Steve Pirnat - Chairman and CEO Jim Harmon - Chief Financial Officer.

Rishi Jain - Dentonia Park.

Greetings and welcome to the ClearSign Combustion Corporation 2014 Fourth Quarter and Fiscal Year 2014 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

[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 corporations’ projections, expectations, plans, beliefs and prospects.

These statements are based on judgments and analyses 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 are described in ClearSign’s public period 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 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. On today’s call will be Steve Pirnat, Chairman and CEO of ClearSign Combustion Corporation; Geoff Osler, Chief Marketing Officer and Jim Harmon, Chief Financial Officer.

I will now turn the conference over to Mr. Harmon. You may proceed..

First, a one-time charge of $943,000 related to the cost of separation under an employment agreement with our former CEO. This cost is to be paid out principally over 2015 and 2016. Second, a $350,000 increase in business development and marketing efforts.

And third, the abandonment of $262,000 of pending patent cost, resulting primarily from a reevaluation to focus on cost beneficial jurisdictions and patents. This resulted from our normal quarterly review of our patent strategy in order to best rationalize our efforts by focusing on our more valuable intellectual property.

At December 31, 2014, we had $2.4 million of capitalized intangible assets whereas we had $1.5 million at the end of 2013. As to our cash recourses, we had $1.8 million of cash at December 31, 2014.

We greatly enhanced our cash position earlier this month when we completed an underwritten public offering for 2,990,000 shares at $5.85 per share to raise net proceeds of $16.3 million. With that, I’d like to take a moment to introduce our new Chairman and CEO, Steve Pirnat.

For those of you who haven’t had a chance to meet him in person yet, Steve served on the ClearSign Board for three years, serving on all of its committees including Chair of the Audit Committee and is very familiar with ClearSign as a Board member.

He brings a wealth of experience and operational knowledge to ClearSign in our target market, the energy supply and services sector. Steve was a long time executive of Ingersoll-Rand and a successor company Ingersoll-Dresser.

For over nine years, Steve was CEO of one of the world’s largest industrial combustion companies, the John Zink Company, which is a division of Koch Industries.

Most recently, Steve came to ClearSign from the Quest Integrated group of Team Industrial Services, a New York Stock Exchange listed company where he was the Managing Director for Europe, the Middle East and Africa. Quest Integrity was a spinoff from John Zink and Steve served on the Quest Board prior to the sale of Quest to Team Industrial in 2010.

Quest provides advanced inspection services and engineering assessments for combustion related assets like fired heaters and boilers which are a target market for ClearSign. Steve has a Bachelor of Science Degree in Mechanical Engineering from New Jersey Institute of Technology. Steve grew up in North Jersey where we met Betty, his wife for 39 years.

Speaking on behalf of our entire management team and many of you listening today, we’re very excited to have Steve join us here at ClearSign as our CEO. And with that, I’ll turn the call over to Steve..

Thanks very much for the kind introduction, Jim and for taking us through the numbers. Before I begin, I would like to say how excited I am to be at ClearSign. I’ve spent three decades in the energy and process industry and over a decade involved in combustion space.

These industries are methodical and diligent in evaluating and adopting new technology. Nevertheless, I’ve seen a lot of enthusiasm and interest in ClearSign’s technology among my many colleagues and customers. ClearSign has the potential to fundamentally improve the economics for providing low emissions combustion solutions to the industry.

The chance to help bring something to the market that not only makes economic sense for a major global industry but might make a real difference in the quality of air around the world. Well, this kind of opportunity comes along maybe once in a career, I certainly could not pass out something like this. And we’re off to a good start in 2015.

Last Tuesday, we announced a major milestone at our field demonstration at Aera Energy. We have achieved the project’s objectives of 5PPM NOx on a Once-Through Steam Generator used for Enhanced Oil Recovery at Aera’s Belridge field operations outside Bakersfield, California.

This is an important announcement for us because we have now demonstrated ClearSign’s Duplex technology operating under field conditions at a truly commercial scale of 42.5 million BTUs an hour and at a location that has among the most stringent NOx emission standards in the world.

And we have achieved this performance in a cost effective manner without costly Flue Gas Recirculation or selected catalytic reduction. Further, we have done it while consistently maintaining steam capacity and steam quality required by Aera for its field operations. We’re continuing our test at Aera.

We’re pushing further testing to investigate various parameters including firing at higher rates, using various Duplex configurations and addressing customers’ requests to investigate a range of possible product installations in order to expand the Duplex acceptability in these applications.

Clearly, we’re excited about the upstream market for Once-Through Steam Generators. There are literally hundreds of these units in California and in Western Canada and we’re looking forward to sharing our ongoing results and the insights gained from our field test with the industry.

Additionally, we have had numerous requests from other operators in the upstream and downstream markets to visit these installations and see the performance of our Duplex Technology first hand. We see the Aera installation as an inflection point among our customers to demonstrate and gain acceptance of our technology at a full commercial scale.

Another important oil and gas opportunities for ClearSign is downstream, and the heaters for refinery and petrochemical processing.

And the year is off to a good start with the announcement in January that two refineries have selected ClearSign Duplex technology for field demonstration in process heaters in the 12 million to 15 million BTU per hour range. These heaters are a common type cabin design which is the workforce at the refinery industry.

We look forward to testing our technology in the coming months and what we expect will be a very important market for the company. As Jim mentioned earlier, two weeks ago, we were pleased to report that inclusion of a successful stock offering, raising over $16 million in operating capital for the company.

Demand for the offering which we were able to price at very close to market price for our stock was strong including the full exercise of the underwriter over allotment option soon after close.

I am very pleased and gratified to see such strong belief among our investors in ClearSign’s future and we are looking forward to continuing to execute our commercialization strategy in the coming quarters with the strong balance sheet.

I am also happy to report that Jeff Ott, the CEO of Quest Integrity Group, has agreed to serve on our Board of Directors. Jeff brings deep financial and energy industry knowledge. And I know that he will be an excellent complement to the strong skill-set of the other board members.

Jeff was previously a colleague of mine in Quest Integrity for over five years and I am looking forward to working with him here at ClearSign. I know he will provide -- we will all benefit from his experience and counsel. Jeff will replace me on the Board as an Independent Director and share the Audit Committee.

Looking forward now, I’d like to take a few minutes and talk about our industry and to provide some insight into ClearSign’s commercialization strategy. As I noted earlier, the industrial and commercial boiler and oil and gas industries upstream production and downstream refining are an immense opportunity for the Company.

ClearSign will continue to promote our technology through direct engagement among industry’s key decision makers and through trade associations. While this is a huge addressable market opportunity, these industries are by their very nature, methodical; intelligent when it comes to adopting new technology.

Our current process which is typical of the combustion industry is to develop and test our innovative technologies at a relevant size and capacity in our lab and then scale the technology and deploy or demonstrate it on a commercial or industrial site to validate its performance and economic benefits.

The process requires credibility and a close collaboration with our customers. Further, the process and the timeline will vary among clients due to the protocol for evaluating and adopting new technology as well as market conditions.

It should also be noted that after a customer agrees to a trial test of our technology then various permitting and requirements to access an operating asset can create challenges. This is of course independent of any field modifications or operational learning that will occur.

We remain very encouraged and excited and interested that building the market based on our unique technology. Despite these challenges, once you have validated technology in the field and words begin to spread, momentum gains within the industry, success builds on success.

Finally, before I wrap up and move to questions, I just want to take a moment and thank our investors for their continued support and enthusiasm for ClearSign. Again, I share their enthusiasm and excitement for the Company and its unique technology. At this point, I’d like to open the call to questions..

We will now begin the question-and-answer session. [Operator Instructions]. Mr. Pirnat, the first question comes from Rishi Jain from Dentonia Park. Please go ahead..

Hi, Steve and the rest of the team. What I was hoping to figure out is maybe get your thoughts on how things look on a forward basis.

One, how many installations do you believe we will have by the end of the year going? And then two, when do you believe the refinery installations that we have signed will begin or should be completed in terms of events actually being up and running? And then the final question I have is when do you believe the decision on the Aera contract will come about?.

Okay. Taking a one at a time, I think it’s difficult to predict how many commercial installations we’ll have in the upcoming year.

The pipeline with opportunities is going quite rapidly but variables like for example the current strike we have in the industry has already delayed one of the installations because the particular refinery can’t take the asset at a service because they’re trying as hard as they can to make the shortfall in gasoline in the industry.

With rest to Aera and the further commercialization of those contracts, we have agreed to do some additional testing and probably more importantly the economics behind Aera moving forward is the determination that they have to make based on a lot of variables including of course the price of oil..

Okay. Thank you..

[Operator Instructions]. The next question comes from Alan Grachak, [ph] a private investor. Please go ahead..

I was wondering whether you’re exploring opportunities for the technologies utilization outside of the refining industry.

Have you had enquiries from other applications?.

Yes, we have, of course. Outside of refining, we have the production market which is an example by Aera; it’s enhanced oil recovery. We have also gotten enquiries from thermal oxidation clients and even in the steel industry we’re looking at some options.

But frankly, we’re trying to remain focused on where we see the biggest opportunities in the shorter cycle time, and those are clearly commercial and industrial boilers, once-through steam generators and then the process industry, refinery and petrochemical..

Thank you..

The next question comes from Bernt Preston, [ph] a private investor. Please go ahead..

Hi, gentlemen. Question for you, looks like all the projects you are currently addressing are with the Duplex tile technology.

Any progress on testing with the electro combustion technology, the ECT?.

The testing of ECC technology is ongoing. We have continued to make progress there. We had some challenges with respect to scaling the technology over the last few months. But we’re very optimistic that some of the testing we’ve done in the last few weeks will help us overcome those challenges.

But that’s again a key piece of our platform strategy and something we’re very focused on..

Thank you..

And at this time, there appear to be no other questions. And we do have a question that has just come in from Bernt Preston. [ph] Please go ahead..

Thank you.

As a follow-up, any timeline in terms of when you think you’ll get your first commercial contract, rather than the demonstrations of what you’re doing right now?.

Well, some of the terms for the contract that we’re currently negotiating have embedded in the concept that if this technology is successful, then they would convert it to a sale. So, I would expect to see that within a year. I am not in a position to really discuss the size of the number but I see that happening..

Great..

Okay. Well, since there are no further questions, I’d like to thank everyone once again for attending today and for your ongoing support and enthusiasm. We’re very focused and excited here at ClearSign and I am looking forward to reporting more in the coming quarters. Thank you very much..

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