10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

Commission File Number 001-35521

CLEARSIGN COMBUSTION CORPORATION

(Exact name of registrant as specified in its charter)

WASHINGTON (State or other jurisdiction of
incorporation or organization) 26-2056298 (I.R.S. Employer
Identification No.)

12870 Interurban Avenue South

Seattle, Washington 98168

(Address of principal executive offices)

(Zip Code)

(206) 673-4848

(Registrant’s telephone number, including area code)

No change

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period than the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x	Smaller reporting company x
	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CLIR	The Nasdaq Stock Market LLC

As of May 14, 2019, the issuer has 26,699,761 shares of common stock, par value $.0001, issued and outstanding

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3
Item 1.	Condensed Consolidated Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2019 and 2018 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (Unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II	OTHER INFORMATION	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
SIGNATURES		27

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PART I-FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ClearSign Combustion Corporation and Subsidiary

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31,			December 31,
	2019			2018
ASSETS
Current Assets:
Cash and cash equivalents	$	6,771,000		$	8,949,000
Short-term investments		6,967,000			6,923,000
Contract assets		39,000			39,000
Prepaid expenses and other assets		455,000			500,000
Total current assets		14,232,000			16,411,000
Fixed assets, net		385,000			457,000
Patents and other intangible assets, net		1,862,000			1,759,000
Other assets		10,000			10,000
Total Assets	$	16,489,000		$	18,637,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	1,119,000		$	1,080,000
Current portion of lease liabilities		214,000			216,000
Accrued compensation and taxes		199,000			341,000
Total current liabilities		1,532,000			1,637,000
Long Term Liabilities:
Long term lease liabilities		41,000			91,000
Total liabilities		1,573,000			1,728,000
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.0001 par value, zero shares issued and outstanding		-			-
Common stock, $0.0001 par value, 26,699,761 and 26,697,261  shares issued and
outstanding at March 31, 2019 and December 31, 2018, respectively		3,000			3,000
Additional paid-in capital		76,753,000			76,417,000
Accumulated deficit		(61,840,000	)		(59,511,000	)
Total stockholders' equity		14,916,000			16,909,000
Total Liabilities and Stockholders' Equity	$	16,489,000		$	18,637,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

ClearSign Combustion Corporation and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended March 31,
	2019			2018
Sales	$	-		$	530,000
Cost of goods sold		1,000			395,000
Gross profit (loss)		(1,000	)		135,000
Operating expenses:
Research and development, net of grants		902,000			1,134,000
General and administrative		1,474,000			1,279,000
Total operating expenses		2,376,000			2,413,000
Loss from operations		(2,377,000	)		(2,278,000	)
Other income:
Interest income		48,000			-
Net loss	$	(2,329,000	)	$	(2,278,000	)
Net loss per share - basic and fully diluted	$	(0.09	)	$	(0.13	)
Weighted average number of shares outstanding - basic and fully diluted		26,697,289			17,717,214

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

ClearSign Combustion Corporation and Subsidiary

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

For the Three Months Ended March 31, 2019 and 2018

										Total
	Common Stock				Additional		Accumulated			Stockholders’
	Shares		Amount		Paid-In Capital		Deficit			Equity
Balances at December 31, 2018		26,697,261	$	3,000	$	76,417,000	$	(59,511,000	)	$	16,909,000
Shares issued for services ($1.44 per share)		2,500		-		3,000		-			3,000
Fair value of stock options issued in payment of accrued compensation		-		-		100,000		-			100,000
Share based compensation		-		-		233,000		-			233,000
Net loss		-		-		-		(2,329,000	)		(2,329,000	)
Balances at March 31, 2019		26,699,761	$	3,000	$	76,753,000	$	(61,840,000	)	$	14,916,000

											Total
	Common Stock				Additional			Accumulated			Stockholders’
	Shares		Amount		Paid-In Capital			Deficit			Equity
Balances at December 31, 2017		15,608,853	$	2,000	$	52,441,000		$	(50,011,000	)	$	2,432,000
Shares issued in stock offering ($2.25 per share)		5,750,000		-		12,937,000			-			12,937,000
Issuance costs of rights offering		-		-		(1,014,000	)		-			(1,014,000	)
Shares issued for services ($3.50 per share)		2,500		-		9,000			-			9,000
Share Based Compensation						50,000						50,000
Net loss		-		-		-			(2,278,000	)		(2,278,000	)
Balances at March 31, 2018		21,361,353	$	2,000	$	64,423,000		$	(52,289,000	)	$	12,136,000

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

ClearSign Combustion Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(2,329,000	)	$	(2,278,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services		3,000			9,000
Share based compensation		233,000			50,000
Depreciation and amortization		70,000			79,000
Accrued interest income		(44,000	)		-
Change in operating assets and liabilities:
Contract assets		-			145,000
Accounts receivable		-			(344,000	)
Prepaid expenses and other assets		45,000			(121,000	)
Accounts payable and accrued liabilities		42,000			379,000
Accrued compensation and taxes		(42,000	)		221,000
Net cash used in operating activities		(2,022,000	)		(1,860,000	)
Cash flows from investing activities:
Acquisition of fixed assets		(11,000	)		(2,000	)
Disbursements for patents and other intangible assets		(145,000	)		(106,000	)
Net cash used in investing activities		(156,000	)		(108,000	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs		-			11,923,000
Net cash provided by financing activities		-			11,923,000
Net increase (decrease) in cash and cash equivalents		(2,178,000	)		9,955,000
Cash and cash equivalents, beginning of year		8,949,000			1,247,000
Cash and cash equivalents, end of year	$	6,771,000		$	11,202,000

Supplemental disclosure of non-cash operating activities:

During the three months ended March 31, 2019, the Company issued stock options to purchase a total of 159,100 shares of common stock to certain of its officers and employees in satisfaction of $100,000 of accrued compensation at December 31, 2018.

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

ClearSign Combustion Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 – Organization and Description of Business

ClearSign Combustion Corporation (ClearSign or the Company) designs and develops technologies for the purpose of improving key performance characteristics of combustion systems, including emission and operational performance, energy efficiency and overall cost-effectiveness. The Company’s primary technologies include its Duplex™ technology, which achieves very low emissions without the need of external flue gas recirculation, selective catalytic reduction, or higher excess air operation, and its Electrodynamic Combustion Control™ or ECC™ technology, which introduces a computer-controlled electric field into the combustion region that may better control gas-phase chemical reactions and improve system performance and cost-effectiveness. The Company is headquartered in Seattle, Washington and was incorporated in the state of Washington in 2008.  On July 28, 2017, the Company incorporated a subsidiary, ClearSign Asia Limited, in Hong Kong to represent the Company’s business and technological interests throughout Asia. Through ClearSign Asia Limited, the Company has established a Wholly Foreign Owned Enterprise (WFOE) in China – ClearSign Combustion (Beijing) Environmental Technologies Co., LTD.

Liquidity

The Company’s technologies are currently in field development and have generated nominal revenues from operations to date to meet operating expenses. In order to generate meaningful revenues, the technologies must be fully developed, gain market recognition and acceptance, and develop a critical level of successful sales and product installations. The Company has historically financed its operations primarily through issuances of equity securities, including $11.9 million in proceeds, net of offering costs, from a stock offering completed on February 27, 2018 and $11.6 million in proceeds, net of offering costs, from a stock offering completed on July 20, 2018. The Company has incurred losses since its inception totaling $61,840,000 and expects to experience operating losses and negative cash flows for the foreseeable future. Management believes that the successful growth and operation of the Company’s business is dependent upon its ability to obtain adequate sources of funding through co-development agreements, strategic partnering agreements, or equity or debt financing to adequately support research and development efforts, protect intellectual property, form relationships with strategic partners, and provide for working capital and general corporate purposes. There can be no assurance that the Company will be successful in achieving its long-term plans as set forth above, or that such plans, if consummated, will result in profitable operations or enable the Company to continue in the long-term as a going concern.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed balance sheet at December 31, 2018 has been derived from the Company’s audited financial statements.

In the opinion of management, these consolidated financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of ClearSign and its subsidiary. Intercompany balances and transactions have been eliminated in consolidation.

7

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition and Cost of Sales

The Company recognizes revenue and related cost of goods sold in accordance with FASB ASC 606 Revenue from Contracts with Customers (ASC 606). Revenues and cost of goods sold are recognized once the goods or services are delivered to the customer’s control and performance obligations are satisfied. Typically, the Company’s contracts with customers have performance obligations regarding air emissions and operational performance that are satisfied upon completion of service. Since this is the singular performance obligation and cannot be achieved until the air emissions and operational performance have been successfully tested, revenue related to the contracts is recognized upon project completion.

The Company’s contracts generally include progress payments from the customer upon completion of defined milestones. As these payments are received they are offset against accumulated project costs and recorded as either contract assets or contract liabilities. Upon completion of the performance obligations and acceptance by the customer the projects can be recorded as revenue.

The Company's contracts with customers contain no variable considerations or incentives or discounts that would cause revenue to be allocated or adjusted over time. Therefore, no separate methods of evaluating the contracts other than consideration of the price at achievement of the performance objectives was used in satisfying the review requirements of ASC 606.

Contract acquisition costs and practical expedients

For contracts that have a duration of less than one year, the Company follows ASC 606, practical expedients and expenses those costs when incurred; for contracts with a life exceeding one year, the Company records those costs when performance obligations related to the contract are completed. The Company generally expenses sales commissions when earned. The Company records those costs within general and administrative expenses.

Product Warranties

The Company warrants all installed products against defects in materials and workmanship for a period specified in each contract by replacing failed parts. Accruals for product warranties are based on historical warranty experience and current product performance trends, and are recorded at the time revenue is recognized as a component of cost of sales. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary, and such adjustments could be material in the future if estimates differ significantly from actual warranty expense. The warranty liabilities are included in accrued liabilities in the balance sheets.

Cash and Cash Equivalents

Highly liquid investments purchased with an original maturity of three months or less are considered cash equivalents. Cash is maintained with a commercial bank where accounts are generally guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company’s deposits may at times exceed this limit. The Company also maintains a cash balance in China. Accounts at such banks are insured up to $75,000 (500,000RMB). The Company has not experienced losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

8

Short-Term Investments

Short-term investments consist of U.S. Treasury bills with original maturities of twelve months or less and greater than three months. These short-term investments are classified as held to maturity and are recorded on an amortized cost basis which approximates fair value.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company may establish or adjust the allowance for specific customers and the accounts receivable portfolio as a whole.

Fixed Assets and Leases

Fixed assets are recorded at cost. Leases are recorded in accordance with FASB ASC 842 Leases. For those leases with a term greater than one year, the Company recognizes on the balance sheet at the time of lease inception or modification a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. Operating leases with a term of 1 year or less are recognized on a straight line basis over the term. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are depreciated over the life of the lease or their useful life, whichever is shorter. All other fixed assets are depreciated over two to four years. Maintenance and repairs are expensed as incurred.

Patents and Trademarks

Patents and trademarks are recorded at cost. Amortization is computed using the straight-line method over the estimated useful lives of the assets once they are awarded.

Impairment of Long-Lived Assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Fair value is determined based on the present value of estimated expected cash flows using a discount rate commensurate with the risks involved, quoted market prices, or appraised values depending upon the nature of the assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal.

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to establish fair value are the following:

· Level 1 – Quoted prices in active markets for identical assets or liabilities;

· Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

9

· Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company's financial instruments primarily consist of cash and cash equivalents, short-term investments, accounts payable and accrued expenses. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributable to the short-term maturities of these instruments.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

Research and Development

The cost of research and development is expensed as incurred. Research and development costs consist of salaries, benefits, share based compensation, consulting fees, rent, utilities, depreciation, and consumables.

During the three months ended March 31, 2019, the Company received $108,000 to partially fund specific research and development activity relating to its ECC technology. Since these funds were provided without expectation of reciprocation, except notification of research results, the funds received were offset against the related research and development costs incurred.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.

Stock-Based Compensation

The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.

Foreign Operations

The accompanying consolidated financial statements as of March 31, 2019 and December 31, 2018 include assets amounting to approximately$234,000 and $199,000, respectively, relating to operations of the Company in China. It is always possible unanticipated events in foreign countries could disrupt the Company’s operations.

10

Foreign Currency

The functional currency of ClearSign Asia Limited is the U.S. dollar. The Company remeasures the transactions denominated in Chinese Yuan at the average exchange rate in effect during the period. At the end of each reporting period, the Company remeasures ClearSign Asia Limited’s monetary assets and liabilities to the U.S. dollar using exchange rates in effect at the end of the reporting period. The Company remeasures its non-monetary assets and liabilities at historical exchange rates. The Company records gains and losses related to remeasurement in other income (expense), net in the consolidated statements of operations. Foreign currency exchange gain (losses) has not been significant in any period presented and the Company has not undertaken any hedging transactions related to foreign currency exposure.

Net Loss per Common Share

Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive. At March 31, 2019 and 2018, potentially dilutive shares outstanding amounted to 1,516,540 and 3,465,168, respectively.

Recently Adopted Standards

In June 2018 FASB issued ASU No. 2018-07 Compensation-Stock Compensation. The amendments in this update expand the scope of Topic 718 to include share based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company currently does not believe this amendment applies to any of its transactions at this time.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures.

Note 3 – Fixed Assets

Fixed assets are summarized as follows:

	March 31,			December 31,
	2019			2018
	(unaudited)
Machinery and equipment	$	857,000		$	853,000
Office furniture and equipment		193,000			186,000
Leasehold improvements		150,000			150,000
Right of use asset-operating leases		637,000			637,000
Accumulated depreciation and amortization		(1,452,000	)		(1,369,000	)
	$	385,000		$	457,000

The Company has a triple net operating lease for office and laboratory space in Seattle, Washington through March 2020 with rent of approximately $12,000 per month plus triple net operating costs. The Company also has a triple net operating lease for office space in Tulsa, Oklahoma through August 2019 with monthly rent of approximately $2,000 per month plus triple net operating costs. Both leases include lessee renewal options for three years at the then prevailing market rate. The Company has an operating lease for office space in Beijing, China through November 2020 with a monthly rent of approximately $6,000.

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Lease costs for the three months ended March 31, 2019 and 2018 and other quantitative disclosures are as follows (unaudited):

	For the three months ended March 31,
	2019		2018
Lease cost:
Operating lease cost	$	59,000	$	53,000
Total lease cost	$	59,000	$	53,000
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	60,000
Right-of-use assets obtained in exchange for new operating lease liabilities
For operating lease:
Weighted average remaining lease term (in years)				1.45
Weighted average discount rate				5.56	%

Minimum future payments under the Company’s leases at March 31, 2019 and their application to the corresponding lease liabilities are as follows (unaudited):

	Discounted lease liability payments		Payments due under lease agreements
2019 (remaining 9 months)		177,000		171,000
2020		78,000		95,000
Total	$	255,000	$	266,000

Note 4 – Patents and Other Intangible Assets

Patents and other intangible assets are summarized as follows:

	March 31,			December 31,
	2019			2018
	(Unaudited)
Patents
Patents pending	$	1,313,000		$	1,202,000
Issued patents		791,000			761,000
		2,104,000			1,963,000
Trademarks
Trademarks pending		59,000			55,000
Registered trademarks		23,000			23,000
		82,000			78,000
Other		8,000			8,000
		2,194,000			2,049,000
Accumulated amortization		(332,000	)		(290,000	)
	$	1,862,000		$	1,759,000

Future amortization expense associated with issued patents and registered trademarks as of March 31, 2019 is estimated as follows (unaudited):

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2019 (remaining 9 months)	$	130,000
2020		151,000
2021		97,000
2022		64,000
2023		33,000
Thereafter		6,000
	$	481,000

Note 5 – Sales, Contract Assets and Contract Liabilities

The Company recognized no revenue during the three months ended March 31, 2019. For the three months ended March 31, 2018, the Company recognized revenues totaling $530,000 from completed flare projects. At March 31, 2019, the Company had contract assets of $39,000 and contract liabilities of $0. The cost of goods sold of $1,000, recognized during the three months ended March 31, 2019, related to additional warranty costs incurred for previously completed contracts.

Note 6 – Stockholders’ Equity

Common Stock and Preferred Stock

The Company is authorized to issue 62,500,000 shares of common stock and 2,000,000 shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Company’s Board of Directors. The Company has not issued any shares of preferred stock.

Equity Incentive Plan

The Company has adopted and the Company’s shareholders have approved the ClearSign Combustion Corporation 2011 Equity Incentive Plan (the Plan) which permits the Company to grant to eligible participants, including officers, employees, directors, consultants and advisors, options to purchase shares of common stock, stock awards and stock bonuses. The Compensation Committee of the Board of Directors is authorized to administer the Plan and establish the grant terms, including the grant price, vesting period and exercise date. As of March 31, 2019, the number of shares of common stock reserved for issuance under the Plan totaled 2,180,367. The Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 10% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine. 

In the three months ended March 31, 2019, the Company made awards of stock options for the purchase of an aggregate 559,100 shares of common stock to its employees from the Plan. Of these awards, options covering 159,100 shares of common stock were awarded in lieu of cash bonuses for 2018 and the expense was recorded during the year ended December 31, 2018. The remaining 400,000 stock option awards have exercise prices at the grant date fair value ranging from $1.21 to $2.25 per share, contractual lives of 10 years, and vest over 2 years. The fair value of the stock options estimated on the date of grant using the Black-Scholes option valuation model was $222,000. The recognized compensation expense associated with these awards for the three months ended March 31, 2019 was $74,000. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

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Expected life	5.89 years
Weighted average volatility	71	%
Forfeiture rate	20	%
Weighted average risk-free interest rate	2.55	%
Expected dividend rate	0	%

Outstanding stock option awards at March 31, 2019 and December 31, 2018 totaled 1,436,540 shares and 880,277 shares, respectively, with the right to purchase 900,399 shares and 587,962 shares being vested and exercisable at March 31, 2019 and December 31, 2018, respectively. The recognized compensation expense associated with stock option awards for the three months ended March 31, 2019 and 2018 totaled $126,000 and $50,000, respectively. On March 31, 2019 the number of shares reserved under the Plan but unissued totaled 743,827. At March 31, 2019, there was $472,000 of total unrecognized compensation cost related to non-vested share based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.2 years.The intrinsic value of outstanding stock options was $0 at March 31, 2019.

Consultant Stock Plan

The Company has a Consultant Stock Plan (the Consultant Plan) which provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and board members are not entitled to receive awards from the Consultant Plan. The Compensation Committee of the Board of Directors is authorized to administer the Consultant Plan and establish the grant terms. The number of shares reserved for issuance under the Consultant Plan on March 31, 2019 totaled 253,317 with 197,567 of those shares unissued. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine. The Company granted 10,000 shares of common stock to a consultant under the Consultant Plan for services performed and to be performed during the period from August 13, 2018 to August 31, 2019. The fair value of the stock at the time of grant was $1.44 per share for a total value of $14,000. The Consultant Plan expense for the three months ended March 31, 2019 and 2018 was $3,000 and $9,000, respectively.

Incentive Stock Options

Pursuant to the rules of The Nasdaq Stock Market, the Company has the ability to issue equity awards, including stock options as an inducement to an individual to accept employment with the Company. These awards need not be granted from a plan approved by the Company’s shareholders. During the three months ending March 31, 2019 the Company granted 600,000 incentive stock options as an inducement to its President and Chief Executive Officer to accept the Company’s offer of employment. (see Note 7) The stock options have exercise prices at the award date fair value ranging from $1.16 to $2.25 per share, contractual lives of 10 years, and vest over 2 years. The fair value of the stock options estimated on the date of grant using the Black-Scholes option valuation model was $329,000. The recognized compensation expense associated with these awards for the three months ended March 31, 2019 was $110,000. The remaining unrecognized compensation expense associated with these awards is $219,000. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	5.75 years
Weighted average volatility	71	%
Forfeiture rate	20	%
Weighted average risk-free interest rate	2.55	%
Expected dividend rate	0	%

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Warrants

At March 31, 2019, warrants for the purchase of 80,000 shares of common stock at an exercise price of $1.80 per share were outstanding and had a remaining life of 1.88 years.

During the quarter ending March 31, 2019, warrants to purchase an aggregate 2,415,784 shares of common stock issued by the Company on March 5, 2014 and January 25, 2017 expired in accordance with their terms. The intrinsic value of the outstanding warrants was $0 at March 31, 2019.

Note 7 – Commitments and Contingencies

On January 28, 2019 (the “Effective Date”), the Company and Colin James Deller entered into an employment agreement (the “Agreement”) pursuant to which the Company employed Dr. Deller as its President until April 1, 2019, at which time Dr. Deller became the Company’s Chief Executive Officer. Pursuant to the Agreement, the Company pays Dr. Deller an annual salary of $350,000. As an inducement to accept employment with the Company, Dr. Deller was also granted an incentive option to purchase 400,000 shares of the Company’s common stock at an exercise price of $1.16 per share and an incentive option to purchase 200,000 shares of the Company’s common stock at an exercise price of $2.25 per share. Each option has a term of 10 years and will vest as follows: the right to purchase one-third of the shares of common stock subject to the option vested on the Effective Date; the right to purchase one-third of the shares will vest on the first anniversary of the grant date; and the right to purchase one-third of the shares will vest on the second anniversary of the grant date. The Company also agreed to pay certain expenses, not to exceed the sum of $100,000, related to Dr. Deller’s move from Tulsa, Oklahoma to Seattle, Washington, including reasonable expenses related to the sale of his home in Tulsa. As a temporary adjustment for the difference in the cost of living between Tulsa and Seattle (the “Relocation Adjustment”), for a period of four years (the “Payment Period”) from the Effective Date, the Company has also agreed to pay up to $6,000 a month to Dr. Deller for expenses related to temporary housing and travel to and from Tulsa to Seattle. If Dr. Deller purchases a home in the Seattle area, the Relocation Adjustment will continue to be paid through the expiration of the Payment Period, although the Relocation Adjustment may be adjusted or terminated upon mutual agreement of Dr. Deller and the Company. The Agreement may be terminated by the Company for cause, as defined in the Agreement, due to Dr. Deller’s death or disability, upon 30 days’ notice to Dr. Deller or as a result of a change in control, as defined in the Agreement. With the exception of a termination for cause, if Dr. Deller’s employment is terminated by the Company, aside from accrued but unpaid salary, bonus (if any) and business expenses, Dr. Deller will receive the balance of the unpaid Relocation Adjustment and six months of his annual salary.

Litigation

From time to time the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in any such matter may harm the Company’s business. As of the date of this report, the Company is not a party to any material pending legal proceedings.

Indemnification Agreements

The Company maintains indemnification agreements with its directors and officers that may require the Company to indemnify these individuals against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by law.

Note 8 – Subsequent Event

Nasdaq Listing Requirements

On April 17, 2019, the Company received a letter from The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock for the previous 30 consecutive business days, the common stock did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Marketplace Rule 5550(a)(2). The letter also indicates that the Company will be provided with a compliance period of 180 calendar days, or until October 14, 2019, in which to regain compliance, pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A). The letter further indicates that if, at any time during the 180-day compliance period, the closing bid price of the common stock is at least $1.00 for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation that it has achieved compliance with the minimum bid price requirement. The Company intends to continue to monitor the bid price levels for the common stock, and will consider appropriate alternatives to achieve compliance within the 180-day compliance period.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

CONTAINED IN THIS REPORT

This report contains forward-looking 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. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “would,” “should,” “could,” “may,” “will” or other similar expressions in this report. In particular, these include statements relating to future actions; prospective products, applications, customers, or technologies; future performance or results of anticipated products; anticipated expenses; and future financial results. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to:

· our history of losses;

· our ability to successfully develop and implement our technology and achieve profitability;

· our limited operating history;

· emerging competition and rapidly advancing technology in our industry that may outpace our technology;

· changes in government regulations that could substantially reduce, or even eliminate, the need for our technology;

· customer demand for the products and services we develop;

· the impact of competitive or alternative products, technologies and pricing;

· our ability to manufacture any products we design;

· general economic conditions and events and the impact they may have on us and our potential customers;

· our ability to obtain adequate financing in the future;

· our ability to continue as a going concern;

· our success at managing the risks involved in the foregoing items; and

· other factors discussed in this report and in the section titled “Risk Factors” in our Annual Report on Form 10-K.

Forward-looking statements may appear throughout this report, including, without limitation, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements included in this report. You should not place undue reliance on these forward-looking statements.

Unless otherwise stated or the context otherwise requires, the terms “ClearSign,” “we,” “us,” “our” and the “Company” refer to ClearSign Combustion Corporation and its subsidiary.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited consolidated condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited financial statements and related notes included in our Annual Report on Form 10-K. In addition to historical information, this discussion and analysis here and throughout this Form 10-Q contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, the risks described in the section titled “Risk Factors” in our Annual Report on Form 10-K.

OVERVIEW

We design and develop technologies for the purpose of improving key performance characteristics of combustion systems, including emission and operational performance, energy efficiency and overall cost-effectiveness. We believe that our patented Duplex™ technology is capable of enhancing the performance of combustion systems in a broad range of markets, including energy (upstream oil production and down-stream refining), commercial/industrial boiler, chemical, and petrochemical. Our Duplex technology, which is our primary technology, uses a porous ceramic tile above a standard burner to significantly reduce flame length and achieve very low emissions without the need for external flue gas recirculation, selective catalytic reduction, or high excess air systems. To date, our operations have been funded primarily through sales of our equity securities. We have earned nominal revenue since inception in 2008. In order to generate meaningful revenues, our technologies must be fully developed, gain market recognition and acceptance, and develop a critical level of successful sales and product installations.

While we have recently begun commercializing our Duplex technology, Duplex has had limited testing and verification by independent third parties. However, based on the results of our laboratory and field testing as well as our initial commercialized installations in different applications, we believe that this proprietary technology is capable of improving emissions control performance and operational performance for many types of industrial and commercial combustion systems. As a result, we also believe that Duplex may reduce costs associated with the construction (including refurbishment and upgrade), operation and maintenance of these combustion systems as compared to combustion systems that use no or alternative technologies to enhance combustion and control emissions.

Based on the results of our testing, we believe that Duplex compares favorably with current industry-standard air pollution control technologies, such as selective catalytic reduction devices, low- and ultra-low NOx burners (which address nitrogen oxides or NOx), high excess air systems and other similar technologies. Such systems are used in our current target market segments of petroleum refining and petrochemical process heaters, large-scale once through steam generators (OTSGs), enclosed ground flares, and packaged boilers.

We were incorporated in Washington on January 23, 2008. The address of our corporate headquarters is 12870 Interurban Avenue South, Seattle, Washington 98168 and our telephone number is (206) 673-4848. Our website can be accessed at www.clearsign.com. The information contained on or that may be obtained from our website is not a part of this report. To date, our operations have been located in the United States, but we are reviewing opportunities in China and Europe.

Our Industry

The combustion and emissions control markets are significant, both in the wide array of industries in which the systems are used and in the amount of money spent in installing and upgrading systems. Combustion systems are used to provide heat for all manner of industrial processes, including boilers, furnaces, kilns and gas turbines. In order to maximize energy efficiency while keeping pace with regulatory guidelines for air pollution emissions, operators of combustion systems are continually installing, maintaining and upgrading a variety of costly process control, air pollution control and monitoring systems. Although we believe that there are many potential markets for our Duplex technology, to date we have limited the introduction of Duplex to petroleum refining process heaters, steam generation, and enclosed flares.

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Our initial target markets center on the energy sector, including upstream crude oil production through the use of OTSGs and wellhead enclosed flares and downstream oil refineries through the use of process heaters and boilers. In recent years, the energy sector has been significantly affected by the volatile market price of crude oil and marginal economic growth. Crude oil prices stabilized during 2016 and 2017 and enjoyed appreciation with the general post-presidential election upswing in certain commodities and improved economic outlook. According to the U.S. Energy Information Administration, the spot price of West Texas intermediate crude oil in the last five years has ranged from approximately $108 per barrel to approximately $26 per barrel, with 2018 prices ranging from $44 to $77 per barrel and April 2019 prices approximating $64 per barrel. Regardless of the effect of crude oil price volatility, based upon our experience and feedback from current and prospective customers, we believe that the value of our Duplex technology to the energy sector continues to be validated because of the technology’s ability to cost-effectively lower emissions and drive certain operational efficiencies.

We believe operators in all of our domestic target markets are under pressure to meet current and proposed federal, state and local pollution emissions standards. The standards applicable to our target markets have been developed over the past 50 years with broad political input. Due to the localized effects of poor air quality, we expect these standards to continue to become more stringent regardless of political leadership. We believe this to be the case in the U.S. and worldwide in most major developed and developing countries. As an illustration, air pollution emission standards are most stringent in the states of California and Texas, historically politically leaning in opposite directions. As a result, these standards are a significant driver in our development and sales efforts. We believe that our Duplex technology can provide a unique, cost-effective pollution control solution for operators in comparison to all known competing products.

Emissions standards largely emanate from the Clean Air Act, which is administered by the Environmental Protection Agency (EPA) and regulates six common criteria air pollutants, including ground-level ozone. These regulations are enforced by state and local air quality districts as part of their compliance plans. As a precursor to ground-level ozone, NOx is a regulated pollutant by local air quality districts in order to achieve the EPA limits. The 8-hour ground-level ozone regulations have been reduced from 84 parts per billion (ppb) in 1997 to 75 ppb in 2008 and 70 ppb in 2015, with the requirement of realizing these levels approximately 25 years following the year of legislation. The areas of non-attainment related to this 1997 limit of 84 ppb are depicted below in the map on the left and the projected areas of non-attainment related to the 2015 limit of 70 ppb are depicted below in the map on the right.

Non-attainment areas under the 1997 limit of 84 ppb	Projected non-attainment areas under the 2015 limit of 70 ppb
Source: EPA, August 2016	Source: URS, August 2015

We have noted that local air quality districts in EPA designated “severe non-attainment zones” in California are uncertain as to how they will achieve the 2015 standard and other future EPA requirements. Because of this uncertainty, we believe that local regulators are in search of additional means beyond those included in the current regulations to comply with the impending standards. Although NOx emissions from refineries and other oil production and processing operations are highly regulated since they are historically a significant source of stationary NOx emissions, enclosed flares have not historically been viewed as a source requiring the same level of regulation. We believe that our Duplex technology is uniquely able to address the emissions challenges being faced by oil producers and other industries as those challenges relate to both current and reasonably predictable future local air emission standards.

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Additionally, we believe that current emissions standards in Europe, the Middle East, other parts of Asia and Canada will continue to trend towards stricter air emission standards as these jurisdictions seek to achieve cleaner air. Existing and new emissions standards in such jurisdictions may create additional market opportunities for us.

Product Applications of Duplex

To date, we have deployed our Duplex technology through retrofits and replacements of existing burners. Retrofits often involve engineering around an existing burner architecture that can complicate the Duplex installation, whereas replacements are more straightforward, especially after the introduction of our Duplex Plug & Play® technology in February 2017. Because of this, we believe that the retrofit and replacement markets are ideally suited for larger projects and larger applications of Duplex.

Process Heaters in the Oil Refining Industry

To date, we have successfully retrofitted two process heaters with the standard Duplex and one demonstration unit with the Duplex Plug & Play design. The Duplex Plug & Play design provides a more simplified, pre-engineered and standardized direct burner replacement for traditional refinery process heaters. We believe that this product will reduce the customized engineering associated with typical retrofits and lend itself to mass production. The product derives its name from the fact that it is designed to allow quick and easy installation into a multi-burner heater or furnace and possibly allow the heater to continue operating during installation rather than be shut down. The Duplex Plug & Play technology is intended to be installed, to operate and to be controlled in a manner similar to traditional commercial burners. We believe that this simplifies the adoption of the Plug & Play technology into our customers’ heaters and furnaces. We plan to continue field testing larger size Duplex Plug & Play devices, as well as alternate multi-burner configurations, to demonstrate the performance and dependability of the product. We believe that this product, our first complete burner product, will be suitable for licensing or other potential supply and manufacturing arrangements with OEMs that have established manufacturing and distribution capabilities.

Wellhead Enclosed Flares

A major California oil producer approached us in early 2016 to address a unique emission compliance need relating to wellhead enclosed flares. This was an important milestone because it demonstrated the broad application of our Duplex technology. A total of six units have been completed for enclosed flares to date.

Based upon discussions with local regulators and examination of regulatory reports, we believe that enclosed flare emissions are a potential target for increased regulation, in part because the success of our installations to date has shown regulators and the EPA that establishing NOx emissions standards for enclosed flares is possible. In anticipation of this, we are pursuing potential customers with target enclosed flare applications that would benefit from our technology.

OTSGs for Enhanced Oil Recovery Industry

We have successfully installed our Duplex technology in three OTSG projects in the enhanced oil recovery industry in California. We believe that these successful installations are gaining regulator acceptance by the Southern California regulatory authorities and, as a result, market acceptance.

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Industrial Commercial Boilers

There are a large number of boiler manufacturers producing many styles of boiler equipment for many different applications. Boilers are used in many industrial applications, as well as in commercial and residential applications at much smaller scales. We are currently actively working on commercial boiler applications for two distinct types of industry standard commercial boilers – fire tube and water tube boilers. For fire tube products, we have recently developed our own prototype burner replacement product similar in concept to our Duplex Plug and Play device for process heaters. This product has achieved excellent results after testing in a typical commercial fire tube boiler produced by one of the industry’s largest suppliers. Water tube boilers are larger and more varied in their designs, so our approach has been to retrofit existing equipment with our Duplex technology rather than to design a replacement burner product. These field projects are ongoing. We anticipate significant progress during 2019 in testing this equipment. If the testing is successful, our goal will be to partner with established OEMs in the water tube and fire tube boiler industry for wider deployment of our Duplex technology.

Duplex’s Emission Results and Business Plan

We have now achieved emission results in multiple applications that exceeded current local Best Available Control Technology (BACT) levels in multiple installations in California related to three of our five target industries. We intend to continue to demonstrate Duplex capabilities through (i) working with local air quality officials to demonstrate the effectiveness of the technology, (ii) operating in-place units, (iii) engineering and testing with new customers and applications, (iv) pursuing additional lab research and development of new applications (e.g. institutional commercial and industrial boilers) and next generation improvements to Duplex design and standardization, including the pursuit of more complete systems similar to the Duplex Plug & Play for application in other vertical markets, and (v) assisting our customers in making emission results available for designation as BACT by local regulatory bodies.

Our business plan contemplates licensing our technology through forming some other type of collaborative supply agreement after we prove commercial viability and generate interest from end users and OEMs. We believe that collaboration with established OEMs will significantly change the makeup of our sales mix, sales cycles, and margins. A supply collaboration within one or an array of selected vertical markets (e.g. burners for refinery process heaters or institutional commercial and industrial boilers) could dramatically accelerate the global sales and market adoption rate of our technology. However, in order to create channel flexibility and meet end user demand, we intend to continue to pursue end user customers through direct sales and promotional activities, sub-contractors, or channel partners. While we are currently pursuing various collaborative supply arrangements, we have no agreements at this time.

Historically, we have funded our operations through the sale of our securities. Over the years we have raised gross proceeds of $72 million and net proceeds of $65.9 million through six offerings of our securities.

In order to generate meaningful revenues, our technologies must be fully developed, gain market recognition and acceptance and develop a critical level of successful sales and product installations. In addition, management believes that the successful growth and operation of our business is dependent upon our ability to obtain adequate sources of funding through co-development agreements, strategic partnering agreements, or equity or debt financing to adequately support research and development efforts, protect intellectual property, form relationships with strategic partners and provide for working capital and general corporate purposes. There can be no assurance that we will be successful in achieving our long-term plans, or that such plans, if consummated, will result in profitable operations or enable us to continue in the long-term as a going concern.

Our costs include employee salaries and benefits, compensation paid to consultants, materials and supplies for research, costs associated with development activities including materials, sub-contractors, travel and administration, legal and accounting expenses, sales and marketing costs, general and administrative expenses, and other costs associated with an early stage, publicly-traded technology company. We currently have 16 full-time employees. We anticipate increasing the number of employees required to support our activities in the areas of research and development, sales and marketing, and general and administrative functions. We also expect to incur consulting expenses related to technology development commensurate with our current levels, because using third party expertise and resources is more cost effective than maintaining full time resources, and we expect to incur increasing expenses to protect our intellectual property.

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The amount that we spend for any specific purpose may vary significantly, and could depend on a number of factors including, but not limited to, the pace of progress of our commercialization and development efforts, actual needs with respect to product testing, development and research, market conditions, and changes in or revisions to our sales and marketing strategies. 

Research, development, and commercial acceptance of new technologies are, by their nature, unpredictable.  Although we undertake development and commercialization efforts with reasonable diligence, there can be no assurance that the net proceeds from our securities offerings will be sufficient to enable us to develop our technology to the extent needed to create future sales to sustain operations.  If the net proceeds from these offerings are insufficient for this purpose, we will consider other options to continue our path to commercialization, including, but not limited to, additional financing through follow-on equity offerings, debt financing, co-development agreements, sale or licensing of developed intellectual or other property, or other alternatives.

We cannot assure that our technologies will be accepted, that we will ever earn revenues sufficient to support our operations, or that we will ever be profitable. Furthermore, we have no committed source of financing and we cannot assure that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to scale back our development plans by reducing expenditures for employees, consultants, business development and marketing efforts or to otherwise severely curtail, or even to cease, our operations.

CRITICAL ACCOUNTING POLICIES

The following discussion and analysis of financial condition and results of operations is based upon our financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. Certain accounting policies and estimates are particularly important to the understanding of our financial position and results of operations and require the application of significant judgment by our management or can be materially affected by changes from period to period in economic factors or conditions that are outside of our control. As a result, they are subject to an inherent degree of uncertainty. In applying these policies, our management uses their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on our historical operations, our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate. See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this report for a more complete description of our significant accounting policies.

Revenue Recognition and Cost of Goods Sold. The Company recognizes revenue and related cost of goods sold in accordance with FASB ASC 606 Revenue from Contracts with Customers (ASC 606). Revenues and cost of goods sold are recognized once the goods or services are delivered to the customer’s control and performance obligations are satisfied. Typically, the Company’s contracts with customers have performance obligations regarding air emissions and operational performance that are satisfied upon completion of service. Since this is the singular performance obligation and cannot be achieved until the air emissions and operational performance have been successfully tested, revenue related to the contracts is recognized upon project completion.

Product Warranties. The Company warrants all installed products against defects in materials and workmanship for a period specified in each contract by replacing failed parts. Accruals for product warranties are based on historical warranty experience and current product performance trends, and are recorded at the time revenue is recognized as a component of cost of sales. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary and such adjustments could be material in the future if estimates differ significantly from actual warranty expense. The warranty liabilities are included in accrued liabilities in the balance sheets.

Research and Development. The cost of research and development is expensed as incurred. Research and development costs consist of salaries, benefits, share-based compensation, consulting fees, rent, utilities, depreciation, and consumables.

Stock-Based Compensation. The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the condensed consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.

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Fair Value of Financial Instruments. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company's financial instruments primarily consist of cash and cash equivalents, accounts payable, accrued expenses and short-term investments in government securities. As of the balance sheet date, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributed to the short maturities of these instruments. The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

RESULTS OF OPERATIONS

Comparison of the Three Months Ending March 31, 2019 and 2018

Sales and Gross Profit. We earned no revenues during the quarter ended March 31, 2019, referred to herein as Q1 2019. We incurred $1,000 in additional warranty costs for previously completed contracts during Q1 2019 which resulted in a gross loss. We earned $530,000 in revenues and realized a gross profit of $135,000 from the installation of our Duplex technology in two enclosed ground flares for a major California oil producer and in an OTSG owned by another major California oil producer during the three month period ending March 31, 2018, referred to herein as Q1 2018.

Operating Expenses. Operating expenses, consisting of research and development (R&D) and general and administrative (G&A) expenses, decreased by approximately $37,000 to $2,376,000 for Q1 2019, as compared to $2,413,000 for Q1 2018. The Company decreased its R&D expenses by $232,000, or approximately 21%, to $902,000 for Q1 2019 as compared to $1,134,000 for Q1 2018. The decrease in R&D expenses was due primarily to decreased field testing and development costs of our Duplex technology. It was also due to the receipt of SBIR grant funds of $108,000. G&A expenses increased by $195,000, or approximately 15%, to $1,474,000 in Q1 2019 as compared to $1,279,000 in Q1 2018, resulting primarily from increased intellectual property expenses, amortization, professional fees, and compensation, offset by reduced selling and marketing costs.

Loss from Operations. Our loss from operations increased during Q1 2019 by $99,000, to $2,377,000 in Q1 2019 from $2,278,000 in Q1 2018.

Interest Income. Our interest income for investments in U.S. treasury bills for Q1 2019 was $48,000 as compared to $0 in Q1 2018.

Net Loss. Primarily as a result of increased G&A and no gross profit, our net loss for Q1 2019 was $2,329,000 as compared to a net loss of $2,278,000 for Q1 2018, resulting in an increase in net loss of $51,000

Liquidity and Capital Resources

At March 31, 2019, our cash and cash equivalent balance totaled $6,771,000 compared to $8,949,000 at December 31, 2018. This decrease resulted primarily from operating costs. Assuming that our expenses do not increase significantly and that we make no material acquisitions, we anticipate that the current available cash and cash equivalent balance will be sufficient to fund the Company’s ongoing business activities for at least twelve months from the date of filing this report.

At March 31, 2019, our current assets were in excess of current liabilities resulting in working capital of $12,700,000 compared to $14,774,000 at December 31, 2018. The decrease in working capital resulted primarily from the funds used in operations and invested in intangible and fixed assets.

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Operating activities for the three months ended March 31, 2019 resulted in cash outflows of $2,022,000 which were due primarily to the loss for the period of $2,329,000. These were offset primarily by other non-cash expenses of $26,000 and services paid with common stock and stock options of $237,000. Operating activities for the three months ended March 31, 2018 resulted in cash outflows of $1,860,000, which were due primarily to the loss for the period of $2,278,000. These were offset primarily by other non-cash expenses of $79,000, services paid with common stock and stock options of $59,000, and net increase in working capital, exclusive of cash, by $280,000.

Investing activities for the three months ended March 31, 2019 resulted in cash outflows of $145,000 for development of patents and $11,000 for acquisition of fixed assets, compared to $106,000 in disbursements for patent development and $2,000 for the acquisition of fixed assets during the same period of 2018.

There were no net cash inflows from financing activities in the three months ended March 31, 2019. In the three months ending March 31, 2018, we received $11,923,000 from a public offering of our common stock.

Off-Balance Sheet Transactions

We do not have any off-balance sheet transactions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our management, with the participation of our Chief Executive Officer (CEO) (principal executive officer) and our Interim Chief Financial Officer (CFO) (principal financial and accounting officer), has concluded that, as of March 31, 2019, our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no material changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

23

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS

We incorporate herein by reference the risk factors included under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018 which we filed with the Securities and Exchange Commission on March 12, 2019. The following risk could also materially affect our business results of operations or financial condition and cause the value of our securities to decline.

If we fail to comply with the continued minimum closing bid requirements of The Nasdaq Capital Market LLC (“Nasdaq”) by October 14, 2019 or other requirements for continued listing, including stockholder equity requirements, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

Our common stock is listed for trading on Nasdaq, therefore, we must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share for 30 consecutive business days. On April 17, 2019, the Nasdaq staff notified us that we did not comply with the minimum $1.00 per share bid price requirement for continued listing, as set forth in Nasdaq Listing Rule 5550(a)(2). We have been granted 180 calendar days, through October 14, 2019, to regain compliance. In the event that we do not regain compliance within this 180 day period, we may be eligible to seek an additional compliance period of 180 calendar days if we meet certain requirements.

There can be no assurance that we will be able to regain compliance with Nasdaq’s listing rules. If we are unable to regain compliance with the minimum closing bid price requirement or if we fail to meet any of the other continued listing requirements, including stockholder equity requirements, our securities may be delisted from Nasdaq, which could reduce the liquidity of our common stock materially and result in a corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, employees and business development opportunities.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 31, 2019 we issued 2,500 shares of common stock, having a per share value of $1.44, the closing price of our common stock on October 31, 2018, the date of grant, from our 2013 Consultant Stock Plan to our investor relations firm, Firm IR, for services provided in the three months ended March 31, 2019.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

24

ITEM 6. EXHIBITS

Exhibit Number	Document
3.1	Articles of Incorporation of ClearSign Combustion Corporation, amended on February 2, 2011 (1)
3.1.1	Articles of Amendment to Articles of Incorporation of ClearSign Combustion Corporation filed on December 22, 2011 (2)
3.2	Bylaws (1)
10.1	Consulting Agreement dated January 4, 2019 between the Company  and Roberto Ruiz (3)
10.2	Confidential Separation Agreement and General Release dated January 4, 2019 between the Company and Robeto Ruiz (3)
10.3	Cooperation agreement dated January 8, 2019 between the Company and Anthony DiGiandomenico and certain affiliates of Anthony DiGiandomenico (3)
10.4	Cooperation Agreement dated January 8, 2019 between the Company and Christopher Marlett and MDB Capital Group, LLC (3)
10.5	Employment Agreement dated January 28, 2019 between the Company and Colin James Deller (4)
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a)/15d-14(a) Certification of Interim Chief Financial Officer*
32.1	Section 1350 Certification of Chief Executive Officer and Interim Chief Financial Officer+

101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE XBRL Instant Document* XBRL Taxonomy Extension Schema Document* XBRL Taxonomy Extension Calculation Linkbase Document* XBRL Taxonomy Extension Definition Linkbase Document* XBRL Taxonomy Extension Label Linkbase Document* XBRL Taxonomy Extension Presentation Linkbase Document*

*Filed herewith.

+Furnished herewith.

(1) Incorporated by reference from the registration statement on Form S-1 filed by ClearSign Combustion Corporation on November 14, 2011.

(2) Incorporated by reference from pre-effective amendment number 2 to the registration statement on Form S-1 filed by ClearSign Combustion Corporation on February 7, 2012.

(3) Incorporated by reference from the Current Report on Form 8-K filed by ClearSign Combustion Corporation on January 10, 2019.

(4) Incorporated by reference from the Current Report on Form 8-K filed by ClearSign Combustion Corporation on January 30, 2019.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CLEARSIGN COMBUSTION CORPORATION
	(Registrant)
Date: May 14, 2019	By:	/s/ Colin James Deller
		Colin James Deller
		Chief Executive Officer
	By:	/s/ Brian G. Fike
		Brian G. Fike
		Interim Chief Financial Officer

26

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Colin James Deller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ClearSign Combustion Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2019

/s/ Colin James Deller

Colin James Deller

Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Brian G. Fike, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ClearSign Combustion Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15-d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2019

/s/ Brian G. Fike

Brian G. Fike

Interim Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the periodic report of ClearSign Combustion Corporation (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission (the “Report”), we, Colin James Deller, Chief Executive Officer (Principal Executive Officer) and Brian G. Fike, Interim Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of our knowledge:

(1)       The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Exchange Act, and

(2)       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: May 14, 2019

/s/ Colin James Deller

Colin James Deller

Chief Executive Officer (Principal Executive Officer)

/s/ Brian G. Fike

Brian G. Fike

InterimChief Financial Officer (Principal Financial and Accounting Officer)

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of ClearSign Combustion Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 14, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Registrant Name	CLEARSIGN COMBUSTION CORP
Entity Central Index Key	0001434524
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Trading Symbol	CLIR
Entity Common Stock, Shares Outstanding		26,699,761
Entity Emerging Growth Company	false
Entity Small Business	true

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 6,771,000	$ 8,949,000
Short-term investments	6,967,000	6,923,000
Contract assets	39,000	39,000
Prepaid expenses and other assets	455,000	500,000
Total current assets	14,232,000	16,411,000
Fixed assets, net	385,000	457,000
Patents and other intangible assets, net	1,862,000	1,759,000
Other assets	10,000	10,000
Total Assets	16,489,000	18,637,000
Current Liabilities:
Accounts payable and accrued liabilities	1,119,000	1,080,000
Current portion of lease liabilities	214,000	216,000
Accrued compensation and taxes	199,000	341,000
Total current liabilities	1,532,000	1,637,000
Long Term Liabilities:
Long term lease liabilities	41,000	91,000
Total liabilities	1,573,000	1,728,000
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.0001 par value, zero shares issued and outstanding	0	0
Common stock, $0.0001 par value, 26,699,761 and 26,697,261 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively	3,000	3,000
Additional paid-in capital	76,753,000	76,417,000
Accumulated deficit	(61,840,000)	(59,511,000)
Total stockholders' equity	14,916,000	16,909,000
Total Liabilities and Stockholders' Equity	$ 16,489,000	$ 18,637,000

XML

Consolidated Balance Sheets [Parenthetical] - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares issued	26,699,761	26,697,261
Common stock, shares outstanding	26,699,761	26,697,261

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Sales	$ 0	$ 530,000
Cost of goods sold	1,000	395,000
Gross profit (loss)	(1,000)	135,000
Operating expenses:
Research and development, net of grants	902,000	1,134,000
General and administrative	1,474,000	1,279,000
Total operating expenses	2,376,000	2,413,000
Loss from operations	(2,377,000)	(2,278,000)
Other income:
Interest income	48,000	0
Net loss	$ (2,329,000)	$ (2,278,000)
Net loss per share - basic and fully diluted	$ (0.09)	$ (0.13)
Weighted average number of shares outstanding - basic and fully diluted	26,697,289	17,717,214

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($)	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]
Balances at Dec. 31, 2017	$ 2,432,000	$ 2,000	$ 52,441,000	$ (50,011,000)
Balances (in shares) at Dec. 31, 2017		15,608,853
Shares issued in stock offering	12,937,000	$ 0	12,937,000	0
Shares issued in stock offering (in shares)		5,750,000
Issuance costs of rights offering	(1,014,000)	$ 0	(1,014,000)	0
Shares issued for services	9,000	$ 0	9,000	0
Shares issued for services (in shares)		2,500
Share Based Compensation	50,000		50,000
Net loss	(2,278,000)	$ 0	0	(2,278,000)
Balances at Mar. 31, 2018	12,136,000	$ 2,000	64,423,000	(52,289,000)
Balances (in shares) at Mar. 31, 2018		21,361,353
Balances at Dec. 31, 2018	16,909,000	$ 3,000	76,417,000	(59,511,000)
Balances (in shares) at Dec. 31, 2018		26,697,261
Shares issued for services	3,000	$ 0	3,000	0
Shares issued for services (in shares)		2,500
Fair value of stock options issued in payment of accrued compensation	100,000	$ 0	100,000	0
Share Based Compensation	233,000	0	233,000	0
Net loss	(2,329,000)	0	0	(2,329,000)
Balances at Mar. 31, 2019	$ 14,916,000	$ 3,000	$ 76,753,000	$ (61,840,000)
Balances (in shares) at Mar. 31, 2019		26,699,761

XML

Condensed Consolidated Statements of Stockholders' Equity [Parenthetical] - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Common stock for services per share issue one	$ 1.44	$ 3.50
Stock Issued During Period Rights Offering Per Share		$ 2.25

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (2,329,000)	$ (2,278,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services	3,000	9,000
Share based compensation	233,000	50,000
Depreciation and amortization	70,000	79,000
Accrued interest income	(44,000)	0
Change in operating assets and liabilities:
Contract assets	0	145,000
Accounts receivable	0	(344,000)
Prepaid expenses and other assets	45,000	(121,000)
Accounts payable and accrued liabilities	42,000	379,000
Accrued compensation and taxes	(42,000)	221,000
Net cash used in operating activities	(2,022,000)	(1,860,000)
Cash flows from investing activities:
Acquisition of fixed assets	(11,000)	(2,000)
Disbursements for patents and other intangible assets	(145,000)	(106,000)
Net cash used in investing activities	(156,000)	(108,000)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of offering costs	0	11,923,000
Net cash provided by financing activities	0	11,923,000
Net increase (decrease) in cash and cash equivalents	(2,178,000)	9,955,000
Cash and cash equivalents, beginning of year	8,949,000	1,247,000
Cash and cash equivalents, end of year	$ 6,771,000	$ 11,202,000

XML

Condensed Consolidated Statements of Cash Flows [Parenthetical] - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Cash Flow Noncash Operating Activities Disclosure [Abstract]
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures	159,100
Due to Officers or Stockholders, Current		$ 100,000

XML

Organization and Description of Business

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

Note 1 – Organization and Description of Business

ClearSign Combustion Corporation (ClearSign or the Company) designs and develops technologies for the purpose of improving key performance characteristics of combustion systems, including emission and operational performance, energy efficiency and overall cost-effectiveness. The Company’s primary technologies include its Duplex™ technology, which achieves very low emissions without the need of external flue gas recirculation, selective catalytic reduction, or higher excess air operation, and its Electrodynamic Combustion Control™ or ECC™ technology, which introduces a computer-controlled electric field into the combustion region that may better control gas-phase chemical reactions and improve system performance and cost-effectiveness. The Company is headquartered in Seattle, Washington and was incorporated in the state of Washington in 2008.  On July 28, 2017, the Company incorporated a subsidiary, ClearSign Asia Limited, in Hong Kong to represent the Company’s business and technological interests throughout Asia. Through ClearSign Asia Limited, the Company has established a Wholly Foreign Owned Enterprise (WFOE) in China – ClearSign Combustion (Beijing) Environmental Technologies Co., LTD.

Liquidity

The Company’s technologies are currently in field development and have generated nominal revenues from operations to date to meet operating expenses. In order to generate meaningful revenues, the technologies must be fully developed, gain market recognition and acceptance, and develop a critical level of successful sales and product installations. The Company has historically financed its operations primarily through issuances of equity securities, including $11.9 million in proceeds, net of offering costs, from a stock offering completed on February 27, 2018 and $11.6 million in proceeds, net of offering costs, from a stock offering completed on July 20, 2018. The Company has incurred losses since its inception totaling $61,840,000 and expects to experience operating losses and negative cash flows for the foreseeable future. Management believes that the successful growth and operation of the Company’s business is dependent upon its ability to obtain adequate sources of funding through co-development agreements, strategic partnering agreements, or equity or debt financing to adequately support research and development efforts, protect intellectual property, form relationships with strategic partners, and provide for working capital and general corporate purposes. There can be no assurance that the Company will be successful in achieving its long-term plans as set forth above, or that such plans, if consummated, will result in profitable operations or enable the Company to continue in the long-term as a going concern.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed balance sheet at December 31, 2018 has been derived from the Company’s audited financial statements.

In the opinion of management, these consolidated financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of ClearSign and its subsidiary. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition and Cost of Sales

The Company recognizes revenue and related cost of goods sold in accordance with FASB ASC 606 Revenue from Contracts with Customers (ASC 606). Revenues and cost of goods sold are recognized once the goods or services are delivered to the customer’s control and performance obligations are satisfied. Typically, the Company’s contracts with customers have performance obligations regarding air emissions and operational performance that are satisfied upon completion of service. Since this is the singular performance obligation and cannot be achieved until the air emissions and operational performance have been successfully tested, revenue related to the contracts is recognized upon project completion.

The Company’s contracts generally include progress payments from the customer upon completion of defined milestones. As these payments are received they are offset against accumulated project costs and recorded as either contract assets or contract liabilities. Upon completion of the performance obligations and acceptance by the customer the projects can be recorded as revenue.

The Company's contracts with customers contain no variable considerations or incentives or discounts that would cause revenue to be allocated or adjusted over time. Therefore, no separate methods of evaluating the contracts other than consideration of the price at achievement of the performance objectives was used in satisfying the review requirements of ASC 606.

Contract acquisition costs and practical expedients

For contracts that have a duration of less than one year, the Company follows ASC 606, practical expedients and expenses those costs when incurred; for contracts with a life exceeding one year, the Company records those costs when performance obligations related to the contract are completed. The Company generally expenses sales commissions when earned. The Company records those costs within general and administrative expenses.

Product Warranties

The Company warrants all installed products against defects in materials and workmanship for a period specified in each contract by replacing failed parts. Accruals for product warranties are based on historical warranty experience and current product performance trends, and are recorded at the time revenue is recognized as a component of cost of sales. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary, and such adjustments could be material in the future if estimates differ significantly from actual warranty expense. The warranty liabilities are included in accrued liabilities in the balance sheets.

Cash and Cash Equivalents

Highly liquid investments purchased with an original maturity of three months or less are considered cash equivalents. Cash is maintained with a commercial bank where accounts are generally guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company’s deposits may at times exceed this limit. The Company also maintains a cash balance in China. Accounts at such banks are insured up to $75,000 (500,000RMB). The Company has not experienced losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Short-Term Investments

Short-term investments consist of U.S. Treasury bills with original maturities of twelve months or less and greater than three months. These short-term investments are classified as held to maturity and are recorded on an amortized cost basis which approximates fair value.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company may establish or adjust the allowance for specific customers and the accounts receivable portfolio as a whole.

Fixed Assets and Leases

Fixed assets are recorded at cost. Leases are recorded in accordance with FASB ASC 842 Leases. For those leases with a term greater than one year, the Company recognizes on the balance sheet at the time of lease inception or modification a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. Operating leases with a term of 1 year or less are recognized on a straight line basis over the term. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are depreciated over the life of the lease or their useful life, whichever is shorter. All other fixed assets are depreciated over two to four years. Maintenance and repairs are expensed as incurred.

Patents and Trademarks

Patents and trademarks are recorded at cost. Amortization is computed using the straight-line method over the estimated useful lives of the assets once they are awarded.

Impairment of Long-Lived Assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Fair value is determined based on the present value of estimated expected cash flows using a discount rate commensurate with the risks involved, quoted market prices, or appraised values depending upon the nature of the assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal.

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to establish fair value are the following:

	Level 1 – Quoted prices in active markets for identical assets or liabilities;
	Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company's financial instruments primarily consist of cash and cash equivalents, short-term investments, accounts payable and accrued expenses. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributable to the short-term maturities of these instruments.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

Research and Development

The cost of research and development is expensed as incurred. Research and development costs consist of salaries, benefits, share based compensation, consulting fees, rent, utilities, depreciation, and consumables.

During the three months ended March 31, 2019, the Company received $108,000 to partially fund specific research and development activity relating to its ECC technology. Since these funds were provided without expectation of reciprocation, except notification of research results, the funds received were offset against the related research and development costs incurred.

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.

Stock-Based Compensation

The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.

Foreign Operations

The accompanying consolidated financial statements as of March 31, 2019 and December 31, 2018 include assets amounting to approximately$234,000 and $199,000, respectively, relating to operations of the Company in China. It is always possible unanticipated events in foreign countries could disrupt the Company’s operations.

Foreign Currency

The functional currency of ClearSign Asia Limited is the U.S. dollar. The Company remeasures the transactions denominated in Chinese Yuan at the average exchange rate in effect during the period. At the end of each reporting period, the Company remeasures ClearSign Asia Limited’s monetary assets and liabilities to the U.S. dollar using exchange rates in effect at the end of the reporting period. The Company remeasures its non-monetary assets and liabilities at historical exchange rates. The Company records gains and losses related to remeasurement in other income (expense), net in the consolidated statements of operations. Foreign currency exchange gain (losses) has not been significant in any period presented and the Company has not undertaken any hedging transactions related to foreign currency exposure.

Net Loss per Common Share

Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive. At March 31, 2019 and 2018, potentially dilutive shares outstanding amounted to 1,516,540 and 3,465,168, respectively.

Recently Adopted Standards

In June 2018 FASB issued ASU No. 2018-07 Compensation-Stock Compensation. The amendments in this update expand the scope of Topic 718 to include share based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company currently does not believe this amendment applies to any of its transactions at this time.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures.

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Fixed Assets

3 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 3 – Fixed Assets

Fixed assets are summarized as follows:

	March 31,			December 31,
	2019			2018
	(unaudited)
Machinery and equipment	$	857,000		$	853,000
Office furniture and equipment		193,000			186,000
Leasehold improvements		150,000			150,000
Right of use asset-operating leases		637,000			637,000
Accumulated depreciation and amortization		(1,452,000	)		(1,369,000	)
	$	385,000		$	457,000

The Company has a triple net operating lease for office and laboratory space in Seattle, Washington through March 2020 with rent of approximately $12,000 per month plus triple net operating costs. The Company also has a triple net operating lease for office space in Tulsa, Oklahoma through August 2019 with monthly rent of approximately $2,000 per month plus triple net operating costs. Both leases include lessee renewal options for three years at the then prevailing market rate. The Company has an operating lease for office space in Beijing, China through November 2020 with a monthly rent of approximately $6,000.

Lease costs for the three months ended March 31, 2019 and 2018 and other quantitative disclosures are as follows (unaudited):

	For the three months ended March 31,
	2019		2018
Lease cost:
Operating lease cost	$	59,000	$	53,000
Total lease cost	$	59,000	$	53,000
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	60,000
Right-of-use assets obtained in exchange for new operating lease liabilities
For operating lease:
Weighted average remaining lease term (in years)				1.45
Weighted average discount rate				5.56	%

Minimum future payments under the Company’s leases at March 31, 2019 and their application to the corresponding lease liabilities are as follows (unaudited):

	Discounted lease liability payments		Payments due under lease agreements
2019 (remaining 9 months)		177,000		171,000
2020		78,000		95,000
Total	$	255,000	$	266,000

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Patents and Other Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets Disclosure [Text Block]

Note 4 – Patents and Other Intangible Assets

Patents and other intangible assets are summarized as follows:

	March 31,			December 31,
	2019			2018
		(Unaudited)
Patents
Patents pending	$	1,313,000		$	1,202,000
Issued patents		791,000			761,000
		2,104,000			1,963,000
Trademarks
Trademarks pending		59,000			55,000
Registered trademarks		23,000			23,000
		82,000			78,000
Other		8,000			8,000
		2,194,000			2,049,000
Accumulated amortization		(332,000	)		(290,000	)
	$	1,862,000		$	1,759,000

Future amortization expense associated with issued patents and registered trademarks as of March 31, 2019 is estimated as follows (unaudited):

2019 (remaining 9 months)	$	130,000
2020		151,000
2021		97,000
2022		64,000
2023		33,000
Thereafter		6,000
	$	481,000

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Sales, Contract Assets and Contract Liabilities

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Note 5 – Sales, Contract Assets and Contract Liabilities

The Company recognized no revenue during the three months ended March 31, 2019. For the three months ended March 31, 2018, the Company recognized revenues totaling $530,000 from completed flare projects. At March 31, 2019, the Company had contract assets of $39,000 and contract liabilities of $0. The cost of goods sold of $1,000, recognized during the three months ended March 31, 2019, related to additional warranty costs incurred for previously completed contracts. 

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Stockholders' Equity

3 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

Note 6 – Stockholders’ Equity

Common Stock and Preferred Stock

The Company is authorized to issue 62,500,000 shares of common stock and 2,000,000 shares of preferred stock. Preferences, limitations, voting powers and relative rights of any preferred stock to be issued may be determined by the Company’s Board of Directors. The Company has not issued any shares of preferred stock.

Equity Incentive Plan

The Company has adopted and the Company’s shareholders have approved the ClearSign Combustion Corporation 2011 Equity Incentive Plan (the Plan) which permits the Company to grant to eligible participants, including officers, employees, directors, consultants and advisors, options to purchase shares of common stock, stock awards and stock bonuses. The Compensation Committee of the Board of Directors is authorized to administer the Plan and establish the grant terms, including the grant price, vesting period and exercise date. As of March 31, 2019, the number of shares of common stock reserved for issuance under the Plan totaled 2,180,367. The Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 10% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine. 

In the three months ended March 31, 2019, the Company made awards of stock options for the purchase of an aggregate 559,100 shares of common stock to its employees from the Plan. Of these awards, options covering 159,100 shares of common stock were awarded in lieu of cash bonuses for 2018 and the expense was recorded during the year ended December 31, 2018. The remaining 400,000 stock option awards have exercise prices at the grant date fair value ranging from $1.21 to $2.25 per share, contractual lives of 10 years, and vest over 2 years. The fair value of the stock options estimated on the date of grant using the Black-Scholes option valuation model was $222,000. The recognized compensation expense associated with these awards for the three months ended March 31, 2019 was $74,000. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	5.89 years
Weighted average volatility	71	%
Forfeiture rate	20	%
Weighted average risk-free interest rate	2.55	%
Expected dividend rate	0	%

Outstanding stock option awards at March 31, 2019 and December 31, 2018 totaled 1,436,540 shares and 880,277 shares, respectively, with the right to purchase 900,399 shares and 587,962 shares being vested and exercisable at March 31, 2019 and December 31, 2018, respectively. The recognized compensation expense associated with stock option awards for the three months ended March 31, 2019 and 2018 totaled $126,000 and $50,000, respectively. On March 31, 2019 the number of shares reserved under the Plan but unissued totaled 743,827. At March 31, 2019, there was $472,000 of total unrecognized compensation cost related to non-vested share based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 2.2 years.The intrinsic value of outstanding stock options was $0 at March 31, 2019.

Consultant Stock Plan

The Company has a Consultant Stock Plan (the Consultant Plan) which provides for the granting of shares of common stock to consultants who provide services related to capital raising, investor relations, and making a market in or promoting the Company’s securities. The Company’s officers, employees, and board members are not entitled to receive awards from the Consultant Plan. The Compensation Committee of the Board of Directors is authorized to administer the Consultant Plan and establish the grant terms. The number of shares reserved for issuance under the Consultant Plan on March 31, 2019 totaled 253,317 with 197,567 of those shares unissued. The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine. The Company granted 10,000 shares of common stock to a consultant under the Consultant Plan for services performed and to be performed during the period from August 13, 2018 to August 31, 2019. The fair value of the stock at the time of grant was $1.44 per share for a total value of $14,000. The Consultant Plan expense for the three months ended March 31, 2019 and 2018 was $3,000 and $9,000, respectively.

Incentive Stock Options

Pursuant to the rules of The Nasdaq Stock Market, the Company has the ability to issue equity awards, including stock options as an inducement to an individual to accept employment with the Company. These awards need not be granted from a plan approved by the Company’s shareholders. During the three months ending March 31, 2019 the Company granted 600,000 incentive stock options as an inducement to its President and Chief Executive Officer to accept the Company’s offer of employment. (see Note 7) The stock options have exercise prices at the award date fair value ranging from $1.16 to $2.25 per share, contractual lives of 10 years, and vest over 2 years. The fair value of the stock options estimated on the date of grant using the Black-Scholes option valuation model was $329,000. The recognized compensation expense associated with these awards for the three months ended March 31, 2019 was $110,000. The remaining unrecognized compensation expense associated with these awards is $219,000. The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	5.75 years
Weighted average volatility	71	%
Forfeiture rate	20	%
Weighted average risk-free interest rate	2.55	%
Expected dividend rate	0	%

Warrants

At March 31, 2019, warrants for the purchase of 80,000 shares of common stock at an exercise price of $1.80 per share were outstanding and had a remaining life of 1.88 years.

During the quarter ending March 31, 2019, warrants to purchase an aggregate 2,415,784 shares of common stock issued by the Company on March 5, 2014 and January 25, 2017 expired in accordance with their terms. The intrinsic value of the outstanding warrants was $0 at March 31, 2019.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 7 – Commitments and Contingencies

On January 28, 2019 (the “Effective Date”), the Company and Colin James Deller entered into an employment agreement (the “Agreement”) pursuant to which the Company employed Dr. Deller as its President until April 1, 2019, at which time Dr. Deller became the Company’s Chief Executive Officer. Pursuant to the Agreement, the Company pays Dr. Deller an annual salary of $350,000. As an inducement to accept employment with the Company, Dr. Deller was also granted an incentive option to purchase 400,000 shares of the Company’s common stock at an exercise price of $1.16 per share and an incentive option to purchase 200,000 shares of the Company’s common stock at an exercise price of $2.25 per share. Each option has a term of 10 years and will vest as follows: the right to purchase one-third of the shares of common stock subject to the option vested on the Effective Date; the right to purchase one-third of the shares will vest on the first anniversary of the grant date; and the right to purchase one-third of the shares will vest on the second anniversary of the grant date. The Company also agreed to pay certain expenses, not to exceed the sum of $100,000, related to Dr. Deller’s move from Tulsa, Oklahoma to Seattle, Washington, including reasonable expenses related to the sale of his home in Tulsa. As a temporary adjustment for the difference in the cost of living between Tulsa and Seattle (the “Relocation Adjustment”), for a period of four years (the “Payment Period”) from the Effective Date, the Company has also agreed to pay up to $6,000 a month to Dr. Deller for expenses related to temporary housing and travel to and from Tulsa to Seattle. If Dr. Deller purchases a home in the Seattle area, the Relocation Adjustment will continue to be paid through the expiration of the Payment Period, although the Relocation Adjustment may be adjusted or terminated upon mutual agreement of Dr. Deller and the Company. The Agreement may be terminated by the Company for cause, as defined in the Agreement, due to Dr. Deller’s death or disability, upon 30 days’ notice to Dr. Deller or as a result of a change in control, as defined in the Agreement. With the exception of a termination for cause, if Dr. Deller’s employment is terminated by the Company, aside from accrued but unpaid salary, bonus (if any) and business expenses, Dr. Deller will receive the balance of the unpaid Relocation Adjustment and six months of his annual salary.

Litigation

From time to time the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties and an adverse result in any such matter may harm the Company’s business. As of the date of this report, the Company is not a party to any material pending legal proceedings.

Indemnification Agreements

The Company maintains indemnification agreements with its directors and officers that may require the Company to indemnify these individuals against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by law.

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Subsequent Event

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 8 – Subsequent Event

Nasdaq Listing Requirements

On April 17, 2019, the Company received a letter from The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock for the previous 30 consecutive business days, the common stock did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Marketplace Rule 5550(a)(2). The letter also indicates that the Company will be provided with a compliance period of 180 calendar days, or until October 14, 2019, in which to regain compliance, pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A). The letter further indicates that if, at any time during the 180-day compliance period, the closing bid price of the common stock is at least $1.00 for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation that it has achieved compliance with the minimum bid price requirement. The Company intends to continue to monitor the bid price levels for the common stock, and will consider appropriate alternatives to achieve compliance within the 180-day compliance period.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed balance sheet at December 31, 2018 has been derived from the Company’s audited financial statements.

In the opinion of management, these consolidated financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods.

The accompanying unaudited condensed consolidated financial statements include the accounts of ClearSign and its subsidiary. Intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition Cost of Sales and Change in Accounting Principle [Policy Text Block]

Revenue Recognition and Cost of Sales

The Company recognizes revenue and related cost of goods sold in accordance with FASB ASC 606 Revenue from Contracts with Customers (ASC 606). Revenues and cost of goods sold are recognized once the goods or services are delivered to the customer’s control and performance obligations are satisfied. Typically, the Company’s contracts with customers have performance obligations regarding air emissions and operational performance that are satisfied upon completion of service. Since this is the singular performance obligation and cannot be achieved until the air emissions and operational performance have been successfully tested, revenue related to the contracts is recognized upon project completion.

The Company’s contracts generally include progress payments from the customer upon completion of defined milestones. As these payments are received they are offset against accumulated project costs and recorded as either contract assets or contract liabilities. Upon completion of the performance obligations and acceptance by the customer the projects can be recorded as revenue.

The Company's contracts with customers contain no variable considerations or incentives or discounts that would cause revenue to be allocated or adjusted over time. Therefore, no separate methods of evaluating the contracts other than consideration of the price at achievement of the performance objectives was used in satisfying the review requirements of ASC 606.

Contract Acquisition Costs And Practical Expedients Policy [Policy Text Block]

Contract acquisition costs and practical expedients

For contracts that have a duration of less than one year, the Company follows ASC 606, practical expedients and expenses those costs when incurred; for contracts with a life exceeding one year, the Company records those costs when performance obligations related to the contract are completed. The Company generally expenses sales commissions when earned. The Company records those costs within general and administrative expenses.

Standard Product Warranty, Policy [Policy Text Block]

Product Warranties

The Company warrants all installed products against defects in materials and workmanship for a period specified in each contract by replacing failed parts. Accruals for product warranties are based on historical warranty experience and current product performance trends, and are recorded at the time revenue is recognized as a component of cost of sales. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary, and such adjustments could be material in the future if estimates differ significantly from actual warranty expense. The warranty liabilities are included in accrued liabilities in the balance sheets.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Highly liquid investments purchased with an original maturity of three months or less are considered cash equivalents. Cash is maintained with a commercial bank where accounts are generally guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company’s deposits may at times exceed this limit. The Company also maintains a cash balance in China. Accounts at such banks are insured up to $75,000 (500,000RMB). The Company has not experienced losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Short Term Investments [Policy Text Block]

Short-Term Investments

Short-term investments consist of U.S. Treasury bills with original maturities of twelve months or less and greater than three months. These short-term investments are classified as held to maturity and are recorded on an amortized cost basis which approximates fair value.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company’s customers. Based on a review of these factors, the Company may establish or adjust the allowance for specific customers and the accounts receivable portfolio as a whole.

Fixed Assets Policy [Policy Text Block]

Fixed Assets and Leases

Fixed assets are recorded at cost. Leases are recorded in accordance with FASB ASC 842 Leases. For those leases with a term greater than one year, the Company recognizes on the balance sheet at the time of lease inception or modification a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. Lease costs are recognized in the income statement over the lease term on a straight-line basis. Operating leases with a term of 1 year or less are recognized on a straight line basis over the term. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are depreciated over the life of the lease or their useful life, whichever is shorter. All other fixed assets are depreciated over two to four years. Maintenance and repairs are expensed as incurred.

Patents and Trademarks Policy [Policy Text Block]

Patents and Trademarks

Patents and trademarks are recorded at cost. Amortization is computed using the straight-line method over the estimated useful lives of the assets once they are awarded.

Impairment Of Long Lived Asset Policy [Policy Text Block]

Impairment of Long-Lived Assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Fair value is determined based on the present value of estimated expected cash flows using a discount rate commensurate with the risks involved, quoted market prices, or appraised values depending upon the nature of the assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced for the cost of disposal.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to establish fair value are the following:

	Level 1 – Quoted prices in active markets for identical assets or liabilities;
	Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
	Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company's financial instruments primarily consist of cash and cash equivalents, short-term investments, accounts payable and accrued expenses. As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is primarily attributable to the short-term maturities of these instruments.

The Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets at fair value.

Research and Development Expense, Policy [Policy Text Block]

Research and Development

The cost of research and development is expensed as incurred. Research and development costs consist of salaries, benefits, share based compensation, consulting fees, rent, utilities, depreciation, and consumables.

During the three months ended March 31, 2019, the Company received $108,000 to partially fund specific research and development activity relating to its ECC technology. Since these funds were provided without expectation of reciprocation, except notification of research results, the funds received were offset against the related research and development costs incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The costs of all employee stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Stock compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured.

Foreign Operations [Policy Text Block]

Foreign Operations

The accompanying consolidated financial statements as of March 31, 2019 and December 31, 2018 include assets amounting to approximately$234,000 and $199,000, respectively, relating to operations of the Company in China. It is always possible unanticipated events in foreign countries could disrupt the Company’s operations.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency

The functional currency of ClearSign Asia Limited is the U.S. dollar. The Company remeasures the transactions denominated in Chinese Yuan at the average exchange rate in effect during the period. At the end of each reporting period, the Company remeasures ClearSign Asia Limited’s monetary assets and liabilities to the U.S. dollar using exchange rates in effect at the end of the reporting period. The Company remeasures its non-monetary assets and liabilities at historical exchange rates. The Company records gains and losses related to remeasurement in other income (expense), net in the consolidated statements of operations. Foreign currency exchange gain (losses) has not been significant in any period presented and the Company has not undertaken any hedging transactions related to foreign currency exposure.

Earnings Per Share, Policy [Policy Text Block]

Net Loss per Common Share

Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive. At March 31, 2019 and 2018, potentially dilutive shares outstanding amounted to 1,516,540 and 3,465,168, respectively.

Recently Adopted Standards Policy [Policy Text Block]

Recently Adopted Standards

In June 2018 FASB issued ASU No. 2018-07 Compensation-Stock Compensation. The amendments in this update expand the scope of Topic 718 to include share based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company currently does not believe this amendment applies to any of its transactions at this time.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s consolidated financial statement presentation or disclosures.

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Fixed Assets (Tables)

3 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Fixed assets are summarized as follows:

	March 31,			December 31,
	2019			2018
	(unaudited)
Machinery and equipment	$	857,000		$	853,000
Office furniture and equipment		193,000			186,000
Leasehold improvements		150,000			150,000
Right of use asset-operating leases		637,000			637,000
Accumulated depreciation and amortization		(1,452,000	)		(1,369,000	)
	$	385,000		$	457,000

Schedule Of Leases Cost [Table Text Block]

Lease costs for the three months ended March 31, 2019 and 2018 and other quantitative disclosures are as follows (unaudited):

	For the three months ended March 31,
	2019		2018
Lease cost:
Operating lease cost	$	59,000	$	53,000
Total lease cost	$	59,000	$	53,000
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	60,000
Right-of-use assets obtained in exchange for new operating lease liabilities
For operating lease:
Weighted average remaining lease term (in years)				1.45
Weighted average discount rate				5.56	%

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Minimum future payments under the Company’s leases at March 31, 2019 and their application to the corresponding lease liabilities are as follows (unaudited):

	Discounted lease liability payments		Payments due under lease agreements
2019 (remaining 9 months)		177,000		171,000
2020		78,000		95,000
Total	$	255,000	$	266,000

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Patents and Other Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill [Table Text Block]

Patents and other intangible assets are summarized as follows:

	March 31,			December 31,
	2019			2018
		(Unaudited)
Patents
Patents pending	$	1,313,000		$	1,202,000
Issued patents		791,000			761,000
		2,104,000			1,963,000
Trademarks
Trademarks pending		59,000			55,000
Registered trademarks		23,000			23,000
		82,000			78,000
Other		8,000			8,000
		2,194,000			2,049,000
Accumulated amortization		(332,000	)		(290,000	)
	$	1,862,000		$	1,759,000

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Future amortization expense associated with issued patents and registered trademarks as of March 31, 2019 is estimated as follows (unaudited):

2019 (remaining 9 months)	$	130,000
2020		151,000
2021		97,000
2022		64,000
2023		33,000
Thereafter		6,000
	$	481,000

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2019

Equity Incentive Plan [Member]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	5.89 years
Weighted average volatility	71	%
Forfeiture rate	20	%
Weighted average risk-free interest rate	2.55	%
Expected dividend rate	0	%

Employee Stock Option [Member]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following weighted-average assumptions were utilized in the calculation of the fair value of the stock options:

Expected life	5.75 years
Weighted average volatility	71	%
Forfeiture rate	20	%
Weighted average risk-free interest rate	2.55	%
Expected dividend rate	0	%

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Organization and Description of Business (Details Textual) - USD ($)	1 Months Ended
	Jul. 20, 2018	Feb. 27, 2018	Mar. 31, 2019	Dec. 31, 2018
Organization and Description of Business [Line Items]
Proceeds from Issuance of Common Stock	$ 11,600,000	$ 11,900,000
Accumulated deficit			$ (61,840,000)	$ (59,511,000)

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Summary of Significant Accounting Policies (Details Textual)	3 Months Ended
	Mar. 31, 2019 USD ($) shares	Mar. 31, 2018 shares	Mar. 31, 2019 CNY (¥)	Dec. 31, 2018 USD ($)
Variable Interest Entity [Line Items]
Cash, FDIC Insured Amount	$ 250,000
Weighted Average Number of Shares Outstanding, Diluted | shares	1,516,540	3,465,168
Tax Benefits Recognized Description	The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution.
Assets	$ 16,489,000			$ 18,637,000
Funds Received	108,000
CHINA
Variable Interest Entity [Line Items]
Cash, FDIC Insured Amount	75,000		¥ 500,000
Assets	$ 234,000			$ 199,000

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Fixed Assets (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Machinery and equipment	$ 857,000	$ 853,000
Office furniture and equipment	193,000	186,000
Leasehold improvements	150,000	150,000
Right of use asset-operating leases	637,000	637,000
Accumulated depreciation and amortization	(1,452,000)	(1,369,000)
Property, Plant and Equipment, Net, Total	$ 385,000	$ 457,000

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Fixed Assets (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Lease cost:
Operating lease cost	$ 59,000	$ 53,000
Total lease cost	$ 59,000	53,000
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$ 60,000
For operating lease:
Weighted average remaining lease term (in years)		1 year 5 months 12 days
Weighted average discount rate		5.56%

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Fixed Assets (Details 2)	Mar. 31, 2019 USD ($)
Discounted Lease Liabilities Payments [Member]
2019 (remaining 9 months)	$ 177,000
2020	78,000
Total	255,000
Payments Due Under Lease Agreement [Member]
2019 (remaining 9 months)	171,000
2020	95,000
Total	$ 266,000

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Fixed Assets (Details Textual)	3 Months Ended
	Mar. 31, 2019 USD ($)
Operating Lease, Cost	$ 6,000
Lease One [Member]
Triple Net Operating Cost	12,000
Lease Two [Member]
Triple Net Operating Cost	$ 2,000

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Patents and Other Intangible Assets (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Patents	$ 2,104,000	$ 1,963,000
Trademarks	82,000	78,000
Other	8,000	8,000
Patents and other intangible assets	2,194,000	2,049,000
Accumulated amortization	(332,000)	(290,000)
Finite-Lived Intangible Assets, Net	1,862,000	1,759,000
Patents Pending [Member]
Patents	1,313,000	1,202,000
Issued Patents [Member]
Patents	791,000	761,000
Trademarks Pending [Member]
Trademarks	59,000	55,000
Registered Trademarks [Member]
Trademarks	$ 23,000	$ 23,000

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Patents and Other Intangible Assets (Details 1) - Patents [Member]	Mar. 31, 2019 USD ($)
Finite-Lived Intangible Assets [Line Items]
2019 (remaining 9 months)	$ 130,000
2020	151,000
2021	97,000
2022	64,000
2023	33,000
Thereafter	6,000
Finite-Lived Intangible Assets, Net	$ 481,000

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Sales, Contract Assets and Contract Liabilities (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Cost of Goods and Services Sold	$ 1,000
Contract with Customer, Asset, Net, Current	39,000		$ 39,000
Contract with Customer, Liability, Current	0
Flare Projects [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 0	$ 530,000

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Stockholders' Equity (Details) - Equity Incentive Plan [Member]	3 Months Ended
	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life	5 years 10 months 20 days
Weighted average volatility	71.00%
Forfeiture rate	20.00%
Weighted average risk-free interest rate	2.55%
Expected dividend rate	0.00%

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Stockholders' Equity (Details 1) - Incentive Stock Options [Member]	3 Months Ended
	Mar. 31, 2019
Expected life	5 years 9 months
Weighted average volatility	71.00%
Forfeiture rate	20.00%
Weighted average risk-free interest rate	2.55%
Expected dividend rate	0.00%

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Stockholders' Equity (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Class of Stock [Line Items]
Common Stock, Shares Authorized	62,500,000
Preferred Stock, Shares Authorized	2,000,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 472,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	222,000		400,000
Stock Option Plan Description	The Consultant Plan provides for quarterly increases in the available number of authorized shares equal to the lesser of 1% of any new shares issued by the Company during the quarter immediately prior to the adjustment date or such lesser amount as the Board of Directors shall determine.
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 0
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.80
Warrants Intrinsic Value Outstanding	$ 0
Warrants Authorized For Issuance To Acquire Common Stock Shares Number	2,415,784
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	80,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number	900,399		587,962
Stock Issued During Period In Lieu of Cash Bonus			159,100
Warrants and Rights Remaining Term	1 year 10 months 17 days
Employee Stock Option [Member]
Class of Stock [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 219,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	600,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term2	10 years
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 2.25
Allocated Share-based Compensation Expense	$ 110,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period1	2 years
Employee Stock Option [Member] | Minimum [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 1.16
Consultant Plan [Member]
Class of Stock [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance	253,317
Consultant Plan Expenses	$ 3,000	$ 9,000
Shares Reserved Unissued	197,567
Consultant Plan [Member] | Employee Stock Option [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	329,000
Consultant Plan One [Member] | Employee Stock Option [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	126,000	50,000
Consultant Plan Two [Member]
Class of Stock [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	10,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 1.44
Share Based Compensation Arrangement By Share Based Payment Award Options Value Grants In Period Weighted Average Grant Date Fair Value	$ 14,000
Equity Incentive Plan [Member]
Class of Stock [Line Items]
Common Stock, Capital Shares Reserved for Future Issuance	2,180,367
Increase Decrease Of Share Based Compensation Arrangement By Share Based Payment Award Percentage	10.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	559,100
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 1.21
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term2	10 years
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 2.25
Allocated Share-based Compensation Expense	$ 74,000
Share-based Compensation Outstanding - Reserved but unissued shares under the Plan	1,436,540		880,277
Shares Reserved Unissued	743,827
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period1	2 years 2 months 12 days

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Commitments (Details Textual) - USD ($)	1 Months Ended
	Jan. 28, 2019	Feb. 20, 2019
Share-based Compensation Award, Tranche One [Member]
Loss Contingencies [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	400,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Exercise Price	$ 1.16
Share-based Compensation Award, Tranche Two [Member]
Loss Contingencies [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number	200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Exercise Price		$ 2.25
Employment Contracts [Member]
Loss Contingencies [Line Items]
Salary and Wage, Excluding Cost of Good and Service Sold	$ 350,000
Labor and Related Expense	$ 100,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term	10 years
Employment Early Termination Living Allowance Per Month	$ 6,000

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Subsequent Event (Details Textual) - Subsequent Event [Member]	1 Months Ended
	Apr. 17, 2019 $ / shares
Subsequent Event [Line Items]
Trading Minimum Bid Price	$ 1.00
Description of Other Regulatory Limitations	the Company received a letter from The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock for the previous 30 consecutive business days, the common stock did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Marketplace Rule 5550(a)(2). The letter also indicates that the Company will be provided with a compliance period of 180 calendar days, or until October 14, 2019, in which to regain compliance, pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A). The letter further indicates that if, at any time during the 180-day compliance period, the closing bid price of the common stock is at least $1.00 for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation that it has achieved compliance with the minimum bid price requirement.