ClearSign Technologies Corp (CLIR) 2016 Q2 法說會逐字稿

Good afternoon and welcome to the ClearSign second quarter 2016 results conference call. (Operator Instructions)

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 Corporation'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 can cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties associated with the forward-looking statements made in this conference call are described in ClearSign's public periodic filings with the SEC, including the discussion in the risk factors section of our 2013 annual report on Form 10-K.

Investors or potential investors could 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. Please note this event is being recorded.

I would now like to turn the conference over to Matthew Selinger at Three Part Advisors.

Thank you, operator. Greetings and welcome to the ClearSign Combustion Corporation's second-quarter 2016 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 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. These 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 2015 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.

So on the call today will be Steve Pirnat, Chairman and Chief Executive Officer of ClearSign Combustion Corporation; and Jim Harmon, Chief Financial Officer. So now I will turn the call over to Jim. Jim?

Thank you, everyone, for joining us this afternoon. Before I turn the call over to Steve, I would like to review our results for the quarter as they have been reported in our Form 10-Q and in this afternoon's press release.

We incurred a loss of $2.4 million in the second quarter of 2016 as compared to a loss of $1.8 million for the same period of 2015. The increased loss was primarily due to our increased field testing and development efforts related to our Duplex technology, including the increase in field and R&D headcount from 9.5 to 17.5 full-time employees.

As to our cash resources, we had about $5.4 million of cash at the end of the quarter. We project that we have about three quarters of cash on hand, based in our current projections.

We currently have eight field test projects that we announced regarding our Duplex technology: three related to once-through steam generators, or OTSGs, in the enhanced oil recovery industry; one related to wellhead-enclosed flares; and four related to process heaters in the oil refining industry. Four of these projects are in the design phase and four are in the fieldwork stage. Six of the eight field test project agreements include payments once the project is completed and the installed units are operating to the customer's satisfaction.

Our fieldwork has been successful to date in meeting NOx emission levels within the customer and relevant regulatory body specifications. We continue to progress through the customer-required fieldwork before we complete the installation and commissioning processes.

Our field test application of Duplex on a wellhead-enclosed flare is nearing completion. Just last week we received a purchase order from the prime contractor for the end-user, a major California oil producer. The total value of the order, including the initial test unit, exceeds $1 million and is expected to be completed within 6 to 12 months, depending on the customer's schedule. This is significant, as it represents our first major order.

This order resulted from our end customers' need to reduce their emissions. Our Duplex technology is primarily an air emission solution that is provided in a cost effective manner. As such, it is important to understand that air emission regulations are a key market driver for demand of our product.

American emission standards largely emanate from the Clean Air Act, which is administered by the EPA. These regulations are enforced by state and local air quality districts as part of their compliance plans. Ground-level ozone is among six regulated common criteria air pollutants. As a precursor to ground-level ozone, nitrogen oxides, or NOx, are regulated emissions by local air quality districts in order to achieve the EPA limits.

The eight-hour ground-level ozone regulations have been reduced from 84 parts per billion in 1997 to 75 parts per billion in 2008 and 70 parts per billion in 2015, with the requirement of realizing these levels approximately 25 years following the year of legislation.

The MD&A of our Form 10-Q and the tab labeled environmental landscape on our ClearSign website includes maps of the nonattainment areas in the US associated with the 1997 limit of 84 parts per billion and the 2015 limit of 70 parts per billion. The difference is striking, and the message is clear. Clean-air regulations have become dramatically more stringent over my lifetime, and there does not seem to be an end to this trend.

In short, clean air is largely popular. As such, we believe there is an increasing trend to improve air quality -- not only in the US, as previously described, but globally. This will be an important driver for our business.

As an example of local air emission standards becoming more stringent to comply with federal mandates, the San Joaquin Air Pollution Control District, which regulates central California, is currently faced with the need to reduce its current ground-level ozone from the low 90s to 84 parts per billion by approximately 2023. In what they term a no-stone-unturned approach, they are in the process of adopting more stringent NOx emissions standards for flares under their Rule 4311. Current NOx standards for flares approximate 110 parts per million. Our technology can achieve NOx levels for flares of sub-10 parts per million.

Similarly, the South Coast Air Quality Management District, which has jurisdiction over the greater Los Angeles area, has stated that they seek to reduce refinery NOx emissions by approximately 45% by 2022. If you look at the maps referenced earlier, you can see why we expect greater regulation in the future in order to achieve the 2015 limit of 70 parts per billion for ground-level ozone.

With regard to our envisioned market size, Frost & Sullivan recently completed a market study for us, focused on five target market segments. This information was recently summarized at the Boston IDEAS conference and is both posted on our website under the investor presentation section and filed with the SEC in a Form 8-K filed in late June.

In the study Frost & Sullivan concluded that the total 10-year US serviceable market is up to $3.6 billion. This is comprised of the following segments: refinery; enhanced oil recovery; enclosed flares; institutional commercial and industrial boilers, or ICI boilers; and large industrial. We currently have field development work ongoing in the refinery, enhanced oil recovery, and enclosed flare segments, which total up to $1.1 billion of 10-year US serviceable market value.

With that market backdrop summary, I turn the call over to Steve. Steve?

Thank you, Jim, for that overview, and I would like to thank everyone for joining the call today. As many of you know, I assumed the role of Chairman and CEO of ClearSign in February 2015 after serving three years as an Independent Director. Now, after 18 months at ClearSign, I remain as excited as ever about the unique capabilities of our technology and the potential for our customers to transform the combustion industry.

As Jim said, we recently received our first major multiunit contract for low emissions flares at a large oil production company in California. This purchase order was issued to us by the oil company's prime contractor and is valued in excess of $1 million. This is also significant, as it was ClearSign's entrance into the enclosed ground flare market, which was based on our ability to successfully apply Duplex technology to a traditional enclosed ground flare and reduce NOx emissions significantly.

The recent market study by Frost & Sullivan, which was commissioned by us, indicates that the enclosed flare market in the United States currently approximates $200 million. This represents only a small portion of all flares that are currently installed. We believe that interest among regulators to reduce emissions from this type of equipment is increasing and will increase this market size.

Within the refinery segment we have various up-fired burner installations which, as previously announced, are progressing based on customer's schedules and the refineries' asset availability. We are actively scheduling several refinery clients for in-person visits to selected installation sites in order for them to evaluate our technology firsthand.

More significantly, ClearSign will present a case study paper to the prestigious American Flame Research Committee in September, which will be attended by thought leaders in the combustion industry throughout the world. We continue to receive significant interest from refiners in various locales who seek to prepare for more stringent emissions standards. Our momentum is growing in the key refinery segment.

We continue to enjoy a significant competitive advantage and the thermally enhanced oil recovery market for OTSGs due to our proven ability to reduce emissions below 5 parts per million NOx while eliminating the need for flue gas recirculation or access air operation, which wastes energy. The performance of our original once-through steam generator installed in California is working well, and the customer has scheduled an installation of a second unit. We have been requested to meet this customer in the fall to discuss potential new requirements for our technology.

We are in the process of completing the engineering for a larger, 250 million BTU an hour once-through steam generator in Western Canada and are seeing additional inquiries from other enhanced oil recovery operators within Canada. ClearSign was invited to present a paper on our Duplex technology to the World Heavy Oil Congress in Calgary this year. Clearly, our reputation for providing low emissions, reduced-energy-consumption OTSGs is permeating throughout the industry. There are approximately 800 OTSGs in the United States and another 200 OTSGs in Western Canada, for an estimated total of 1,000 within North America. We believe that our Duplex technology is the on the combustion technology that can reduce NOx emissions to 5 ppm without requiring flue gas recirculation, thus allowing us to help our customers comply with the most stringent NOx emissions regulations while reducing energy consumption.

Regarding the development of our Electrodynamic Combustion Control technology, we continue to move forward in the lab. As we have said before, we believe the applications are well-suited for solid fuels like coal, which would be meaningful in a massive addressable market in dire need of an emissions solution.

In closing, our focus will remain on the successful completion of our field installations, building our current and future book of business, and providing technologically feasible and cost-effective solutions for our customers. I am pleased with our progress and would like to thank the team at ClearSign; our partners and customers for their continued support; and, of course, thank our shareholders for their time, investment, and support in our game-changing technology and the ClearSign team.

At this point I would be pleased to answer some questions.

(Operator Instructions) Jim McIlree, Chardan.

Jim, in your prepared remarks you talked about six of the installations you will get revenues or purchase orders on delivery, and I was just wondering if you could get into that into a little greater detail? So when do the installations turn into revenue or orders? Can you just walk me through the cycle of those? I'm not expecting you to do that for each of the six, but just maybe -- and also, relative to the $1 million order, are those other five a similar size or bigger?

Jim, it's Jim Harmon. Good to have you on the line.

I can generally characterize the six units or six installations that you are referring to by saying that payment of the sales amount is conditional upon us having a successful installation at their site. So once they have been satisfied we complied with the contract, then we would receive payments for those six installations.

And that successful installation, then, is going to depend on whatever contractual arrangements you have entered into with each particular site as to --

Correct.

-- how long it has been operating and what metrics you are using to determine whether or not it is a success?

Right. But the overview that I would give to you is that it is performing to the metrics of the contract and satisfies the customer.

Okay. And generally speaking, how long does that -- I'm going to call it a test, although that's probably the wrong term for it -- but how long does that test typically last? Are they looking to see that these metrics are achieved over a one-week period, or a one-year period, or somewhere in between?

Steve, how about if I turn that one over to you?

Yes, Jim, it varies by client. The principal criteria for the performance is really NOx emissions -- to be able to demonstrate we could meet their permitted or their regulatory requirement for NOx. And the amount of time it takes could be as short as a couple of months, in some cases -- the client who might be looking to make a long-term investment in the technology across a broad range of units, as is the case with our potential client in Western Canada. They would like to see field demonstration testing in the six months to a year range. So it does depend on the client and the circumstances.

And since these clients are trying to reduce SOx and other things, is part of what's taking -- is part of what's a long sales cycle because they are not just looking at what you are offering, but they need to do you and -- I think Jim mentioned that there are five components that are regulated here. Do they need to get a solution for the other five before they're going to deploy your solution for NOx?

No, the reason for the protracted, if you will, cycle is everything from them needing to get an experimental permit with the regulators to try our technology and for them to agree internally what asset they would allow us to use as -- not a test, but let's call it a demonstration site. And there is always some internal discussion on what asset should they use, and filing for the experimental permit, and then determining the economics of using our technology versus some alternatives that might be possible.

But in general it's not uncommon for the client to take six months even to a year to make this determination.

In the case of, again, the project that we are doing in Western Canada, which involves numerous large once-through steam generators, we just finished what they call -- is a process HAZOP meeting where you sit down with the operators and you go through each piece of equipment, every valve, every control, every PLC. And you do a what-if scenario in terms of the operability, safety, and reliability of that equipment. And it is usually applied to some criteria within the refinery based on their experience.

And it is not uncommon for that process to take a week or two and then result in some reiteration of the engineering, based on the fact that they prefer this type of valve versus that type of valve. So as you'd expect with a refinery customer, it tends to be a very detailed, very rigorous process.

Right, okay. And I'm just wondering if there is a goal that you can share with us for how many installations you would like to have by year-end and what you are shooting for next year? Or if next year is really going to be a year of, we have proven this technology in a number of markets, and now we can go about more selling it instead of demoing?

We have not yet committed to any specificity around the two points you asked, but we do -- given the relative success of this year and what we see as the completion of these demonstrations that Jim had mentioned earlier -- expect to see a ramp-up in deal flow next year, for sure.

Okay. Great. I know it's been a tough road, but it has been a lot of progress. So congratulations on that, and good luck with everything.

Yes, yes. Thanks, Jim.

Lou Basenese, Disruptive Tech Research.

Congrats on the quick turnaround on the flare installation and the follow-on orders. I just was curious if you could comment whether it was a competitive situation, and what incumbent technologies you displaced to get that business?

Well, it was really a specific customer request. He had a problem, and he actually had gone back to the supplier of the original flare, which was more of a traditional flare design, and they were unable to come anywhere close to meeting the emissions he needed. So we really were able to assess what was needed and give them what we thought was a fair price.

And we're also pleased that in a fairly short period of time, as you point out, we're able to modify the existing flare and install our technology with a very, very good result. We really had a dramatic reduction in the NOx emissions of this flare. And as a consequence of that, as we have stated earlier, we got a contract for $1 million and are optimistic that there is other opportunities like that in the making.

But, yes, we were quite pleased, because as you know a lot of our focus with Duplex has been on burners, both boiler burners and process burners. And I think the striking thing to me is -- the fact that we were able to adapt Duplex technology to a flare application just opens up a huge opportunity for another entire vertical market.

Right. And just in a follow-up to that, about what you said in how dramatically can reduce the emissions, is there any other technology that you're aware of that can get to those levels in flare installations? And then how does that impact how quickly word spreads to other owners of flares in terms of this solution being unique?

Not that I am aware of. And then the follow-up answer is: not even close. (multiple speakers) are profound. I mean, they are big numbers.

Now, the feedback we have gotten, and we're a little cautious about revealing the customer and the whole nature of the transaction for a bunch of obvious reasons, is you have gotten very good feedback from the regulators with respect to their interest in the technology and the possibility of regulating this type of asset, a flare. A lot of -- most flares really aren't controlled with respect to emissions. They are controlled with respect to smoking, but not with respect to emissions.

And given our success at this particular client, there is a strong possibility that they would look at our technology and regulating flares as a good option for them. But that's -- a lot of water has to flow under the bridge before stuff like that happens.

Okay. Just a quick question on the major Canadian oil producer with the OTSG. Are you still on schedule to complete that first installation -- I think it is by early October was the guidance?

The answer is yes.

Okay, good. And then just -- maybe this is for Jim -- a question about the eight projects in process. Is there any reason -- do you have any reason to believe you won't be able to perform to the metrics of each contract? And then assuming that you do on all of them, what are we looking at in terms of just a range of potential revenue in the backlog?

First off, yes, we are -- there is a range of answers with regard to those six. But I will tell you that the overall substance of -- excuse me -- with regard to all eight. But the overall substance of it is, yes, our guys are tough, and that they will be able to complete those.

With regard to how much revenue would be recognized, we have always characterized it as a relatively de minimis amount. We haven't revealed the amount. But as each one clicks off, you know -- it is enough to be handy and be useful. But I don't think it is going to dramatically change any sort of projections that you have for the Company, Lou.

Okay. And then just a last follow-up: do you believe that these eight installations could be completed by year-end?

Which ones?

Not accepted -- just all -- the eight installations that you have in various stages? Not accepted, but just the installation work completed so that the customer can enter the evaluation periods.

Lou, they could be. Based on the dates we are currently getting, the latest one is the refinery in Texas that said they would put -- reinstall the equipment in the fourth quarter of this year. So that might be the latest one.

Okay.

But in theory -- and again, I'm not trying to hedge my best here, because -- you know, I have the exact date, time, and hour that I expect them to be completed; it is just that my ability working with our clients to predict these things, because of all the things that happen internally to change their schedule, is pretty large.

But the answer to your question is a short yes. There is no reason right now for me to think that they all won't be installed by the end of the year.

Okay, great. Congrats on the progress, and I appreciate you taking my questions.

(Operator Instructions) David Brown, Private Investor.

Congratulations again on the first commercial revenue order. Great news there.

My question -- I have got several questions. The first is about the NOx levels, if you can give any more specificity about the various verticals? I know you have said that you are meeting the regulatory requirements, which would be 5 parts per million for once-through steam generators and for refinery heaters.

Are there -- could you reveal possibly what -- close to the median numbers that you are getting and those verticals? And also, I was glad to hear that you mentioned the wellhead flares was actually under 10 parts per million, which -- I know the current regulation is 15 parts per million. So if you could give me any more color on those metrics, I would appreciate it.

Yes, I would say that we are -- in the field, we are producing NOx emissions that are comfortably below the regulatory requirements. And when I say comfortably below, the clients themselves like, if you will, a little wiggle room in the performance of the equipment relative to their permit, because there is other variability with respect to fuel constituents, and heat rate, and then how hard the burner is being fired, which could impact the NOx emissions relative to their original design. But because we, again, are comfortably below the regulatory requirement, we have been able to satisfy our customers' needs over in a variety of operating ranges.

And it's also -- it is a technology that is embedded, so there is no real wiggle room or cheating, like Volkswagen did. So I am sure the regulators are happy with that aspect.

Yes. And you know, what happens in the process with respect to refineries is they put in our equipment, and they very often -- and this is almost axiomatic -- they bring in a third-party independent inspection company, who is certified with equipment that is certified, that is extremely accurate. And they really measure the heck out of the performance.

Great.

And that actually plays to our strength, because the smarter our customers are and the harder they try to make sure everything is right, the better we look.

That's great. I like to hear that.

A question -- just a separate question, just a very quick one: I believe I have heard you say that once the customer is ready, and the installation is ready to go -- and this may vary on the different verticals -- the time of the actual installation is relatively quick. Could you give me -- I was thinking, like, two days for some of your processes. Could you tell me a little more about how long it takes to actually install the Duplex once the customer is ready, and the once-through steam generator is closed down, and you are ready to go?

It is true that on refineries, if we have unobstructed access to the asset, it is a couple days. On once-through steam generators, some of these things can be pretty large. The ones in Western Canada are actually 5 times the size of the ones in California.

Right, right.

So it might take a week. That said, the real issue from the client's standpoint is that we are not taking the asset out of service for a period that is so long that it makes it economically unattractive.

Great.

And, by the way, that's a good point to emphasize, because the best solution in the world -- if it is going to take you a couple of months to apply it, the impact financially on the client is pretty big.

Right.

Just to emphasize that one, if you think about refineries as a process, a production of oil into various oil products, you can't -- it is very difficult to isolate particular burners and take them down. Meanwhile, OTSGs in a field -- much easier to isolate one and take it down. The field doesn't shut down, because there is still dozens or in some cases hundreds of OTSGs still operating.

Great points, thank you. And another question: I hear that the Company -- you know, obviously, you have answered this in other -- mentioned it in other conference calls about the boiler, the commercial boiler space. I understand that the Company has perhaps purchased a commercial boiler and is retrofitting it for a demonstration project. Could you give me a little color on that?

Geez, if you would know that, you shouldn't.

(laughter) Okay.

Were you up here visiting or something? (laughter)

I mean, you know, I won't comment, because you might have been standing in the parking lot when it was delivered. So I'm not sure what you want me to say.

Okay. And then just news regarding companies and the EPA -- my last question. So for instance, Marathon Petroleum was in the news in June 9 of this year about having to agree with the EPA to spend $334 million to reduce pollution at the refineries in five states.

Obviously, Tesoro -- which we already have a book of business with, hopefully, that is successful in the not-too-distant future -- is also -- was in the news regarding fines from the EPA. Is the Company basically actively pursuing companies that are coming up against these kind of fines and such?

The answer is yes we are; and the answer is, yes, typically as part of this process we sign an NDA, a nondisclosure agreement, because the clients themselves want to keep their solution and the timing of it on a confidential basis.

Okay, great.

But I mean, in the case at Tesoro, they were fine with us announcing it. In fact, they, I think for their own reasons, felt this was a good message to send to the regulators. But for the most part the refineries themselves, who of course are aware of our technology, are inclined to have us keep the work we do with them as confidential.

Sure. That makes sense. And I would assume, then, that regulators are -- the news about the successes that ClearSign is having with Duplex is spreading pretty well with regulators?

Just to be clear -- and people have done very well with this -- when the actual refinery tries our technology, they typically file for an experimental permit. That information is publicly disclosed.

Right.

So if you really want to look hard, you can find -- you can -- I mean, you don't have to pull up in the parking lot to see who delivers a boiler, but you can find this information out. What I'm saying to you is that my obligation with these refineries is to not disclose it. The information could be made available through other sources.

Okay. And just one question, one more general question, about the boiler space: is there a model of -- that you are -- like, businesswise that you would like to be working on in the boiler space? Obviously, you can't go -- you know, there are so many boilers all over the world and the country, even, the US, that you couldn't go to every -- it would be doubtful in my mind that you could go to every boiler company, or place that would have boilers or other large industrial heaters and things like that, and do all the installation.

So is there a thought of some kind of a licensing or something like that in that space, where you would be with some other company that would be the -- you know, similar to, like, what Energy Recovery did with -- I am blanking on the company, but one of the large companies that license their technology. Is that in your thoughts? Or maybe you don't want to comment.

No, we previously commented on this.

Okay.

The reality of it is, just as you said, there is 300,000-plus installations of boilers in the United States. So it is not practical for us to necessarily go to each one.

But focusing on boiler OEMs who have not only existing boiler burner capabilities, but also have field service organizations -- a license agreement with a large boiler OEM would be ideal. And what we're in the process of doing, and we have been doing this for quite a while, actually, is developing enough field experience with boilers that we can make a compelling case for licensing our technology and having more leverage based on the confidence that we validated this technology in the field. If you go too early, and you really can't prove you can make it work, then you're not in as strong a negotiating position as we are now or as we will be in a few months from now.

Sure, exactly. All right, thank you. That's all I've got.

(multiple speakers) you would like to buy a boiler?

(laughter)

Richard Deutsch, Ladenburg Thalmann.

Thank you for taking my call and congratulations on your transformation process and how you are executing, going from a patent-rich company to one that is actually right now becoming commercial as we speak. The issues here are moving from an academic discussion to what is really important to shareholders and possible shareholders in terms of pricing your security.

There is a problem that you are in such a broad array of commercial and precommercial operations that it is almost hard to pick out a question that is most relevant to shareholders. But I am going to settle on your plan over the near-term in terms of financing alternatives. Having such a small market cap and small number of shares outstanding, you have got huge leverage to the upside. And I would like a little bit of your thinking as to where you would like to go under ideal circumstances, and what your confidence level is in your financial needs and how they're going to be met?

And specifically, you just got into a little bit of the conversation with Mr. Brown about licensing. In a technology company with as broad a base as you have, both in domestic and international opportunities, and with the Company's expertise and experience in the field now -- validating, as Steve was just saying, the increasing value of any licensing agreements -- I'd like to see whether you are willing to discuss a little bit about your partnering joint venture or licensing arrangements, as to how they might intersect with potential financing? So if that hasn't been too confusing, maybe you can address that for me right here?

Richard, what was the question?

How you expect to finance the Company over the next, near-term, 6 to 12 months; and whether there is a possibility of a joint venture or licensing agreement now that you have field-tested and demonstrated multiple commercial -- major client performance levels?

I would say that, to the core of your question, we are comfortable that we can continue to properly finance the Company. And we are looking at various financing options. We are really not in a position to comment on any specific path. You have highlighted one of them. Yes, of course, at some point licensing opportunities and the possibility of, perhaps, strategic investment by licensing partners are always an option for a company like ours.

But suffice it to say that we are looking at our options for financing; that we are comfortable that we will be able to properly finance the Company going forward. These are -- again, in my 18 months times have never been so exciting. The opportunities have never been so clear to us. And we have not for a minute taken our foot off the pedal with respect to commercializing the technology, nor do we feel we are going to be out of opportunity to finance the Company.

Okay, and just one drill-down question. Over a year ago I believe you announced a contract with Tesoro, and that did generate quite a bit of investor interest in which the market capitalization was substantially higher than it is now, even though you have obviously progressed massively since then. And one of the issues is that we never got any clarity on any follow-through with that contract.

And as I understand it, they are committed. They would like you to progress. But can you give us some sort of progress report on what you feel will be the actual expected installation date for that already-announced contract?

Not to go through too many of the steps, we had had the initial meetings with Tesoro that were announced, where we met with their engineering subcontractor and did what is called the process HAZOP to identify how they would install our equipment in their refinery. And then, further, we have been actively trying to schedule a fairly large group -- 7 to 10 people -- to go visit a site where we have ClearSign technology in a refinery so they can see it firsthand. And we're working on a schedule that we expect to see sooner rather than later.

But since this thing had been scheduled once last month and had to get delayed for a variety of reasons, I hesitate to say when it is going to be. But of course their interest in doing this is pretty great, so we think they will do it at their earliest convenience. And we're perfectly willing to accommodate them, and meet them places, and arrange for them to visit our installation sites. And so far the clients we have spoken to are very accommodating.

You will find that other refineries are very willing to help their colleagues dealing with safety, health, and environmental issues. They all kind of work together when they have a common objective. So we haven't had any pushback at all from our installed client base about showing not only Tesoro, but some of the other refiners that have expressed interest in seeing the sights.

But just for clarification, once they make the visit, would you consider the time frame of moving forward to be within a matter of weeks, or would that be further? And second, how would you characterize Tesoro's interest? They are a big company. They have got massive amounts of different things going on. And how far up on the senior management's radar is this pollution control, regulatory, and actual safety and maintenance issues for your technology up on their radar? Do you find them very interested, or could they just simply be laissez-faire about it? Thank you.

Well, they are interested, and I think what drives their interest is the regulations. And the reason I can't give you really a crisp answer to your question, Richard, is I'm not privileged to what's -- of the things that are on their list. I don't know whether they are working on this or whether they are putting in a new hydrocracker.

Okay. The second question, though, is after they make the visit, do you have any idea as to how quickly they may move forward?

I really don't. I would hesitate to say a couple weeks, because in the industry nothing seems to have ever happen in a couple of weeks. But the fact that they are -- they have -- you know, and this goes for the discussion that somebody else suggested about Marathon, the fact that as an industry sector, refiners are under scrutiny to improve their emissions gives them an interest in our technology.

They are the ones who have said, hey, we want to work with you. We have given you a trial order. We have paid you to do engineering. We want you to arrange a visit. So all of the signs that would indicate interest are favorable to them being interested.

Okay, well, thanks a lot. Again, congratulations for not dropping the ball and really having such a great number of different verticals all coming through at the same time. That's pretty amazing out of young technology companies that I followed in the past. So, keep up the good work and stay healthy.

Yes, thank you. We will definitely hang on to the ball.

Okay.

(Operator Instructions) Joe Bassett, Private Investor.

Congratulations on all the amazing progress. It is pretty exciting. My question was kind of/sort of answered, but just wanted to reemphasize it again: how much, basically, runway do we have left? And then when would a strategic investment and/or capital raise need to materialize? At what point? Thank you.

Yes, this is Jim Harmon, Joe. As you characterized it, this is been addressed, but we have three quarters of cash left based on our current projections. And as Steve mentioned, we have a plan with regard to any capital raises that are required that we feel very comfortable with. And we are taking action with regard to those plans.

All right, thank you so much.

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

Thank you. Since there are no further questions, I would like to thank everyone once again for attending today and for your ongoing support and enthusiasm.

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