Activities during this quarter focused on using the phase-I results to define process sequence alternatives for phase-II. Two process alternatives have been devised while obtaining the desired marketable product slate. The status of required process units has been evaluated. While there are some units that need to be designed and fabricated, the upstream process units are in place to proceed with the process plan. Separations have been completed and analyzed on three of the four shale oil fractions. The extraction work on the heaviest fraction has run into difficulties due to equipment design limitations. Modifications are in progress to rectify this problem and to complete the planned work. The separations and analytical work on the middle distillate fraction (275-400 C) have been completed. The solvent system has performed as expected and will be used in the pilot system in phase-II. The work on conversions task has steered in the direction of using thermal hydrodealkylation (THD) process to dealkylate polar fractions. The THD process is expected to yield low molecular weight polar compounds/concentrates that are suitable for market needs. The design and fabrication will be initiated in the next quarter. The analytical procedures and characterization task is in the final stages of refinement to complete the software as expected. The Z-BASIC software, eventually, will be used to monitor separations by tracking compound types or z-types. Present modifications are expected to provide z-type distributions. The decision-making routines need further refinement. The progress of the development work slowed a little during this quarter due to work load demand from other projects. However, serious efforts will be made to meet the original project schedule.