in order to do that we are much further down the path with that project. Then would allow us to work with a potential -- a partner at some time in the future. Regarding the Exxon, and at this point, we're assuming there will be an order forthcoming that has not -- I think just for clarification, that has not been confirmed but we're certainly very optimistic. Assuming that we do get a partnership finalized in an appropriate time, it would certainly be my intent that all would be executed with the new partner so that the new partner burners will be demonstrated and we would have equipment in the field that is built and proven in a way that we will continue to do business going forward beyond that. So it's really down to the time but just saying that's certainly my preference.

Then the other thing on timing. I'm trying to stay away from the collaborations because that's just going to happen whenever it happens, but In the case of the Chinese -- I'm just looking at the ones that we know that we're working on independently as a separate entity. As far as China goes, since we're now beginning the heating season, is there some timeframe at the other end of this tour? In other words, is there a window, is there the other end of the window to where we can hope to hear something come forward with that? In other words, since we're at the beginning of the window for heating season and it seems to revolve around the heating season, there's obviously an end to that, though, do we need to think that we should hope to hear something somewhere between now and the end of the heating season? I guess that's what I'm trying to say.

Yes. How are you doing? About this, well you're absolutely right. The burners that we are demonstrating and the very larger target market that we have in China is very much focused on the heating needs. I appreciate in the cold region of China or all the domestic housing. Most of the offices are heated by these heating districts. If you think of the size of China that's a huge market force. For timing, the ClearSign burner in the water tube boiler is ready to go. I'd appreciate that in China, the heating district starts on a specific date, which is right about almost. There's a lot of activity at that time. [Indiscernible] is a new installation, we'll start it up very soon but we may not start on the very first day just because of how much is going on in their routine boilers but certainly within the next few days following that we expect to be starting up. As we get the burner up to rates and assuming that everything works well and we are able to get the approvals and the performance that we need, certainly we will be sharing news. We hope that that will be before the end of the heating season. As soon as we have that good news and we've got something confirmed that we can publicly announce we will do it.

Then the arrangement you already have with ASHCOR on the players, since they're the ones working on that and trying to place orders in that area and I believe you said in the past that you have a product that they're marketing. Is there some belief that in the not too distant future, something will become of that? Do you think there'll be something coming forth as far as the installation there?

I do, we have been working diligently with them. I think in this last quarter you look same the promotional material that ASHCOR actually published, and we have referenced that on the website. As you see we also connected ASHCOR with California boiler to introduce them to the California markets. California boilers is -- happy promoting all of the place and product range and see us as a very good opportunity for them. We have attending concerts with ASHCOR, we're visiting their clients and -- interest with system with a promotion of ClearSign technology and we truly believe in taking our destiny into our own hands and not just sitting back and waiting other to do that. So we're working with them very closely. We do have technology developed the ClearSign core is embedded in the designs of ASHCOR players and we do have customers proposals out. So we are looking forward towards to all this.

And I guess the primary thing in China was the water tube to back that up is the fire to, is that fire tube is not necessarily connected to the heating season so that would be something that we could maybe look forward to be on the heating season like thinking about that right.

Just red one, although we have the water to boiler burned restored in China first the very large volume of five -- boiler is there is a very substantial opportunity. I'm not sure I see why is one primary, one secondary it was just one that we took to China first but they are both very, very significant markets for us.

I'm just asking is it limited to the, is the other one the fires that limited to the heating period or is it beyond that?

It does go beyond that the majority of the boils in China are for eating purposes but they're all more all the five tube boilers in other applications and industrial applications which are not strictly focused on heating and therefore run through the year. So the majority of all the applications of the heating but there are year-round needs for that business.

Robert, this is Rob Hoffman. I just wanted to clarify; I think your first question, if I understood that you were asking whether supply agreement would have to wait until we prove success with World Oil and Exxon. And if that's the question the answer is no, we won't have to until those are proven. The supply agreements are moving forward on their own, is that part of the question that you had.

I was kind of looking at from the other reflection of that. I was just saying to our benefit from our standpoint if just one of those projects moving forward and we have an installation and get good measurements to get good results and runs for a while. Is that going to be a benefit to us in thinking something collaboratively because look at what we have, we've done this now for somebody and I'm assuming the World Oil when will have a chance to show itself first and then followed up by the Exxon. I just wonder if that would give us an advantage actually the kind of the way I was thinking of it, if the demonstration of it with real companies and real operations.

I will let Jim answer.

As Boby point having an installation life, World Oil installation up and running, will give great confidence to our customers and --it was like. Regarding timing a promise that we working with however express sufficient confidence in ClearSign technology that, start of the overall project is not a precursor to signing an agreement.

Sure. Okay, fair enough.

The next question is from David brown a Private Investor. Please go ahead.

Exciting to hear the news about the ClearSign eye and the combustion centers, so congratulations on that progress. I have a little bit of a follow-up question on fire tube boilers and the package boiler space that was thought to be by previous management a homerun about two years ago if we could get down to 5 PPM at 3% oxygen we achieve that. Is there some North America component of that still going on besides the Chinese component?

Yes there is absolutely and previously with the ASHCOR we mentioned that while the company California boiler obviously by their name that gives you very good insight into where they focused and actually lane part of their interested in ClearSign. We're pursuing partnerships in domestic USA or boiler burner business; we are primarily focusing on China really talking about China just because of the size of that market. But there is a market all above here in the USA and as we progress we're also developing our business challenge and structure to address that USA market.

Great. And also, how is our progress with the regulatory agency, the Southern California air quality management district, I know we were working on getting our what was then called duplex technology into working with them to get that to be best available control technology with them. Have we achieved that label with them at this point?

We are making very good progress there, the World Oil projects is actually at the South Coast Air Quality Management District have made an equal investment in the World Oil project, as World oil, focus on that project will then is to prove ClearSign technology, as best combustion technology. So the start of these burners and the verification from the day that we will collect afterwards is all the purpose of confirming ClearSign technology as best of BICT.

Thank you, that that helps me understand better the layperson. I'm just really excited about the opportunity in China, so I know it's been whether a long time coming, but it sounds very exciting, obviously a huge market full steam ahead on that, thanks so much for taking my question.

Thank you.

The Next question is from Laurence [ph], a Private Investor. Please go ahead.

Good afternoon, thanks for taking the call. I'm excited about China although I may have misinterpreted some your comments -- time for revenue generation maybe pushback. Let me some basic questions a similar to your first speaker from maybe a little different angle. A little confusion certainly on my part on when the heating season begins and ends and I assume it may differ from district to district. Begins in Beijing district in November and ends in I don't know April and then I had some follow-up questions, I want to ask on.

So the Chinese government as you set the start date of the heating season and is right at the middle of November and they can push it back in four, five few days, but it's off in middle of November and it runs through March.

That's helpful. Are you running pilot demonstrations on both fire tube and water tube boilers?

We are the water tube boiler burner in its new improved role is installed, it's ready to go and as I said earlier we're not planning to stop that on the first day just because there's so much going on, you appreciate starting up thousands of boilers on the same day. So we don't, we get tied up in that but within the next couple of days after that we will be starting that burner up. The five tube boiler burner is actually prepped for crating at the end of this week and will be shipped to China to be installed in a very simplified tube boiler there in China and going to the same demonstration and verification process as the water tube boiler.

Okay, that's helpful. On the water tube boiler I was under the impression that you in the past had not been able to reach whatever the agreed-upon standards were but your comments today made me believe that you did reach those standards, mutually agreed standards between ClearSign and the Beijing district is that the correct interpretation?

We have demonstrated good performance before, we have not meet all of the criteria in the previous heating season but we did learn a lot but we've also taken what we learned on the five tube boiler burner and extrapolated that and we reengineered it for the largest size of the water tube boiler and that was the main components of the changes that we've installed in Beijing and we fully expect to meet the operational operation requirements this season, we did not trying to meet all of them at the end of the last seasons, so we have some improve, but when you demonstrate it, you want to demonstrate the entire capability of the technology.

That's helpful, with the demonstration relative to your MOU of the Beijing district, would it go through the heating season or could Beijing district site. Everything looks great, move on to discussing that definitive agreement.

There are multiple cost for that and I'm trying to take one at a time. The length of the testing is actually being negotiated; it is not expect to be any length of all of the season. We need to get to a study rates, our interest is as we want to keep at a shortest possible just to move on to the next phase but I truly kind of answer the question because that is an open negotiation. Okay, just to confirm you made a question; for clarity, we do have an MOU with a Beijing district heating group of the natural of a future cloud ratio while was certainly talking to them it's not guaranteed at this point, we do have to go through the process to reach an agreement.

From your comments today it sounded like before an agreement could be reached, the Chinese government whatever agencies responsible would have to certify these devices is that the correct interpretation and little bit worried inside soon, governments being governments it could take quite some time.

So the official testing is one of the same, is what was referred as the first part of your question. I do not anticipate any delay in that part. We are aware of the testing and have taken action to make sure that it will be provided a reasonable schedule for us, it's not guaranteed we're dealing with the government in China. I do not anticipate delay in getting that measurement done.

You mentioned and I have seen in the past couple different figures on the number of boilers in China. I assume the first or most likely first agreement in China would be with the Beijing heating district and I guess my question is, how many boilers might be apply able for that district in a potential agreement.

Sorry for pausing. So first of all, the as a the nature of agreement that relates to our business structure and how we opiate in China would be different from a sales order. Suddenly we all looking to some of these very influential major partners as potential allies in both -- what I can say on the last visit to China, we met with very senior people within the Beijing district heating group, they are very enthusiastic about our technology, the same as the operators that we spoke to on the ground level, they do not like some of the complexities that they incur with the other technologies which are being installed, so they are just waiting for our technology to be proven, so they can implement and that actually one of the big reasons why I'm excited about China. There is really nice when your challenges is really what's in your control and you believe the market is there waiting for you. The heating district is huge, there are so many boilers there and the nice thing about heating season, I know the heating season is limited but remains as that it vary some downtime between them, so there is actually a very good opportunity for installation of replacement burners where as if you look at something like a traditional oil refinery. One of the big challenges when you're looking to sell and install equipment is you have to schedule that around a very red shutdowns which may years apart.

To approach that from a slightly different angle does that mean basically insulation as you would do for the heating industry in China would largely be limited to what seven months a year?

Yes to the non-operational time for the heating districts.

Okay. And back to previous point, assuming everything goes well, and assuming some type of agreement relative to Beijing district is made with a reasonable assumption for calendar 2020 to be 10 burners installed, 20 burners can you give any kind of rough estimate?

I think you have to think that that right now we're proving the technology to get it established. The early stages of any product introduction are going to be much slower than you would anticipate from regular business, once you have manufacturing channel and proven technology widely disbursed throughout the market. So I think the assumptions that it will be a much bigger business after we've got a seasonal of both infrastructure development and early adopted demonstrations completed is reasonable.

I mentioned my assumption before that China was the in my mind at least the most likely big revenue generator for ClearSign in the near future is that the correct assumption or could somehow Exxon, finally?

I think China was certainly a very, very big opportunity for ClearSign with a very immediate need it's a perfect fit. So I'm very excited especially about the processes heated markets in the United States, especially with California and Texas. The feedback we're getting from the customers we're talking to in the domestic US as they work out the best options for them to tackle the anticipated future mission equipments. So China was certainly a very big market, I think time will tell whether that is the biggest or whether it's actually the US processes heated market. Or in fact looking further down the road to may be the sensing technology overlaps all of those but that's a long way. I think we have balance between the process in China and I think time will tell.

You mentioned the sensing technology back in I believe it was the May conference call of last year under the old management, statement was made that several technical developments should show expansion into new markets such as aerospace, marine and gas turbines. I assume that things did work out in those areas and now and the area that you described earlier in the call about the sensing on claim.

So the sensing technology is, as we developed we really seen the technology, we go and worked out how we can best take this in market in a marketable product. The essence of it is a hydrocarbon or mix or a planned sensor that can be applied to flames which is obviously the first deployments, when you look at the life of transports wherever there is a fuel system in place, it has a application there.

Okay, that's helpful. I'm going to show this one out, I'm not sure you can make any comment about it all leading to the bottom line of what kind of revenue generation might be expected in 2020 and whether ClearSign is not sufficient for the ClearSign would have to go to another stock offering or an equity investment or some other means to fill the gap between the operating costs and the revenue generation. I don't know whether you could make any comment about that but I thought I throw it out anything you care to say.

Jim, I will take this one; this is Rob Hoffman. I know you didn't mention it explicitly, but we filed a F3 shelf registration back in July and we've got some questions about that. I just want to point out that filings like that are good for three years and always considered prudent financial management to have one in place. So I don't think having a shelf is indicative of anything other than financial management. And I think, I would like to reiterate what Brian Fike, our CFO and Jim stated in their comments is that we have over a year's worth of cash in the balance sheet and again that assumes zero revenue. Jim and the team have done a great job reducing the burn rate while at the same time making significant progress he talked about in getting our products to be commercial ready. And so when you think about your burn rate our cash balances going forward, the only reason for expenses that arise will be in conjunction with revenue coming in the door. So things that the burn rate is pretty the length of time we have is pretty good. And so Jim also commented about coming back from Japan, there are number of entities who have expressed interest, they have done in the past and reiterated that interest in partnering with us in China. And so we've mentioned that they have an interest in partnering with us. So, when we demonstrate success. You know, we think will be able to talk about that. And I guess just for those who fear dilution, I just want to mention that in addition to being Chairman of the Board of ClearSign technologies, I'm the general partner of something called clear SPV, LLC and Clear SPV is the owner of close to 20% of ClearSign Technologies and Clear SPV owns common equity. In other words were on the same place in the capital structure as everyone else. So to connect all those dots our collective goal, meaning for both the SPV clearance to be and all common shareholders is success. So I think that's the, hopefully that helps answer the question. You just asked.

I knew most of what you mentioned, maybe you do it all. I guess part of the reason I bring the point up, the CFO, generally, starts each quarterly conference saying we got cash to I guess this time it was beyond 2020. And I'm just have a little difficulty, I'm not saying it wasn't accurate. But it gives the impression that you and the rest of board members would be willing to take the chance of coming off of close to zero cash in the back, before you tried to replenish it or might go that route to not have a lot of difficulty may be incorrectly, believing that you would do that. So that was part of the reason.

Well, you I think you have to remember that the entire board and Jim and Brian were cognizant it don't want to go to zero, but there is a lot of a lot of progress to be made in the coming months that we look forward to announcing, I will leave it at that.

Well, I appreciate you answering all my questions and thank you for your time. Good bye.

The next question is from Jeff [ph], a Private Investor. Please go ahead.

Thanks Jim, a part of my question was just answered by Rob but you said this in your comment and then Rob did as well. When you mention part of the Beijing heating district and I think you said partnering and using your quote, you can see that with ClearSign, does that mean partnering from a manufacturing standpoint or does it mean something like investing in or acquisition. You mentioned the Chinese subsidiary and both the Hong Kong subsidiary as well. So let me kind of infer maybe wrongly that it may be something more than just manufacturing and buying burners, maybe being a financial partner as well and the ClearSign structure.

We met and I actually met with some of the lead guys, I said it twice now. They see what we're doing, they are aware of the installation that we have with Beijing district heating group and they are aware of business plans and the opportunity for technology likely ClearSign in China. I think, to answer your question is all of the above. They are interested in or combined with, the other thing we talked about the Beijing district heating group in using the technologies in with this building manufacturing the technology if we need to develop some infrastructure in China they have expressed an interest in talking to us. Should there be a role for them to play in a development like that also of course, after the importance of getting the technology cloven in China that is a general requirement and one of them have expressed also but given that they are a very good friend of ClearSign in China and they have expressed an interest in working with us and we have a manifestation makes the best sense for of the business and of course for them at the same time.

[Indiscernible] they could be a financial partner with us as well, or factor in ClearSign in Asia or other one.

That is a possibility, we thought a lot of people ideas that is something we do believe is available should that be something that we want to do.

Okay, thank you very much.

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

Thank you. If there are no further questions, I would like to thank everyone for participating on the call today and we do look forward to updating you on our progress as events occur. We do appreciate your continued support, and thank you.

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