CLIR

• Capital Structure & Board Updates

  • Two small common stock private placements were completed at market price with existing long-term investors to strengthen the balance sheet, which improves competitiveness when engaging large customers. A post-quarter placement added $1.7 million in net cash, bringing the pro forma cash balance to $11.6 million as of June 30, 2026.
  • Former ExxonMobil global technology leader Larry Sadler joined the board of directors. Sadler, an industry veteran with deep expertise in refinery heater and burner technology, conducted independent hands-on testing of ClearSign's technology before joining, bringing valuable industry connections and technical insight.

• Operational Progress by Product Line

  • M-Series midstream burners maintain an active proposal pipeline of ~50 outstanding proposals, with unreported additional proposals from heater manufacturers that include ClearSign technology in customer bids without requesting updated quotes. All recent M-Series orders are from top-tier Fortune 500 energy clients in the Permian Basin, a key growth market for the segment.
  • The new flat flame process burner design for the California refinery project expands ClearSign's addressable market by opening up new heater configurations that were previously inaccessible. This development is a key first step toward entering the large delayed coker and ethylene furnace markets, which can have orders of 100+ burners per site.
  • The replacement flare burner project in California was successfully completed and started up, with the client already identifying additional future sites for ClearSign flare systems.

• Overall Business Sentiment

  • Management is optimistic about momentum across all three product lines, with growing customer traction and a strong pipeline of potential future orders following the completion of ongoing initial projects.

• Management does not provide formal full-year revenue guidance, but notes that 6 to $7 million in annual sales from the M-Series midstream and flare product lines alone is feasible based on current pipeline activity.
• Double-digit annual revenue is viewed as a realistic achievable target, with the timeline dependent on conversion of the pending process burner pipeline that is expected to activate after successful startup of ongoing key projects. Management indicates double-digit revenue could potentially be achieved as early as 2027, dependent on order timing.
• Key milestones to watch for the remainder of 2026 include the October 2026 startup of the 26-burner Gulf Coast process burner project, startup of the first full flare system in California, and potential unexpected new M-Series orders that can move quickly from inquiry to order.
• The 32-burner California refinery project's test burner is expected to be witnessed by the customer in early October 2026, with fabrication of the first 16 burners (for the first of two heaters) expected to take 3-4 months after customer approval.

Overall company revenue in 2Q26 was $560,000, up from $133,000 in 2Q25, driven by partial delivery of a Flare system order, completed CFD studies, and spare parts orders. Gross profit margin was 41%, flat year-over-year. Net loss decreased by $373,000 year-over-year, primarily due to a $368,000 reduction in general and administrative expenses from lower 2026 legal fees (2025 had elevated legal costs for a dissolved special board committee). No separate segment-level revenue contribution percentages are provided. The three product segments are:

1. M-Series Midstream Burners: Six new orders were secured in 2Q26, five of which are large M1 units with pricing north of $200,000 per burner (one smaller M1 for the same end client as the first two orders). M25 units (for less strict NOx requirements) range as low as $40,000 per burner. One three-burner order was structured as a licensing/royalty agreement, where the heater manufacturer produces burners from ClearSign drawings, resulting in lower top-line revenue but equivalent profit margin per unit to direct sales.
2. Process Burners: A 32-burner flat flame project for a California refinery is on schedule, with the test burner in manufacturing and testing scheduled for the coming weeks. A 36-burner project in Texas is currently on hold due to client financing delays. A 26-burner project for a Gulf Coast petrochemical client is on track for October 2026 startup. The current advanced pipeline has approximately 20 additional process heaters under discussion across three customers, with an estimated average revenue of $2 million per heater.
3. Flare Products: A replacement flare burner project in California has been installed and started up, with preliminary testing showing strong results. The first full-system turnkey flare project (valued in the $750,000 to $1 million range, per standard pricing for full systems) is currently being installed on a second client site and is scheduled for startup in the coming months. Full flare system proposals range from $750,000 to $1.5 million.

• The 36-burner Texas process burner project is currently on hold, with an unclear timeline for restart dependent on the resolution of customer-side financing issues outside of ClearSign's control.
• All future revenue growth is dependent on successful completion and positive operational results from ongoing key startup projects, which will determine if customers move forward with additional planned orders.
• Project timelines for large process burner projects are dependent on customer scheduling and approval, which are outside of ClearSign's control and can shift from original expectations.
• Entry into new high-volume markets like ethylene furnaces requires additional multi-year product development, which requires resource allocation and partnership with industrial clients, with no guarantee of successful commercialization.

Q: What is the difference between M1 and M25 M-Series burners, and what is the maximum potential order size for midstream projects? / A: The M1 uses ClearSign's full high-tech core IP, with specialized nozzle design to achieve very low single-digit NOx emissions, meeting strict new regulatory requirements. The M25 is a simplified, lower-priced variant for less stringent NOx rules. For midstream applications, most heaters use one burner per heater, so orders of 2-3 burners correspond to 2-3 heaters on the same site, but the company already has inquiries for almost 30 burners in a single midstream project.

Q: When could ClearSign reach double-digit million annual top-line revenue, and what is the timeline for the 32-burner California refinery project? / A: It is not possible to give an exact guaranteed date, but current pipeline activity for midstream, flare, and process burners makes double-digit revenue feasible, potentially as early as 2027 after pending projects startup. For the California project, testing of the first flat flame burner is expected to be completed by early October 2026; after customer approval, the 32 burners will be delivered in two phases of 16 burners each, with fabrication taking 3-4 months after PO receipt.

Q: What is the roadmap and timeline for entering the ethylene furnace and steam methane reformer markets? / A: The current flat flame burner testing is the first step toward this long-term opportunity. Developing a qualified product for these extreme operating conditions will take approximately two years after development starts, and will be done in partnership with an interested industrial end user to align development with customer needs. The ethylene market alone is as large as the entire current refining burner market, and single projects can have over 100 burners, but this will be incremental growth that does not divert resources from current core business.

Q: What did Larry Sadler do during his pre-joining technology assessment? / A: As a veteran industry expert, Sadler wanted to test the burner beyond standard customer specifications, running it through extreme operating conditions to validate its stability, ruggedness, emissions performance, and ability to operate across a wide range of fuel types. He was satisfied with the results and also observed customer reactions to the technology during a public demonstration before agreeing to join the board.