Clear Blue Technologies International Inc.

Clearblue Technologies. Just to let everyone know, we will be recording this presentation webinar and uploading it onto our website and distributing it to interested investors. So it will be recorded. I'm joined this morning by Farouk Anwar, our CFO, as well as Ryan Fremantle, our wonderful IR team member from Sofit Capital. This morning, we're going to go through an overview of the company from a go-forward perspective, as well as our fiscal 2022 results. As soon as I can get the computer to move the page, I will. There we go. As always, as a publicly traded company, please read the forward-looking statements. That gives cautionary advice on we're giving the best knowledge that we can, but things can happen, as we all know, and you should take that under consideration when making any investment decisions. So what we're going to do is give you an update on the company, its products, what we're seeing in the marketplace. And there's been quite a bit of change. So I think it'll be an interesting conversation for you this morning. We're then going to be going over the fiscal 2022 results. And after that, we'll talk about the outlook for 2023, which at this point in time, we are cautiously optimistic that things are in good stead for a good year in 2023. So let's start first of all with 2022. And there is really no other word than abysmal when you look at the revenue results for the year. they were contrary to not only our 2021 results, but our 2020 results, our 2019 results, and our 2018 results. And so it is, in management's opinion, an anomaly that is not something that is typical for the company. It is such a big delta compared to even four years of previous history. And we've spent a lot of time analyzing and thinking about what that cause could have been. And really, the macroeconomic challenges were the key driver of what happened in 2022. As a result of that, we had other challenges as a company. We had working capital challenges, as you can imagine. We are a company that leads because of our R&D technology. We are leaders in innovation. in power and what we do, and that requires R&D investment. And so when the revenue dropped, we needed to figure that out. And I think we took some good actions to do that. And then, you know, it wasn't just us that went through hell and back last year. A lot of our customers, most of our customers had significant impacts as well. They hung up their capital investments, projects had to be reallocated. And that, of course, they would reach out to us for help and assistance on all of those things. So all in all, it has been a tough year. But as we all know, many companies do well when they work through the tough periods. That is when real value and real gems come through. And our job as a company has been to make sure that we take advantage of both the positive and the negative. And so we worked very hard last year to put in place the things we needed to have to make it a launch pad for large and resilient future growth. Albert Einstein, in the middle of every difficulty lies opportunity, and that is clearly what we did. So let's talk about what that looks like. And so I think the key thing that everyone needs to understand is that we are today a very different company than we were 15 months ago. On the one hand, we've raised more than $10 million of non-dilutive capital, and of that, $6 million is pure R&D grants. That is funding that doesn't come in as a one-time lump sum. It comes in on a monthly and quarterly basis and provides us capital to continue to invest in R&D and maintain our market leadership over the next three years. We acquired ePower Systems. We signed the deal in December and closed it in January. And that's a real game changer for us. I'm going to spend a bit of time talking about eSight Power Systems, but it has a huge change in terms of our product line, as well as how we are perceived and positioned within the marketplace as a company. We have broadened our product offering quite significantly. January the 1st of 2022, we basically had two products. We had our nanogrid product for telecom, and we had our aluminum streetlight product. As of today, and July 1, we start shipping two of the products commercially. We are a five-product company. And so that's a big change in the products we have, which expands our addressable market and extremes our use cases and our opportunity for revenue growth. Because of the Eastside Power acquisition, we've expanded our customer base and we added 35 large and strategic new telecom customers as a result of that acquisition in 25 countries. And these are marquee companies. We're talking about American Tower, Airtel, MTN, Vodacom, Safaricom, Orange. And although IHS Towers is a great customer of Clear Blues, they are also a good customer for eSight Power for the larger systems and retrofits. And that's of strategic value to us going forward. And then I think the last thing I'd like to say is that as a result of all of the above, we're really moving into the core network and core infrastructure. So on the core network side, larger power plants, AC driven power hybrid systems and getting working with customers to add solar and get off of diesel from a retrofit perspective is now a big part of our conversation. And I think when I say that, you know, the acquisition of eSight really changes how the market views Clear Blue, it's clear to the marketplace now that we are a leading sophisticated player in telecom power. Prior to eSight, you know, we were in that business, we were in that market, but with new and innovative technology and applications and not really part of the core. Now we are part of the core. And I've seen in a lot of meetings I've had with customers, there's a bit of a different view, a different conversation happening there. and renewed interest in our other products. So if we have eSight and we're doing it in the core, then, you know, that same underlying technology is in NanoGrid. So it's telecom grade equipment. On the Illumiant business, and you're going to see us start to talk a lot more about Illumiant and our North American business than we have in the past. And the reason for that is there's been a market change recently. in sales, in orders, in demand, and in the market. This is highly generated by the Clean Air and Infrastructure Acts in the U.S. and the budgets in Canada that have been announced. And I think the key thing is that the market seems to have been ready. So there's been other incentives in the past, but now we're seeing major infrastructure projects as a result. And so, you know, to be able to talk about the fact that for O'Hare Airport in Chicago, we're part of an airport runway extension project. And in the American Midwest, we're doing an interstate highway interchange. These are different projects than what we have traditionally done and they're larger projects. They're more mission critical infrastructure. They're bigger spending and our expanded product basis is helping us to win those businesses. So when we look at our product line, you will see that it has expanded significantly. First of all, through the acquisition of eSight Power Systems, a Swedish company, we have now taken that technology and we are blending it with Clear Blue's IP from an Illumion's cloud management service perspective. Our business model, our unique IP is being added to that product. And so we're We now call it eSight Micro. And as you can see, that expands our use cases from the nanogrid business, which really took you up to about three kilowatts, up to well over 30 kilowatts of power from an eSight Micro perspective. So whereas no projects or revenue for those types of systems were in our numbers for 2022, even starting in Q1, we have revenue for eSight Micro in our results. Additionally, you know that we've announced the PicoGrid product. It's been a big focus of our R&D investment as a company, and it starts to ship commercially in Q2. So you start to see the impact of PicoGrid revenue and volume sales in our numbers in the back half of this year. I will caution everyone, it will be small numbers this year. But we expect the volume to scale quite significantly. And our plan and our hope is that it will have a material line item in our revenue for 2024. On the Illumiant side, we've also worked on new product introduction. And our traditional product prior to January 1 of last year was our Strata series. We launched the Kami series, which is really a lithium version of our Strata series. I think in Q2 of last year, and one of our large booking orders for that interstate highway is the CAMI product. So we started to see results already in the orders. As you would know, there's easily a nine to 12 month lead time on orders. So we launched it in Q2 and voila, an order already in hand in Q1 of this year. And we are launching our new Senti product, which I'll speak more about in a minute. And I just want to make a comment that Senti builds off of PicoGrid. So it's the same power smart power electronics inside, but two different versions of product from a go to market perspective. And so when you look at the two product lines, you can see that we've added eSight Micro, we've added PicoGrid, we added Kami last year, and we're now adding Senti. And so the portfolio of products the company has is quite expanded. Let me just spend a few minutes on PicoGrid and on Senti. And it's really a definition and an example of the innovation Clearblue brings to the marketplace. So when you're looking at Internet of Things devices, a lot of those systems are very small powered devices. We're talking about security cameras that draw three watts, but they're still very mission critical. And the market needed a very small and low cost, simple system in order to provide reliable power. And so our PicoGrid product is an all-in-one product. It's got energy storage inside of it, as well as the power electronics. So instead of someone having to go out and buy the batteries and buy a charger and then buy some DC-DC converters and have five or six little pieces put together... and have quite a bit of a mess, we have designed and built a single all-in-one simple system, very low cost, very targeted for specific use case. quite a lot of sophistication in terms of the control and management of the loads, which is very much needed for this use case, as well as an ability to support a myriad of different devices from a power perspective. And so you have a company that's got five or six little things that they have to put together, And it might cost about $2,000 to get rid of all of that. And in one 12-inch box, you get picogrid, and it's replacing that. On the Senti side, if you drive around, you have probably seen a fair number of all-in-one solar streetlights. And basically what they are is it's a light on the bottom and a solar panel on the top clapped together so it's kind of an all-in-one. There were a lot of challenges. Unless you're right underneath the equator, those all-in-one streetlights were sub-performance for a number of reasons. And so one of the reasons Clear Blue had not come out with an all-in-one solar street light was because the technology performance was not there. They were basically garden lights, and you've heard me talk a lot about garden lights. We don't do garden lights. We came to a point where because of the performance of PicoGrid, so PicoGrid is inside of Senti, because of the performance of PicoGrid, because of the advancements in LED lighting, and we now have our own LED light engineer on board, and because of an innovative patent around this turret, We now have an ability to deliver an all-in-one streetlight that is probably three to four times the performance of other products in the marketplace. And it'll work in Toronto. And it'll work in, you know, South America. It doesn't just have to be under the equator. So it can be slanted to face the sun. You can put the light any direction you want. You don't have to try to line it up. And it sells for manufacturers, so just real-time price around $1,200 US. And there's no wiring, no separate batteries. Again, everything is built inside. So these products begin shipping in late Q2, and we do expect both of them. Our plan and our target is that these will scale to thousands and thousands of systems that will ship. Now I want to talk a little bit about eSight. So as you know, eSight is a Swedish company, and I'm very proud to talk about Swedish hardware engineering and quality and software that's sitting on that hardware. It is a strong industry brand recognition and a strong respect in the industry that they've been around since I think 2008 with their products in the marketplace, a marquee customer list of customers that they have. And it's interesting to understand that it's quite unique. If you are a power person, you're not used to seeing this outside compartment. And the reason it is there is that it is specifically engineered for harsh, non-air-conditioned environments. So if you are a telecom company and you are spending thousands of dollars a month on diesel gas because the grid's not there or not reliable, Um, Getting off of diesel and reducing that is both a green initiative as well as a huge cost problem. In the last year in Nigeria, for example, people will talk about the cost of diesel going from 200 to 670. So we're talking about over three times the price increase. The only way to get off of diesel and go green is to be non-air conditioned, to have passive cooling. And the only way to do that is is what eSight Micro has. So there was a very specific reason why we were interested in the company and their technology and engineering of what they have built in this product is leading in the industry just from a hardware perspective. When you take that and you merge it with our smart power management platform, which we are adding and integrating with eSight, every eSight system we sell and ship today, with our recurring revenue Illumiance management platform and our service solution. That implementation and integration is ongoing, but every customer from day one that we closed the business has asked for that. And we have an imminent order that we're hoping to get in short order. where the customer is buying some new eSight systems. We've now included our Illumiance, and they've come to us and said, can we take all of our 100 systems we previously purchased from eSight and add the Illumiance platform and service to that? We've also added the fact that we are now selling full system solutions to the marketplace, so we don't just sell the power electronics, we engineer the energy and the power of the system for our customers and we provide an industry-leading service model. So customers don't just get the hardware and then they have to figure it out. They get our ongoing support, and there is strong demand and acceptance for that. So when you put those two things together, you know, when I sit down and I have a conversation with the senior executive of large telcos and towercos, really where we are is we're on the road to zero-diesel. And customers are saying to us, well, how can you go to zero diesel? We're never going to get rid of all of the diesel generators. These are small footprint existing sites. There's shading of the tower on solar panels. And it's a very interesting story. So let me just go back to what our core technology is and what it is that we do. So Clear Blue's core technology is, is our smart off-grid management capability. That is embedded in our hardware out in the field. So Clearblue's NanoGrid, PicoGrid, Illumiant, Senti, all has smart power electronics with edge computing in it. And the wonderful thing about eSight is their hardware has that edge computing capacity as well. And so the ability to add Illumiant into the eSight system is a a perfect synergistic opportunity. Every single system in the field communicates wirelessly with our cloud platform. And through our cloud platform, we deliver unparalleled maximum uptime, long system life, and we handle all the installation maintenance nightmares. And they are quite challenging in the field. How do we do that? Well, we do energy forecasting and management. So we have the weather. We look at the energy profile of the site. We look at what's happening to the site. We get warning indicators and predictors. to help us manage the energy of the site and keep it up even through extreme situations or maintenance events. One of the things that a lot of people don't realize is that when a site goes down and there's a problem, it can take days to repair a maintenance situation. And we have a unique ability to deliver service through a maintenance event, unlike any other company in the marketplace. We also have fantastic troubleshooting and remediation tools, the ability to look for problems that are coming or starting to have an issue long before, you know, the site has to go into emergency mode and the doctors have to get out there and make sure everything's working perfectly in an emergency way. So customers benefit from our intelligent management. We manage through the rainy period. We manage through storms. We manage through degraded sites. Someone broke a solar panel or something wasn't connected properly. And we also manage deliver to our customers more energy than they actually have acquired or paid for. So we have one customer, as an example, who's consuming 50% more power than the site was actually engineered for. And most of the time, that's okay. And that's as a result of our energy and weather forecasting. So we're able to over exceed our performance capacity for a very big chunk of the year, even though the site was not engineered for it. Battery lifecycle management, energy storage, how much you have, how much you have on an How you charge and discharge those batteries and make sure that they're healthy is the key to every business case and business model. There are really two big issues when you're looking at deploying power infrastructure. One is, what is the upfront capex? And we have a better capability to deliver 40% lower upfront capex than anybody else in the marketplace. But also making sure that the batteries in the energy system lasts a long time. needs to last five years, needs to last 10 years, and how to make sure that happens. So I was listening to CNBC last night, and they were talking about pixie dust of the word AI. And, you know, different companies are using the word AI and some people are getting a stock ticked for it or not. So I'm a little bit cautious about talking about this. And so, you know, it's a big word and, you know, I want to be very clear. Clear Blue does not today have any AI. But if you look at this Gartner graph, When you are on the move towards artificial intelligence and that, you start down a path where first you've got to have the data. You've got to know what happened and how things happened, and you have to have descriptive analytics. You have to have lots of data. We are the only company that has thousands of systems in tens and tens of countries that are sending data to an integrated cloud and data platform in the marketplace. There is no other company in the world that is doing that for power systems, for telecom and smart city and hybrid off-grid systems. We have already done the data and the big data. Analytics is something we've been doing for many years. And over the last few years, we've been moving into predictive analytics. So we can now predict certain issues and problems and see when there's going to be a problem in the future. The next step on that path. is to start to automate at scale and then say, use that data to teach the system, to get the machine to learn, to then start to have their own insight. And Clear Blue's $5 million grant from SDTC, the Canadian government that we won and started drawing money down in December of last year, is about our plan to add a checkmark to the fifth item here. And it's going to take us a few years to do that. But we are already very far down the path. And other companies, unless you're a Microsoft or a Google where you have all that data, but if you're a power infrastructure company in our market, you got to start at the beginning. You got to start with data. Then you got to get to big data. Then you got to go to analytics, predictive analytics. So we're on a journey. We don't do AI technically, but we've got a lot of the building blocks and we're going there. So what does that look like for our customers? The conversation we're having with our customer is that what we're doing with R&D, and we're not there today and we can't guarantee everything, but here's where we're going and what we're trying to do. First of all, we want to lower your capex. That we've proven to the marketplace, and it's been independently validated by a meta Facebook and Telefonica telco in South America who did a field study in 2021, produced their own independent report. Yes. Clearblue's smart off-grid power requires 40% lower upfront capex than other competitive systems. So we'll check mark on that one. The next step is how do we get to zero diesel? How do we eliminate massive quantities of diesel? And we're not going to do it on every site. Yes, we'll add solar and every site will require less diesel. But if we can get to a point where using predictive analytics and machine learning and optimization, we can increase the performance of solar, we can optimize for shading, we can use machine learning dynamics to say, okay, hey, this grid over here with this power consumption of that site in this location and that solar, you know what? 20 to 50% of your sites, you can actually turn the diesel generator off. reducing maintenance windows by 50%, knowing ahead of time when there's a problem, improving uptime availability. And at the end of the day, what we want to do is we want to walk into a TowerCo and say, our technology has 5% to 10% margin to the bottom line. You take our acquisition of eSight to take us into that retrofit business where all of a sudden diesel is a blend. Remember that Clear Blue's technology did not support a hybrid diesel site. With the addition of eSight, we now have a much stronger AC support for hybrid diesel systems. And you put all of that together and we are at a point where we have momentum to move forward and deliver for our customers some significant value. with a wide range of products in the marketplace. So hopefully that was informative. If you have any questions, please don't hesitate to reach out. I could dive in for hours on it, but I wanted to kind of give you a high level overview of that. Now we're going to go into our 2022 results. So there's only one word for it. I'm going to be very blunt. Our 2022 revenue top line result was abysmal. It was way lower than we could ever have anticipated. And we hit the year quite strong. We expected that our trend in growth would continue from our previous years. We had orders and customers and bookings and everything and momentum to move forward. And then the war and the interest rates and China still being closed and still shortages on parts. People remember now there's no shortages in parts now, less than there was, but it definitely impacted. And so at the end of the day, really starting in Q2, project cancellation, project deferral, project delay, And when CapEx spending gets delayed, our projects are part of that and things got kicked forward. So our results for the year were impacted. We were down 68% from the previous year. And our Q4 was particularly low. I will say, and if I could have had Tom, I would have done it. We did have to reverse out two transactions of two customers who are very good relationship of ours because they didn't get their financing and things were unable to move forward. I was originally thought they would move forward pretty well, but by the time we got into early Q1 of this year, they had to be reversed out. So that's why December is so low. At this point, I'm going to turn it over to Farouk to give you some updates on our financials in detail. Farouk, do you want to take it from here?

Yeah, for sure. Thank you so much, Miriam. Hello, everyone. So as Miriam pointed out, our overall revenue has been down compared to prior year. However, we see some interesting trends shaping up. Clearblue's lightning vertical is made up of one-time revenue and energy as a service deferred revenue. As the company continues to grow its energy as a service offerings, we have seen a gradual decrease in one-time lightning revenue and corresponding increase in the Energy as a Service recovering revenue. The 37% decrease in Lightning revenue is impacted by the same shift, with revenues to be generated over the next three years. Decrease in U.S. revenues is also, you know, likely impacted by the company's, you know, It's basically likely impacted by the shift and also by project delays waiting on infrastructure and cleaner acts, which are now in place, resulting in a big change in future outlook for our lightning business. On a telecom side, our... Our business had been growing consistently over the past few years. However, for the first time, we can see that there's a decline in this vertical during the current year. As Miriam pointed out, and rightfully so, the decrease is mainly attributable to the global supply chain issues, which we can see that that's affecting the telecom rollout of different customers of ours, and projects have been delayed to 2023. resulting in a decrease in revenue for the quarter and trailing for a quarter of 2022. Customers also delayed their CAPEX expenditure in 2022, which caused project deferrals. So we can see a decrease in our Middle East and Africa segment, which can be mainly attributed to this. However, we still continue to have a good relationship with these customers and are working with them to accommodate them to, you know, so that we can work on their revised rollout schedule with them. Next slide, Miriam. Okay. So as we said in the previous slide, so now recovering revenue is the revenue that the company earns from its energy as a service, Illumion's ongoing management service and cloud service. So the three main areas where we get our energy as a service, that's Illumion's ongoing management services, their cloud services, and our energy as a service. So every single system that Clearblue has ever sold includes an ongoing service component. Clearblue manages and operates the power systems on an ongoing basis for our customers, and this is at the heart of our business and our value proposition. As telecom customers increase wireless communication bandwidth to support their ever-growing customer base, so too do their power needs of those sites also increase, and that's why it helps us in our recurring revenue. This ongoing growth of telecom systems and the ongoing operations and maintenance of power needed to keep these systems functioning is what drives the growth in our recurring revenue. As you can see, addition of our telecom customer rollouts over the years have a nice impact upon the growth of our recurring revenue. For the trailing four quarters, recurring revenue grew 83% to $819,000. For Q4, revenue was $116,689, which is around 112% from the same period last year. Mariam, do you want to speak about bookings?

Yep. So bookings were actually up compared to the previous year, just under $2 million in bookings. And just as a reminder, our bookings include two components. One is customers prepay their Illumion's deferred revenue services and And as a result of that, we have that as a deferred revenue line item and it's prepaid. So it's bookings that we will realize the revenue in the future. The second is when we have orders that we've received but have not yet shipped. And when the portions of the orders that are deferred revenue only convert from purchase order to deferred revenue once it has shipped. So as a result of that, at the end of last year, we were just under 2 million, which is up from the previous year. And we do expect that this is going to grow nicely when we are able to announce our Q1 results. One of the great news is that bookings jumped quite nicely in Q1.