Executive Summary / Key Takeaways

• ClearSign is strategically expanding its market reach and product portfolio beyond traditional refinery process burners, leveraging its proprietary ultra-low NOx and high-efficiency combustion technologies.
• Recent operational milestones, including major process burner installations, the debut of the M-Series for midstream, and the ClearSign Eye sensor, are poised to serve as critical market references and catalysts for future sales.
• Strategic partnerships, notably the co-branding agreement with global leader Zeeco, are designed to significantly amplify ClearSign's sales channels and market penetration, offering a scalable, asset-light growth model.
• Despite a record $3.6 million in annual revenue for 2024 and improving gross margins, the company faces ongoing losses and relies on equity financing, alongside Nasdaq listing compliance challenges.
• The long-term investment thesis hinges on the successful commercialization and broad adoption of its differentiated technologies, which offer compelling environmental and economic benefits over conventional solutions, driving a shift from component sales to higher-value system solutions.

Setting the Stage: ClearSign's Mission in a Decarbonizing World

ClearSign Technologies Corporation (NASDAQ:CLIR) operates at the forefront of industrial combustion, dedicated to decarbonization and enhancing the performance of critical systems across the energy, chemical, and industrial boiler sectors. Founded in 2008, ClearSign has evolved from a technology developer into a solutions provider, strategically positioning itself to address the growing global demand for reduced emissions and improved energy efficiency. The company's core strategy, solidified under CEO Jim Deller since 2019, centers on commercializing its patented technologies, expanding market channels through strategic partnerships, and diversifying its product portfolio while maintaining an asset-light operational model.

The industrial combustion landscape is dominated by large, diversified players such as Honeywell International (HON), Emerson Electric (EMR), Johnson Controls International (JCI), and General Electric (GE). These giants offer broad automation and energy solutions, often with extensive global footprints. ClearSign, in contrast, carves out a niche with its specialized, proprietary technologies designed for precise emission control and operational efficiency. While ClearSign's profitability and cash flow metrics (TTM Net Profit Margin of -203.65% and TTM Operating Cash Flow of -$4.37 million) lag significantly behind these larger, more established competitors (e.g., HON's TTM Net Profit Margin of 15% and EMR's 11%), its strength lies in targeted innovation and the ability to offer direct, cost-effective replacements that can outperform conventional solutions in specific applications. This focused approach allows ClearSign to compete effectively by addressing critical gaps in the market, particularly where ultra-low NOx emissions and high efficiency are paramount.

Technological Edge: The Power of ClearSign Core and ClearSign Eye

At the heart of ClearSign's competitive advantage are its differentiated technologies: the ClearSign Core burner technology and the ClearSign Eye flame sensor. The ClearSign Core system, featuring an industrial burner body with a downstream porous ceramic or metal flame stabilizing structure, achieves very low nitrogen oxide (NOx) emissions without the need for selective catalytic reduction (SCR). This is a significant differentiator, as SCR systems are typically large, expensive, and complex to install and operate. The tangible benefits are substantial: reduced capital expenditure, lower operational disruption, and superior environmental performance.

ClearSign's boiler burner technology, for instance, has demonstrated remarkable efficiency. A third-party study by ICF, sponsored by the California GET program, found that a boiler fitted with a ClearSign burner consumed 4% less energy than an industry-standard burner. For a mid-sized 500-horsepower boiler in California, this translates to an estimated $80,000 in annual fuel savings and approximately 500 tons per year in CO2 reductions, in addition to achieving sub-2.5 parts per million (ppm) NOx levels compared to the industry standard of 6 ppm. This compelling economic and environmental case provides a powerful sales proposition, directly countering competitors' broader offerings with a specialized, high-performance solution.

The ClearSign Eye flame sensor represents another key technological differentiator. Unlike traditional flame rods that degrade rapidly due to direct flame exposure, the ClearSign Eye's sensing head is positioned about an inch below the flame in the core zone, making it significantly more durable and reliable. This "disruptive technology" addresses a common pain point in the industry—frequent maintenance problems with existing flame detection devices. The ClearSign Eye is a standardized, off-the-shelf product, expected to sell for approximately $4,000 apiece in multiples, applicable to virtually every refinery burner globally, thus vastly exceeding the addressable market of its process burners.

Beyond existing offerings, ClearSign is actively innovating. Its M-Series burners, optimized for the midstream industry, have achieved 2 ppm NOx in initial installations. The company is developing an M25 burner, a "detuned" version of the M1, targeting a slightly higher NOx level but at a reduced price point, aiming to capture a "much bigger volume part of the market." Furthermore, a $1.6 million Phase 2 Department of Energy (DOE) grant is funding the development of a flexible fuel ultra-low NOx process burner capable of burning 100% hydrogen, while also being robust for a wide range of refinery fuel gases. These R&D initiatives are designed to expand ClearSign's market reach, enhance its competitive moat, and drive long-term growth by solving diverse customer needs.

Operational Momentum and Strategic Partnerships

ClearSign's operational strategy is characterized by a focus on high-impact projects and leveraging strategic alliances. The company's relocation to Tulsa, Oklahoma, in 2022, positioned it closer to key industry partners like Zeeco, Inc., the world's second-largest burner manufacturer. This relationship has deepened significantly, culminating in a co-branded Zeeco ClearSign process burner line, launched in March 2025. This allows Zeeco's global sales team to promote ClearSign's technology, providing unparalleled market access and credibility. While orders from this partnership are anticipated in 2026 due to long industry sales cycles, the "teach-ins" to Zeeco's sales force and joint marketing efforts are already underway, signaling a powerful future channel.

Recent operational achievements underscore this momentum. The 20-burner order for a California refinery is expected to start up in the coming weeks (as of Q2 2025), representing a "very significant reference" for ClearSign. Additionally, the 26-burner order for a Fortune 500 chemical company on the U.S. Gulf Coast, the company's largest order to date, is progressing through final engineering and testing, with fabrication and shipment expected in 2025 and start-up in early 2026. These installations with "household global name companies" are crucial for validating ClearSign's technology at scale.

In the midstream sector, the M-Series burner has garnered "strong and growing interest," with the first M1 installation operating flawlessly and a second for Devco Process Heaters due to start up later in 2025. The company is also expanding into higher-value "systems projects" for flares and thermal oxidizers, leveraging its specialized burner technology to offer complete solutions valued between $0.5 million and $1.25 million per unit, a significant step up from component sales. The ClearSign Eye sensor is also gaining traction, with initial demonstration units for a super major refinery on the Texas Gulf Coast ready to ship, and commercial orders expected to pick up within 3-6 months following evaluation.

Financial Performance and Liquidity

ClearSign's financial trajectory reflects a company in an early growth phase, marked by increasing revenue but persistent losses as it invests in commercialization and R&D. The company achieved record annual revenue of $3.6 million in 2024, a 50% increase from $2.4 million in 2023. This growth was primarily driven by the shipment of 25 process burners to California refineries. While Q2 2025 revenue was $133,000 (up from $45,000 in Q2 2024), year-to-date revenue for the six months ended June 30, 2025, was $534,000, a decrease from $1.147 million in the comparable 2024 period, primarily due to fewer process burner shipments in Q1 2025.

Despite revenue growth, ClearSign reported a net loss of $1.68 million for Q2 2025 and $3.76 million for the six months ended June 30, 2025. The full-year 2024 net loss was $5.3 million. These losses contribute to an accumulated deficit of $102.8 million as of June 30, 2025.

Gross profit for Q2 2025 was $55,000, a 31% increase from $42,000 in Q2 2024. However, the gross profit for the six months ended June 30, 2025, decreased by 47.6% to $251,000 from $479,000 in 6M 2024, predominantly due to lower revenues. The full-year 2024 gross profit margin was 31.1%, a slight decrease from 34% in 2023, attributed to higher-than-expected startup costs for a large boiler burner installation. Management anticipates further margin improvement with increased volume and efficiency gains.

Operating cash flow for Q2 2025 was an outflow of $511,000, a $1 million favorable reduction year-over-year, driven by customer cash collections.

As of June 30, 2025, ClearSign held $12.3 million in cash and cash equivalents, which management believes is sufficient to fund current operating expenses for over twelve months. The company has no contractual debt obligations but has historically relied on equity offerings for funding, including a new ATM agreement with H.C. Wainwright & Co. to sell up to $10.39 million in common stock.

Risks and Challenges

ClearSign's growth trajectory is not without challenges. The company faces Nasdaq listing compliance issues, having received notices for not meeting the minimum bid price of $1 per share (due September 29, 2025) and for non-compliance with board independence and audit committee composition requirements (due August 4, 2026). These issues, alongside past stockholder activism, can divert management attention and impact investor confidence.

Market uncertainty, including the impact of tariffs on stainless steel materials and delays caused by evolving environmental regulations, can affect project timelines and costs. While ClearSign includes provisions for price adjustments in its proposals, these factors introduce volatility. Furthermore, the company's reliance on equity financing, coupled with SEC "baby shelf rules" limiting share issuances, could constrain future capital raising efforts. The decision to suspend China operations, while cost-saving, highlights the challenges of international market penetration. Despite these risks, the fundamental demand for emission reduction and efficiency, driven by both regulations and global corporate mandates, remains a strong tailwind for ClearSign's core business.

Conclusion

ClearSign Technologies is at a pivotal juncture, transforming from a niche technology developer into a diversified industrial solutions provider. The core investment thesis rests on its proprietary ultra-low NOx and high-efficiency combustion and sensing technologies, which offer compelling environmental and economic advantages over conventional solutions. Strategic partnerships, particularly with Zeeco, are poised to unlock significant market reach, while the expansion into new product lines like the M-Series and higher-value systems projects broadens its addressable market and revenue potential.

While the company has demonstrated encouraging revenue growth and operational momentum, it remains in an early commercialization phase, characterized by ongoing losses and a reliance on external financing. The successful execution of its growing pipeline of major projects, the effective activation of its expanded sales channels, and the continued adoption of its differentiated technologies will be critical indicators of its ability to achieve sustained profitability. Investors should closely monitor the progress of key installations, the ramp-up of the Zeeco partnership, and the commercial traction of its new product offerings as ClearSign endeavors to solidify its position as a leader in advanced combustion solutions.