Geoffrey D. Osler - Chief Marketing Officer Richard F. Rutkowski - President and Chief Executive Officer James N. Harmon - Chief Financial Officer, Secretary Joseph Colannino - Chief Technology Officer

Jim Mcllree – Dominick & Dominick Brett Conrad - Longboard Capital Advisors

Greetings and welcome to the ClearSign Combustion Corporation Inc. 2013 First Quarter 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. This call will include forward-looking information and statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events that are based on management’s belief, as well as assumptions made by, and information currently available to, management. While we believe that our expectations are based upon reasonable assumptions, there can be no assurances that our goals and strategies will be realized. Numerous factors, including risks and uncertainties, may affect our actual results and may cause results to differ materially from those expressed in forward-looking statements made by us on our behalf. Some of these factors include the acceptance of existing and future products, the impacts of competitive products and pricing, general business and economic conditions, and other factors detailed in our Annual Report on Form 10-K and the other periodic reports filed with the SEC. We specifically disclaim any obligations to update or revise any forward-looking statements whether as result of new information, future developments or otherwise. It is now my pleasure to introduce your host, Geoff Osler, Chief Marketing Officer for Clearsign Combustion Corporation. Thank you, Mr. Osler. You may begin.

I would like to introduce our CEO, Rick Rutkowski who will take the call.

Thanks everyone for joining us this afternoon. We have with us Jim Harmon, our Chief Financial Officer; and Joe Colannino, our Chief Technology Officer as well as Geoff Osler, our Chief Marketing Officer today. I’m going to ask Jim to report the numbers as reported here in the press release. I will say just in terms of broadly characterizing, we are largely on plan in terms of first quarter operating expense. We are under in a couple of different capital budgets, but those are predominantly timing differences. But in general we’re tracking to plan as far as finances go and overall operating expense staffing. I think we’ll come back to where productivity is running at or ahead of schedule with regard to the investments we’re making and of course that’s what we’re very much focused on. And I think we can put some context around that for you. Go ahead, Jim.

Thanks Rick. This is the peas and carrots of the report here. The excitement is to have drawn done here in two minutes. Since we are a development stage company, we have no revenue as of yet and are obviously in the works of moving in that direction. But let me report on what happened with regards to our costs. The biggest difference for us was that we had completed our IPO a little over a year ago, last April and as a result our Q1 in 2012 is substantially less than our Q1 in 2013 because we have substantially more resources this time. So our loss this quarter was $1.357 million, compared to a loss a year ago of $865,000. So that’s a $500,000 difference. It’s made up of two major components. One is on the research and development side. We increased our R&D spend by about $200,000 of which $143,000 was increased compensation because of a headcount increase and $35,000 was depreciation increase because of our significant capital expenditures last year in terms of getting our labs set up and being depreciated. And then on the G&A side, our costs went up approximately $300,000 which is about the amount that it is costing us to be a public company at this stage and obviously we didn’t have any of those expenses a year ago since we weren’t as of yet public. On the balance sheet side of things, our cash balance stands at $6.655 million. As Rick pointed out we’re on plan overall as we’ve been advertising of our OPO. This cash will last us at least through April of 2014 and as I said we continue to be on plan with regard to that. Rick, I’ll kick it back to you.

Sure. So with regard to cash balances, again the goal as we go forward here is to book additional development contracts. The Grandeg contract which we expect to complete within this calendar year would offset cash burn rate to the extent that we sign another agreement and deal against those, that would be an offset as well. We don’t anticipate a significant increase in fixed costs. I believe we other than budgeted adds for this year which are not significant. We have just a small planned headcount. So by and large we are in line with our budget and expectations. Cash position is actually a bit higher again because of timing on some capital expense, in particular some associated with patents where we’re achieving a very high level of productivity. And I think productivity is really the theme. As I look back at the first quarter, it was a time of really pretty significant advancements, two in particular that we reported on, one of which was the development of a power supply which has significant advantages for our application as compared to the power supplies that we’ve been using in the laboratory. So in particular dramatically reduced costs. We have historically used systems that require 40 to 50 kilovolts and cost about $1,000 per kilovolt and the system that we have developed we believe can be produced in small volumes for a small fraction of that cost. The impact of that of course is to make our system more affordable and or more profitable for our partners and customers alike. So we think there’s a benefit to be enjoyed by everyone here. Also this opens up new applications for smaller systems. And of course I like to point out that given a $50,000 power supply; something like the Grandeg opportunity would likely not have been possible. It’s less of a factor as we get into very high value commercial and industrial systems, but in terms of higher volume applications which tend to be cost sensitive, that’s a significant development in that regard as well. There are some significant improvements with regard to safety. The new power amplifier is designed to be an (inaudible) power amplifier, meaning that it can go from peak voltage to zero voltage virtually instantaneously without any capacitance and that can make all the difference in the world in terms of safety as well. So this is a significant enabling innovation and I think indicative of the kinds of things that suggest that we are moving towards commercial products based on our technology. Another very significant development during end of last year and into the first quarter when we first demonstrated and reported activity is the Duplex burner architecture wherein we have a two-tiered flame holding structure and we are able to collectively move flames from the first to the second level. That allows us to increase the distance from the gas nozzle to the point of ignition and that in turn allows for substantial additional mixing of both flue gas from inside the furnace and air which allow us to have a combination of a very short flame along with ultra-low NOx emissions. We reported 8 parts per million. We can do this without recirculating flue gas externally and that of course saves substantial fuel efficiency and we can also achieve this effect while using low oxygen or excess air. The target is to be in the 2% to 3% regime and that’s where we’ve been doing most of our work. So this we think is really potentially groundbreaking because what I’ve just described really breaks the rules of conventional combustion systems design, the ability to combine very, very low levels of NOx with a short flame, the ability to combine very, very low levels of NOx with no external flue gas recirculation and very well excess air simultaneously. That translates into significant economic advantages that express themselves as gains in energy efficiency and in many cases the realigned share of the economic advantage. This was certainly the case in something like refinery heaters can be expressed in terms of actual increased production output or process throughput, meaning that by producing a better flame shape and flame pattern, we can increase the thermal output of the heater and therefore the unit capacity. And we’ve done an analysis of this in conjunction with prospective customers, prospective partners as well as third parties that we engage, process heater specialists from major oil companies to review this analysis. And the assumption set that emerges if you can improve process throughput by low single digit percentages in the 3% to 6% or 7% range, that that could increase cash flow at 100,000 a day refinery on the order of $12 million to $25 million annually. We’re happy to revisit that analysis. I think we’ve been suggesting for a while that we will publish this. We will do it as we get a lot of competing priorities. But then it really helps us connect the dots from improved plan shape to increased value. So this is a very significant value proposition. And as we say here in the press release, we believe that this combination of features, the ability to combine these kinds of very aggressive NOx numbers with no external gas flue gas or short flame, low excess air and what we call a high turn down ratio is really unprecedented and has significant and compelling economics associated with that. So needless to say, that’s a terribly exciting prospect for us. I think it’s equally exciting for some of our partners who can gain from the competitive advantages of our technology as well. I’m delighted to report as our sub headline here emphasizes, that we had previously indicated that by June 30 we should be able to achieve 5 parts per million of nitrogen oxide emissions. We will in fact report that well ahead of that date and have now raised the bar targeting the next milestone, two parts per million. We will report progress along the way because there’s a lot of reduction between 5 parts per million and 2 parts per million in percentage terms. But the thing to note here is that these are aggressive and unprecedented numbers. We think we’re attracting already substantial attention from many segments of industry based on this and we expect that over time the regulators will begin to pay attention and that a longer term strategy for us would be to pursue or consult technology if we’re able to achieve these kinds of performance milestones. So that’s a major development in terms of franchise opportunity as well as the intellectual property protection that goes with the Duplex burner architecture. So do stay tuned. As I said we will be reporting these reports. In parallel we’ll be scaling up the technology and it’s fair to say that we have a high level of interest. In particular the categories or field of use market segments that would be relevant in the near term for this architecture would be in package boilers where we would embody the Duplex as part of what’s called a fire tube setup using a (inaudible) tube and also refinery heaters. Those are the near term segments. But it’s fair to say generally speaking that the architecture can be applied very broadly across multiple segments and in fact we believe has longer term implications for even high volume systems like residential systems which are not currently regulated for NOx emissions, but again in the future may well be. And a good bit of that has to do with the availability and affordability of technology. So as good emissions technology becomes available, proves itself to be cost effective, that’s what then allows us to take regulations to more aggressive standards. And we believe given the promises this architecture that we may be a support front of that effort. Another very important development, as I mentioned this is a very rich and productive time for our R&D organization was the construction and installation of a solid fuel system that will allow us to reproduce very compelling and encouraging effects that we have seen in smaller scale systems with regard to suppression of particulate, ultra-fine particulate carbon monoxide and other species and to scale those up and replicate those effects in a larger commercial and industrial scale system. The system that we have will accommodate up to 1.2 million BPUs per hour per square foot and resembles very closely many of the commercial systems in existence. We will as a starting place begin work immediately upon signing with our partners at Grandeg in Latvia and we’re extremely excited about that partnership because again this is a company that is known for both innovation and quality and we think is addressing an exciting market in Europe and preparing to we think enter the U.S market. And we believe that our technology can provide a significant market advantage in that market entry. So that’s an exciting collaboration to us. We also have a great deal of interest in other categories relating to solid fuel principally waste to energy, also called energy from waste. And as we get into conventional industrial scale users of solid fuel for its product industry, things of that nature, that interest is abiding and continues to be strong. So our focus again for those of you who are newer to the company is we really try to in approaching an application or a market segment, ensure that we have multiple constituencies in support of the technology and enlisted in the process and those would include not just prospective partners but also the identification of prospective launch customers early in the cycle. Because we want there to be a level of ownership with the actual customer requirements and specifications as we go to market. So this is an exciting prospect for us. We have done some preliminary work with the scale up. It looks very good. You will hear more as we reach milestones in terms of and again the goals here have velocity with particulate carbon monoxide. Ultra-fine particulate is an especially hot topic these days, especially given the kind of crisis levels of air quality challenges that are being experienced in China, causing the shutdown of factories and other unfortunate circumstances. So we have substantial effort dedicated to scale up and to developing both retrofit and new design solutions related to solid fuel combustion systems. A significant milestone that we set for ourselves and articulated a year ago was to achieve a critical mass in the intellectual properties surrounding our technology. Our goal is to have 100 patents filed by March 31. We did in fact achieve that goal in that timeframe. We reported it a couple of weeks later than that and I think the number is in the low 100s now. I believe the last count I heard was about 104, 105 patents have been filed. In many cases as we’ve mentioned to you before, a single filing may represent more than a single invention. An office action will often split an application into multiple counterparts if the examiner views the inventions as being separate inventions. So we think 100 is probably a conservative number. But to us it really represents again a critical mass footprint in the category that’s been extended of course by our work with Duplex burner architecture. It’s been extended by our work in the power supply domain and we expect that there will be other such extensions as we continue to work in what has again proven to be a very rich domain with regards to novelty and novel approaches to design of combustion systems. We were fortunate enough to have our efforts and Joe Colannino’s efforts acknowledged by the conference in Monaco, the CleanEquity conference in Monaco where were humbled and grateful to receive a best in class in the field of environmental technology research from over 20 finalists who were all doing fascinating things and in fact I think had previously been selected from over 400 applicants. So that was a surprise and something again which we’re grateful and honored to be the recipient of. We did as I mentioned signed a letter of intent with Grandeg. I expect in the coming weeks that we’ll announce that we have finalized that agreement and are ready to move forward. We’ve already in preparations as I mentioned begun to work with the scale up efforts and the goal of that effort is to produce both retrofit and new build solutions for Grandeg that we think can be highly extensible within the solid fuels domain. In particular one of the things you’re probably hearing us do is talk in a more focused way about segments of the market. So I have mentioned refinery heaters within the refinery domain is a very significant market because there are multiple kinds of heaters. The process is a high value process involving very expensive inputs of very capital intensive and operating expenses in the sense of process that is then conducted to yield a very high value end product. So there’s an awful lot of economic leverage at play here in multiple areas of the refinery. In particular when you hear us talk about crude heaters or refinery heaters, those are on the front end of the process. So the ability to de bottleneck that process throughput can result in significant gains there. We’ve also motioned and I touched on previously that there are a broad range of commercial and industrial applications for Low NOx and Ultra Low NOx burners, including package boilers and process heaters of various types. And I think in particular there’s some new regulations pending in California, the south coast, their air quality management districts and in Houston, Texas that have really been presented a significant challenge for industry and for suppliers. So we think we’re adding a new trajectory to the curve of improvement for Ultra Low NOx burners and redefining potentially if we’re successful the state of the art in terms of the ability to achieve these kinds of NOx numbers without significant tradeoffs to energy efficiency. And again we’ll be reporting more on these as we go, but we do believe that we will be able to report 5 parts per million in short order. And during the current year we think we can get down to at least 2 parts per million. At least that’s our goal. The 5 parts per million already puts us in a very enviable position with respect to the industry. And again at the risk of being repetitive, I would emphasize that we can achieve these kinds of numbers without external flue gas recirculation and while keeping oxygen excess air at very low levels. The third area that we focused on is in solid fuels and this include biomass as well as higher derived fuels, other wastes and opportunity fuels and of course including coal. And we have interest from prospective partners in these various segments of the market. So we think there can be some good continuity there. So we have in each of these three cases defined validated with prospective customer partners and third party subject matter experts, the specific system requirements as well as the related economic benefit. It’s been really gratifying to see the strong level of interest and support. We are actively engaged with a number of these partners. Our goal is to close more development deals during the current year, addressing what we think are very significant market segments. And again we think with the kinds of results that we’ve been getting the competitive advantages associated with our technology are significant and will be a significant catalyst in helping drive those relationships. So I want to thank you for listening. We have the other members of the team here that I mentioned to answer questions. So we can move to the Q&A portion of the call.

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. (Operator Instructions) One moment please while we poll for questions. Our first question comes from Jim Mcllree with Dominick & Dominick. Please proceed with your question. Jim Mcllree – Dominick & Dominick: Rick, on getting to 2 parts per million, is that going to require -- well, let me ask it a different way. What will that require? Do you need like a third burner instead of the dual burner that you created or do you have to create a whole new something to get there?

We don’t believe so. We won’t know of course until we get there all of the tricks that we need to do. But at the moment the architecture appears to be robust and scalable enough that I don’t anticipate that we would need anything as meaningful as a third stage. Having said that, we have protected from an IP perspective a variety of different permutations as you can imagine. So I think it’s going to be really tweaking and dialing it in. I’ll let Joe maybe speak to that since he has a better idea.

Yeah, it’s a great question. The changes we’re anticipating are really more a matter of degree rather than time. So the platform that we have as Rick said is a robust platform. But there are differences that we would like to make when we get into things like train lengths and actual physical dispositions of geometric parts, et cetera. There’s significant room for optimization we feel just because we’ve converged on this solution relatively early in our investigation and we feel there’s more room to go. So I think that it’s unlikely that we’ll have to add the qualitative differences. There are more going to be some changes in quantity as we approach these lower emissions limits. Jim Mcllree – Dominick & Dominick: And my assumption is, is that going from 5 to 2 is a heck of a lot harder than it was from going to let’s say a big number down to 5. Is my assumption correct or incorrect?

I think generally and again I’ll let Joe give his answer as well, I think generally it’s the case with emissions that as you -- it’s the last 10% that takes 90% of the effort sort of thing. So you see the same trend with regard to particular, the difference required in terms of capturing or collection efficiencies with respect to ultra-fine particulate are geometrically lower than collection efficiencies with regard. And it starts to go non-linear at about 40 microns, even below 40 microns. So I think the same -- your assumption is a good one with regard to notch. But as you push further down the curve, at least with historical architectures, things have become dramatic when more challenging. If you look at the kind of effort, so people have achieved Low NOx numbers. They’ve typically done them at the expense of tradeoffs like dramatic increase in excess air for example. So we’re seeing some examples of burners where excess air can be dialed up to 8% or 10% in order to drive NOx down along with some other features of the burner. But that creates such a billowing effect and cools the air. It’s like heating a house with the windows open a bit. So Joe, maybe you can talk in general about these ideas on non-linear.

Yeah, I’d love to. Probably a good way to think of this as to the first order is to think of percentage reduction. So to go from 100 parts of a million to 50 parts of a million is about a 50% reduction. And that’s roughly the same level of effort that it takes to go from 10 parts per million to 5 parts per million. It’s the percent reduction that becomes more difficult or that scale I suppose. So it’s a lot easier as you noted to drop 10 or 15 parts per million when you’re starting at 100 than it is when you’re starting at 20. So as we go below five and hopefully get down to 2, those are 60% reductions and they’re going to take some effort to get there. But again we have confidence based on our past history that we will achieve those limits and I suppose time will tell. Jim Mcllree – Dominick & Dominick: And Rick, you also made a remark about, I’m not sure you phrased it, but the way I noted it was driving the regulations and by that I’m assuming what you’re talking about is that if you demonstrate to the regulators that you can do make up a number, 2 parts per million, then that’s what they’re going to put into law and that will become the bogey that all other manufacturers must meet. Is that what you were referring to?

Yeah. Obviously it’s not a process that we have direct control over, but that dialogue between regulators and industry very much takes into account available technology and even in the language that’s available control technology and it’s generally understood that available has some meaning it’s really available, that’s it’s available at least within the bounds of affordability. So I would be premature to prognosticate too much about that. But we think that path is available to us and the way you’ve captured the essence of it is correct that it’s a little bit of a chick and egg. Regulators have a target and it’s up to industry to respond and describe whether that target can be met effectively or cost effectively or within the bounds of what timeframe that’s reasonable. And there is that back and forth. It’s not as arbitrary as regulators are saying hit this number and challenging industry to do it. So we do think that as we’re able to demonstrate more and more in a more referencable scale, that the impact exactly that, the regulators will be able to point to our technology and say apparently there is an available controlled technology to achieve these limits and therefore we think we can some schedule require emissions limits to reach that level without unduly encumbering industry. And that’s really the name of the game with respect to that dialogue. So we do think the potential here would be game changing in that regard.

Our next question comes from Brett Conrad with Longboard Capital. Please proceed with your question. Brett Conrad - Longboard Capital Advisors: I’ve got a question on your -- it’s hard to recall, but is there a market strategy -- it’s easy I think for a small company to gain a line on bill cycles. So it looks like you’ve got a lot of different iron to the fire right now. When do you think something will emerge at particulate vertical that you can really (inaudible) and have it super short relatively sales cycle to the other things you’re looking at and also is capital efficient for the company. In other words maybe getting money upfront or more money upfront from these partners like Grandeg. When do you think that will start to get paired to you or are you starting to see any patterns now in the way you want to go or if you’re limited to capitalized?

Yeah, very much. I think that was my purpose in that last bit of commentary where I said we are seeing some patterns discern themselves in terms of where the high value and again relatively quick to market solutions are. And refinery heaters is a compelling segment of the market, again because the quality of the demand and the value proposition are so compelling, the ability to deliver that kind of economic difference. The funnel is very active right now in terms of partnering prospect. The other thing that’s nice about that particular space is it’s not terribly pregnant. You have a handful of major vendors who really dominate the segment in the U.S which of course is the logical starting place for us and we’re actively in discussions with all of them. So the real variability in terms of predicting the timeline is just the imprecision with which one can predict how fast a relationship with a large company can move. And I don’t know that you’ve heard me say it before but it’s because I only saying started saying it recently, but it’s logical that we would see the partnerships with smaller, more agile companies like Grandeg come ahead of those with larger companies. But I would say that it’s not as if we’re really just beginning those. We should remind folks and maybe some folks haven’t heard of it, that the original assignment that puts us in the direction or allowed us to really focus on the Duplex burner architecture was a prospective partner who said here’s an interesting challenge, can you shrink flame length 30% without increasing NOx emissions. And it was interesting. We did have our board meeting a few days ago and one of our board members was saying I spent many years learning why it’s impossible to have a short flame and low NOx at the same time. He said but because I know you guys I’m going to have to believe you. And then of course we showed him some numbers. So there’s a great deal of excitement about that and again there’s the balance that we want to strike on our behalf, on your behalf, on everyone’s behalf of doing deals quickly and doing them well. We want to make sure that we create a negotiating environment by having the right amount of competitive interest at the table so that we can value our technology in the context of those relationships. But overall we’re very pleased with the quality of the partners that we’re actively in dialogue with, with the value proposition around the particular applications and market segments and with the level of interest and the rate at which things are progressing. So I would say within this quarter and next quarter is when we’re likely to see some developments of that type. Again understanding that if it takes a few more weeks to do a better deal or get another competitive bid at the table, those are obviously things we’re going to take into consideration. The good news though is that as we progress, as we keep knocking down these rift milestones, we’re driving up value all the time because we’ve come to the table each time with a stronger hand. And frankly at this point I think it would be fair to say we’ve exceeded some of our own expectations with regard to the time within which we’ve been able to hit some of these NOx emissions numbers. This is probably the first time we’ve talked about even the possibility of having the best available controlled technology. But not because we didn’t secretly believe or hope that, but as we try to be more conservative and prognosticating about things of that nature that could be significant. Brett Conrad - Longboard Capital Advisors: That’s my only question. Thank you.

Thank you and do look forward to you visiting one of these days. Are there any other questions? If not, I can turn my attention to another press release that you would have seen in which we announced and reported that we had filed a shelf registration statement, a couple of important things that we highlight in the press release. We have been planning to do this soon after we became eligible. We became eligible on the one year anniversary of our public offering. It’s our belief and I think management and the board of directors’ philosophical belief that for small public companies that the S3 shelf registration process is particularly advantageous. It allows us to access the market quickly when opportunity strike. Brett just asked the question about partnering and things of that nature. We do occasionally have partners inquire about making investments in the company. We’d accommodate that as well we also occasionally have inquiries from large institutional investors asking if we may be able to accommodate their interest and some increased liquidity as well. So we anticipate that if we continue to be successful in meeting and exceeding these milestones, that that level of interest will grow. So it allows us to at any time over the ensuing three years from the date of effectiveness to raise up to an aggregate maximum of about $30 million. We can do that in offerings of really any size, time structure in any way and the specific terms are to be derived at the time of the offering. So again it’s a nice we believe strategic way to access capital markets for companies like ours. And obviously we’re going to want to maintain our balance sheet strength in particular as we begin to negotiate prospective partnering arrangements and things of that nature. So if there are other questions we’re happy to take them. Otherwise we look forward to speaking with you next time and as I say we do anticipate reporting our 5 parts per million NOx milestone well ahead of the June 30 schedule and going to work immediately to reduce that. And I think Joe’s point is a good one. The percentages grow so a reduction from 5 to 4 parts per million is going to be another 25% and so on. So you may see us report some interim milestones as we progress further down this path. Thank you again for your time and attention today and for your ongoing support, loyalty, enthusiasm and interest. We share all of it and look to reward it. And we are going to be making several trips throughout the early part of the summer. So don’t hesitate to give us a call if you’d like to schedule a meeting. We also really continue -- we ‘ve had some very successful group meetings here recently where groups of investors have come and spent a couple of hours digging in and meeting the team and seeing some of the demonstrations. And again, given the complexity of our subject matter and how exciting some of the demonstration systems are, that’s something that we continue to encourage. So please don’t hesitate to contact us if you’d like to arrange that meeting. Thank you again and we look forward to catching up soon.

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