Stephen E. Pirnat - Chairman and Chief Executive Officer James N. Harmon - Chief Financial Officer Geoffrey D. Osler - Chief Marketing Officer.

Joseph Pratt – Stifel Nicolaus Carter Driscoll - H.C. Wainwright & Co. Lou Basenese - Disruptive Tech Research Benjamin Padnos - DONE Ventures.

Greetings and welcome to the ClearSign Combustion Corporation First Quarter 2015 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. As a reminder, this conference is being recorded.

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; Jim Harmon, Chief Financial Officer and Geoff Osler. I will now turn the conference over to Mr. Harmon.

You may proceed..

Thank you everyone for joining us this afternoon. Before I turn the call over to Steve, I would like to review the numbers as they’ve been reported in this afternoon’s press release. For the first quarter of 2015, we recorded a loss of $1,583,000 compared with a loss of $1,646,000 in the first quarter of 2014 a decrease of $63,000.

Our research and development cost decreased by $34,000 to $573,000 and our general and administrative expenses decreased by $21,000 to $1,019,000 these decreases were due primarily to decreased consulting cost for the quarter. To our cash resources we had $16.2 million of cash at March 31, 2015.

We greatly enhanced our cash position in February 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'll turn the call over to Steve..

Thank you, Jim, for walking us through the numbers. As many of you know I assumed the role of chairman and CEO earlier this year after three years as an independent Board Member of ClearSign.

Now after almost five months as CEO, I'm more excited than ever about ClearSign’s unique game changing technology and I remain very optimistic about the company’s future. Today I'm pleased to report several significant commercial milestones that have taken place recently.

I believe these events will move the company forward towards a solid commercial footing in the future. We have completed our field demonstration at Aera energy and we're in the process of moving to production.

During this field demonstration, we were able to validate that Duplex technology can meet the regulatory requirements of 5PPM NOx than the San Joaquin Valley which of course is among the most stringent in the world, but even more significantly we were able to show a meaningful reduction in energy consumption.

Specifically we demonstrated with the help of Aera an efficiency improvement due to Duplex Technology’s superior radiant heat transfer characteristic combined with a reduction in electrical consumption due to the elimination of Flue Gas Recirculation and the associated blower horsepower.

As a result of the performance at Aera, we just received the contract from another oil producer in the Bakersfield area.

With over a 1000 once-through steam generators in operation in North America, we are confident that the enhanced oil recovery space will be an area for growth for us based on the compelling value ClearSign can provide as compared to other customer options.

Clearly the ability to reduce emissions and reduce energy consumption is a win for both our customers and the environment and a strong indication that our game changing technology will gain traction within our served markets in the long-term. This extraordinary performance is getting a lot of attention in the industry.

As a result of our performance in California ClearSign was invited to present our technical results to environmental regulators in Texas on May 7 and the reception we received was unprecedented As a hub of the refinery activity in the United States and a leader in environmental quality, Texas is responsible for refining 26% of the nation’s gasoline.

This is a very important market for us and further proof that word is spreading not just in California, but to other regions such as Western Canada about our unparalleled Nox performance. Last month, ClearSign was privileged to host 18 senior technical experts from the American Petroleum Institute at our headquarters in Seattle.

The API members who represent most of the major oil companies in the world were able to visit our labs and see a demonstration of our Duplex Technology first hand and get a technical briefing from our research and business development staff at ClearSign.

The dialogue among the participants was very productive, and interest among the API members was keen. There was particular interest in Duplex Technology’s ability to eliminate flame impingement within process heaters thus de-bottlenecking critical assets and reducing mechanical de-cocking and other operational costs.

One of the attendees Jacques Dugue from France's Total Refining and Chemicals Division. Jacques is the leading expert in fired heaters for refineries worldwide and heads up several API committees.

He has been following the development of Duplex closely and told us he is looking forward to the possibility of implementing this technology on a more broad basis. Of course it generally takes months to properly coordinate and schedule shutdowns for a refinery heater.

Nevertheless, the Refinery and Petrochemical segment is a significant opportunity for ClearSign.

We are very encouraged by the positive feedback we have received from API members and also believe that the successful installation at the two refinery projects already in our trial order backlog will build further confidence and interest in Duplex Technology for refinery applications. Before I wrap up and move to questions.

I would like to thank our investors for their commitments and their appreciation of the game changing technology and the company that we all are working to build. At this point I would be pleased to answer some questions..

We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Joe Pratt with Stifel. Please go ahead..

Yes, could you just bring up to date on Aera project, I know it’s being tested; how long might that go on before they make a decision?.

Bringing up to speed on Aera, we have successfully completed the demonstration testing as I just discussed and I have also been able to prove that there has been meaningful reduction in the use of energy associated with our technology.

Aera of course has multiple units in the field, particularly in the Bakersfield area and indications are additional equipment will be purchased at a time that's appropriate for their budget and their schedules. So we've had a good result from Aera and we are looking forward to some additional business at some point..

Okay, thank you..

The next question comes from Carter Driscoll with H.C. Wainwright. Please go ahead..

Good afternoon gentlemen. Thanks for taking my question.

I realize guys are essentially pre-revenue, but I'm trying to get a sense of two things, one of which is the near-term opportunity of the market you just have been talking about and enhanced oil field recovery and then trying to think on a per unit basis or per installation basis what the revenue opportunity is, just trying to bracket or quantify monetarily the opportunity in front of you as it unfolds over the balance of the year after the success with your Aera project..

I mean, I think I mentioned there is approximately a thousand once-through steam generators used throughout North America in the enhanced oil recovery market and of course depending on the nature of the application, the size of the unit, each unit would involve a retrofit of the Duplex product which has a wide variety of contract pricing for us depending on the scope of what we could do, I mean the projects could be transactionally as small as $50,000 and could be as high as $350,000.

So to take that and extrapolate it for some meaningful revenue stream would be pretty difficult..

Right, well no but $50,000 to $350,000 is very helpful obviously given the number of units that you just talked about so at least for that particular segment that provides pretty sizable opportunity there alone.

And then the next question is, how important is it to have third-party verification of your technology if at all and are you pursuing that, if so and who is particular parties would be that you think are the most respected within certainly the [indiscernible] the recovery sector itself?.

Well third party verification like something like Underwriters, Laboratories or Factory Mutual Research isn’t typical in the oil and gas, petrochemical industry.

The verification process which is quite rigorous is generally done with the end user themselves and of course in the case of Aera as you probably are aware took many months to get the units installed and running instrumented properly and then reduce the data in a way that allowed us to make the report we just gave.

Similarly installations that we have in our trial order backlog for some refinery customers in California will receive I believe equally rigorous analysis with respect to emissions and heat transfer efficiency and claim impingement et cetera.

When you get into the vertical markets associated with small boilers that's a case where having a UL/FM approval of the entire device, the boiler and the burner, will be an essential part of the marketing.

However, the partners we choose to participate in that business will actually do the overall UL/FM approvals, because they will do it with our burner technology in conjunction with their boiler. So that process will be done by our channel partner..

Okay. And of your most recent raise I assume a fair portion of that will go to build units for field testing.

Could you talk about the number of units you have now and how many are in the field and how many you plan to build to deploy at specific test say over balance of the calendar year or some…?.

As just stated we currently have two trial orders in our backlog plus the additional contracts we just received for another once-through steam generator.

We are anticipating a combination of not only additional trial orders, but also commercial orders in the area around the once-through steam generators we’re expecting like we just received the commercial orders for the products.

So the orders will be transactionally a sale not necessarily a demonstration order where we would have to take working capital and use that to fund per se the building of a demonstration unit..

Got it.

So I guess I was trying to at was there are significant number of demo units out there today that can tie up working cap as you transition on the commercial side obviously than just [collection issue] [ph] more than any else? Does that [indiscernible]?.

That's essentially correct..

Okay. All right. I will get back in queue. Thanks gentlemen..

The next question comes from Lou Basenese with Disruptive Tech Research. Please go ahead..

Hi gentlemen, thanks for taking my questions and congrats on the first order..

Yes. Thank you..

Had a quick question for you on the two refinery projects that are in the backlog can you just give an update on where the timing might be with those?.

We’re probably a couple of months away from getting the units installed and running and we are ready to go right now; the schedule is more a byproduct of the availability of the asset within the refinery and their willingness to give us access to it.

The situation really shortly is this as you know there was a refinery strike which created some gasoline shortages nationwide and then there was another incident with a refinery in California which created a little bit of gasoline shortage.

So a lot of the refineries in California rightfully so have kind of put all their efforts into trying to keep up with demand so the shortage didn’t occur and as a result of that our access to some of these assets to install this demonstration technology has been delayed..

Okay.

Also just if you could on the pricing range the 50k to 350K, is the 50K the low end, is that for a single Duplex in a process heater and then is the 350K indicative of the once-through steam generator market or is that range just for the once-through steam generator market?.

Well it could be both, I mean depending on the scope and size of the once-through steam generator and when I say scope how much we provided and how much we subcontract on a small once-through steam generator it could be a $55,000 or $60,000 transaction again all the way up to $350,000 perhaps more depending on the scope and size.

Similarly on a process heaters it would depend on the number of burners and the size of the heaters and whether the heater is a vertical cabin or vertical cylindrical furnace or the complexity and type of the heater.

So the pricing range I think for most markets would fall within that range Lou, but you really need, unfortunately, really need the specificity around the application to nail down the price..

Right, so I mean I am just thinking in the San Joaquin Valley there is a lot of 62.5 million btu units, would that be on the higher end or somewhere in the middle, just trying to get an idea where some of the average size is in the valley, and what that might mean revenue potentially..

I’d have to go and pull out the report that I think you might have seen that shows the inventory of all the heaters in the San Joaquin Valley and count them up and figure that out. So I don’t know off the top of my head..

No, fair enough. One more question and I’ll jump in the queue if I have any others.

Just if you could, could you give us an update on, now that the Duplex is commercializing on the ECC technology and any milestones we should be tracking on that front?.

I’m sorry, you were speaking specifically of the ECC technology..

Yes, on the ECC technology, now that the Duplex is commercializing?.

Yes, I mean. Clearly, Lou, we have more resources to focus on ECC and we’re actually conducting experimentation and tests on ECC while we speak.

There will be some discussions shortly about adding some staff to our research and development organization that will be working with Joe Colannino and of course the basic premise is that if you want to go faster, you got to get more smart, experienced technical guys to help you..

Great. I’ll jump off in the queue. Thanks..

Yes. Thank you..

The next question comes from [John Laer with Laer Investments] [Ph]. Please, go ahead..

Steve, just a quick question on patents.

Can you give us a rough clarification of how many patents have been applied and of those how many been approved?.

There has been three approved and has been, that 160 applied for..

And three approved?.

That’s correct..

Now these are all worldwide patents, right?.

Yes..

Okay. Thank you..

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

First of all, congratulations on the first order that’s a great milestone.

When I read the press release, indicated that part of the adoption in terms of efficiencies, yes that’s a great thing and it’s going to make sure that people are adopting this technology versus additional flow technologies, but I’m wondering, is there enough of a gain there efficiency wise to drive more adoptions of these facilities of the Duplex file systems, without EPA, entry seem the level of their EPP particular curb standards or we pretty much depended upon that both here and yes, the question extends itself to China as well.

Thanks..

If I understand you question correctly, the Duplex technology has the duel of the energy reducing emissions and reducing energy consumption.

The idea application of course is situations where environmental quality and reduction in emissions is an essential part of the decision making to buy the technology, it would be, if you had no requirement for reducing emissions they would be depending on the application, a fundamental economic payback to the efficiency and fuel savings.

But that would of course be specific to the cost of fuel, electricity and the region and the nature of the application.

So if the question is, could people conceivably buy Duplex technology independent of our requirement for emissions, that is possible but it’s more likely given the huge opportunity for reducing emissions and the demand for that type of technology that people would buy it as emissions reduction strategy and benefit from the fact that they are going to a get a cost reduction..

Okay. Thank you.

And how is the progress with the partners in China that they mentioned previously are we making any progress in that market?.

Well, I’m not sure specifically what are you are referring to but we’ve had a lot of discussions with different people in China, who as you can imagine given their tremendous pollution issues are very excited about Duplex and ECC.

We’ve chosen to focus our resources on efforts in the United States to get greater confidence in the technology in the field before we go too aggressively into the Chinese market. So we are going where the opportunities seem to be the most beneficial first..

Well thank you very much and congratulations again, very good work..

Yes, thank you..

The next question comes from Benjamin Padnos with DONE Ventures. Please go ahead..

Good afternoon guys and I'll share the sentiments of congrats, I have been investor since the early first money I think in early 2011, so to get a first order is a big milestone and you should be commended.

Question just is a little bit around kind of the market size you addressed 1000 steam generators in the United States and obviously the international opportunity.

Could you talk a little bit about just the competitive landscape, how we compare to whatever else they are thinking about and any other thoughts you just have on things that will expedite sales cycles, the regulatory environmental things. I'm hearing California where I think of is lots and lots of environmental regulation.

So just on a high level like what cost savings we give that $50,000 to $350,000 price point, what's the payback for those guys, what their alternatives are, who are competing against for these markets? Thank you..

Well, okay the 1000 once-through steam generators is a number for North America.

The second answer to your question was with respect to what their alternative are, they currently have and can use existing low emissions burners, but the low emissions burners that they are using have a cost penalty typically associated with Flu Gas Recirculation which has the double cost of heat transfer inefficiency and then of course the cost of running an electric motor to circulate the flu gas and the economics of course favored the Duplex technology.

It’s difficult without specific sizes and technical data to kind of come up with a payback so to speak because this is very situational with respect to mechanical retrofit piece of it and the consumption piece, but the fact that with Duplex technology there is in fact a payback, it makes our technology unique, because there really isn’t a payback to the other technologies available.

In addition to of course existing low Nox burners, people in this space could also use what's called the selective catalytic reduction that tends to be very expensive as a energy consumption piece and also the challenge of requiring a significant amount of additional real estate, which might not be convenient in some of these applications, particularly within refineries in areas in areas that have a limit to the amount of room they have and SCR is really not a practical solution at all..

I guess where I'm trying get to in thinking about it is, if there is a 1000 in North America, what kind of market share we could potentially get, is it something where every single one of them needs us?.

The principal driver in this is the environmental situation and of course the units in California which they are over 400, I would say clearly those are very high potential opportunities for us.

There is several hundred in Western Canada and the regulations in Western Canada are favorable to using our technology, but they are situational and there has been some roomers although I doubt whether this will materialize that the Canadian government is thinking about delaying some of the emissions reduction targets, because of the drop in the price of oil..

Got you, got you..

So the answer to your question is based on the economic value delivered, it’s reasonable to assume that all 1000 units would be good potential customers for ours, but the actual opportunity is going to vary situational by the company and the geography..

Great. That's it from me. Thanks again guys, I appreciate it..

The next question comes from [Erick Richardson] [ph] a private investor. Please go ahead..

Hey, guys. Congratulations on the order.

I just had a question regarding the I know there is a 1000 potential customers for the once-throughs, but can you talk a little bit about the total market including the refining space and what the potential for ClearSign to get of that market is?.

Well, as reported on many occasions the total market for ClearSign is billions of dollars.

And the market varies by segment, the refinery space, commercial boiler, power boilers used in utilities, the coal fired market for ECC, the market is quite large, I mean it’s as we said I think consistently since the founding of the company the addressable market is very large and the company’s position is well protected and now pretty well proven in terms of its uniqueness and IP..

Great, that answer it. I just wanted to clarify it’s more than 1000 once-throughs. Thank you..

Yes..

The next comes from [Jim Finerty] [ph] private investors. Please, go ahead..

Hello, I was wondering what kind of information do you expect to get from these next trails that you don’t already have from the existing trail and how will that impact your ability to market the product going forward..

Well, we’ve respected it. Once-through steam generators, we’ve gotten very comprehensive data from our testing at Aera and we don’t expect really any additional information in that particular application.

In the case, two trail orders in our backlog for refinery, I think the industry wants to see how the burners behave in a up fired vertical, cylindrical furnace in a refinery.

Again we have an extremely high level of confidence based on the laboratory testing we did here and the actual results we got from Aera that they worked really well in this application, but what clients want us to be able to verify is it they operate properly in a refinery application, there is no burner bother interference which we think is a real attribute of our technology and then we can fire the burners at full heat release and not have any flame impingement issues.

So the refinery industry rightfully so is very diligent, very thorough and wants to make sure that they have a lot of comprehensive data first and before I think the technology reaches a tipping point where people just say, yes, works and there is 20 of these things out in the field working and then it’s kind of a no brainer..

Is there any issue on the longevity of the systems, I mean have they run the thing long enough to be confident that - and what is the life expectance of one of these systems?.

Well, we’re estimating a little bit based what we think the life of the refractory is, but ten years would be a reasonable judgment, but we don’t have any units running two years, so again lot of this is based on data we get from the suppliers of the material.

Again, I would be surprised if it’s not ten years, but in terms of having accelerated testing, we’ve done some of that, it’s very difficult unless you really got a unit in operating to you know exactly how long it will last, but it wouldn’t surprise me if it is 15 years frankly..

Now what’s the business model going forward, will you manufacture any of these systems or will that be all outsourced or you will licenses this technology or how we actually commercializes going forward?.

Yes to all of those..

Yes to all them?.

Yes. We will license that technology, we have done some outsourcing and we have done a modest amount of in-house fabrication and design..

And it seem to and I’m no expert in the industry so I apologize for that but when I first heard about the company, it seemed to me that the opportunity for the ECC Technology in the coal fired space was probably the largest opportunity ultimately, particularly given the Chinese situation.

Is that in fact the case and where are you in terms of that technology and when can we expect to see or what should we expect there in terms of moving on to the trail stage and as you have with the Duplex?.

Well, the Duplex technology is we just alluded to is also quite a large opportunity for us both here and in China. We have as much interest in China for Duplex technology within the refinery businesses we've had enquires for ECC technology on coal. That said I agree forwardly that ECC is a tremendous opportunity for solid fuels in coal.

We continue to work through our research labs to develop the technology further and it will be difficult to say at this point when there is going to be a field demonstration of the ECC technology, but we’re still very excited about what we’ve seen so far in the labs and very optimistic that we will commercialize the technology, but I would be reluctant to a data and time on it..

And my final question, is I know it’s early on and there is a lot of moving parts, but how long, how far would you expect your existing cash to take you..

Yes. We’re estimating it will be over two years..

Great. Well, thank you very much and I echo what others have said. It’s been a tough stock to own for the last six months, but for those of those that have gutted it out, it was worth the wait and congratulations on moving the wall down the field..

Yes. Thanks. Since there are no further question; I would like to thank everyone, once again for attending today and figure ongoing support and enthusiasm. We are very focused and excited here at ClearSign, I’m looking forward to reporting more in the quarters to come..

Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation..