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spk01: Good morning, my name is Deborah and I'll be your conference operator today. At this time, I'd like to welcome everyone to the CLO Waste Solutions 2022 Fiscal Q4 Quarterly Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press star, then the number two. Thank you. I will now hand it over to Mr. Ryan Jackson, Interim Chief Executive Officer, and Ms. Jasdeep Dhaliwal, Interim Chief Financial Officer of CLL Waste Solutions. Go ahead and thank you.
spk05: Thanks, Debra, and thank you everyone for joining us today. I just wanted to also mention a quick shout-out to those who had joined us on the webinar earlier this month. through RV Milestone, and we had a lot of positive feedback and, of course, some good questions developed from that as well. So I didn't want to take up too much time. This is Jazz's show, so I just wanted to let you know that we're going to report the financial results for three months in year-end at April 30, 2022, and all amounts in this news release are in Canadian dollars unless otherwise indicated. So without further ado, I'll turn it over to Jazz Deep.
spk02: Good morning, everyone. As Ryan mentioned, my name is Jasdeep Dhaliwal, the interim CFO, here with the support of our controller, Ms. Anna Chung, supported also by our audit committee, our audit chair, Sheila Leggett. Happy to be here to share the financial results for fiscal year-end, April 30th, 2022. How I'd like to start is just with sharing the numeric values, as you read in the PR that was released on August 25th. Subsequently, as Brian and I have been part of the board during the last fiscal year, and we are now in intern positions, we'd like to shed some light on the strategy and the internal approach that was taken. So as far as the financial results, the total assets increased at April 30th, 2022 by 8.3 million compared to April 30th, 2021. The main increase is related to our PP&E, property, plant, and equipment. Assets were purchased at Fort Saskatchewan for $13 million. There was additional construction activities at Alderside and the R&D facility. Also, as many of you know, we purchased our IP, the intangible asset, of $2 million. Our total liabilities decreased by $0.7 million as of April 30, 2022, in comparison to prior year. This was due to the exercise of our warrants that were classified as liabilities. also a conversion of our convertible debentures, and in addition, a repayment of deferred revenue. There was also an increase on non-current liabilities as there was a reclass for the renewable UMOUs from current to non-current. The net loss for the company for the fourth quarter of 2022 was $2.2 million, a decrease of $31.7 million from 33.9 million for the quarter ended April 30th, 2021. The net loss for the company in the current year was 14.4 million, a decrease of 25.3 million from the 39.7 million for the prior year. Working capital deficiency in prior year was 0.6 million. Working capital of approximately 1.2 million was noted at April 30th, 2022. Other values that were highlighted in the financial information that was provided were financing costs of $1.1 million for the year ended 2022, which in the prior year were $5 million. G&A was $6.6 million for 2022, and in the prior year it was $2.6 million. Research and development expense was $5.4 million, and in the prior year it was $2 million. So those are the numeric values in the financial results that were highlighted in the PR and that are applicable in understanding the business and the financial results of CLO. However, this doesn't explain the story of what was happening from a strategy or the approach or the plan of CLO internally. So I'd like to take this opportunity to provide what we internally call is the bird's eye view of what was happening at CLO at this time. So the best approach is to start right after at the beginning of this fiscal year. So if we go back to approximately last summer, August 2021, it was self-evident, as mentioned for those of you who joined the webinar, that an ad hoc problem-solving approach was no longer reasonable. This was the approach that was taking almost an entrepreneurial approach at Cielo. So the transition that was occurring internally at Cielo was the creation of key roles at the management level to ensure we could formalize an approach to allow Cielo to be successful. At the same time, there was purchase of land as there was an opportunity for future development. And that is where you see an increase in debt for the purchase of land. So what, as you would note, as you probably had noted in the November 12th press release, what had happened in August 2021 is various process modifications resulted in unintended system bottlenecks and flooding issues. And what that means is the ad hoc approach of troubleshooting and problem solving was creating the need for more formalized processes at CLO. So what you had noted in the November 12th press release was a comprehensive analysis at Alderside. It is our opinion that this comprehensive analysis wasn't just at Alderside. It was a strategic analysis internally of the improvements that need to happen at various levels. So we're talking operationally. At operationally, it was data collection, data analysis, formalization of various process flows. There was a focus on ensuring that the spending we were doing at an operational level was effective and efficient. There was also an enhancement of our health and safety standards that was happening. At a corporate level, this is when the transition happened. As Cielo became more sophisticated to ensure we had the expertise at the auditor level, KPMG was engaged. Other policies and procedures were developed. Some of the other strategies that were in place at this time is we purchased the IP company, purchased the IP technology from 1-888 is the company that was referred to. And what this did is this, in the life cycle of CLO, it has created a launchpad for CLO to be more successful. This, in our mind, was an investment, a one-time investment, ensuring that not only is the data collection and the analysis is there, but also the key individuals, the likes of Mr. Ryan Crothers, who at the time was a consultant during early 2021, came on a full-time capacity role. So again, the strategy there was to ensure that our human capital, our investment in our individuals is also in-house. So again, the strategy being operational, corporate, and even at the governance level, there was increase in the oversight, but there was an increase in developing formal strategies and processes at that level. And with the addition of key individuals that came on at the tail end of 2021, such as our board chair, Larry Chaffron, and our current audit chair, Sheila Leggett, we have enhanced governance significantly. But we did not expect what happened in 2022. As there was a change in the marketplace, there was a change in the inflationary So what we had to do is not change our strategy. We did not change our strategy as it remained the same. We are still on the path to commercialization, and we continue to be on that path. What we had to do is take a fiscally prudent measure, as noted in our May 2022 press release, is we hit a pause on Alderside Phase 2. And because this was due to the fact there's a 50% increase in the cost and the investment required for Alderside Phase 2. In line with this revised strategy, again, at the overall strategy, we're still in the path to commercialization, but the pause on Alderside Phase 2 allowed us to reallocate capital to the R&D facility. In our mind, what we needed to do is ensure that our capital raise was in line and favorable to Cielo, but in line with this strategy. So what you note for those of you who participated in the short-form perspective, the capital raise that happened in July 2022, subsequent to year end, it was noted that the intention of the capital raise is on the R&D with a reduced amount of G&A, in our opinion, to support operations. And most recently, what we've done is we've completed our learnings from Alderside, We are now decommissioning the facility, and those learnings will be applied to this R&D facility. And the R&D facility's sole purpose is to look at, for those of you who attended the webinar, input, reaction, output. What we're analyzing is various seed stock and driving economic data, not just to measure revenue or hit an operational target, but to be able to position ourselves looking at gross margins, looking at our profitability as a whole of the process. So in summary, for us, we believe, Brian and I, that this has been a year of internal growth at CLO. We are now positioned after investing very necessary costs into the development of CLO in its life cycle for future success and for a future full-scale facility. In my opinion, if we could, not that we ever would, these costs could be capitalized because they're investments. Under IFRS, they will not be. They are GNA and expense and other aspects of our business has allowed us to grow and evolve as a corporation in the life cycle of CLO. This also, I'd also like to take this opportunity to say that these costs in, I know there's a desire to compare to prior year or future year. Next year will look different than prior year. And the 2022 fiscal, April 30th fiscal year looks very different from the year prior. And as we grow along our growth curve and our company's life cycle, We will be sure to provide insight as we are today on the decisions management's making with the support of the board. But it's very important to understand that we are a trajectory of growth and our financial statements reflect the best decisions we're making in our capacity for the company. Brian, do you have anything further to add to the strategy point or the lens, especially as a board member in the last year?
spk05: Thanks, Jazz. That was very, very well presented. No, I don't have anything further to add. Just want to open it up now to questions for the audience.
spk01: All right, thank you. Ladies and gentlemen, we will now begin the question and answer session. Just a reminder, should you have a question, please press the star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be pulled and either received. Should you wish to decline from the polling process, please press the star followed by the two. Your first question is coming from Gary DeFore, investor. Please go ahead.
spk07: Thank you, operator. First of all, Jazz and Ryan, I want to commend you on the webinar presentation that you put on a couple of weeks ago. I was actually out of the country, but I was able to listen in on the replay. I thought you both presented yourself exceedingly well, so I was appreciative of that and the explanations. I will open up by saying I have a number of questions here. I'm going to ask one or two and then I'll turn it over back to the operator, but I would like to circle back at the end because I have a few more questions that have been presented to me from various shareholders who may not want to participate on the call themselves. I think it's a fair statement to say that the credibility of the board and management right now is very low. There were statements that were made by previous CEOs publicly and in press releases, etc., that clearly have not come to fruition. So I think we really expect to have 100% transparency. On the first call that Ryan introduced himself after Greg and Chris left, you know, his opening comment, not his opening comment, but one of his comments was about the share price, of course, and it was very undervalued. Lo and behold, two weeks later, a financing through FCF is done at about a 30% discount from that time when the call was on. I understand, as a former CFO, that those things happen, and the marketplace is dynamic. But what I don't understand is how, to date, unless I've missed it, I have not seen any of the CMC board or management, with the exception of Ryan, who put in, I believe, about $80,000 of his own cash back into CMC. Where is the skin in the game, kind of walk the talk, when we don't see management putting money back in and believing in this new strategy and new process that's been laid out? I would like to see that. Any comment, please?
spk09: Hello?
spk02: Hi there. Sorry, I assume Ryan was disconnected. Sorry, I'll take one piece at a time. Yes, we do believe our share price is undervalued because we haven't been communicating to, in our opinion, we haven't communicated to the marketplace the successes that we are attaining and the growth that we are experiencing. That's why at the request of the board we are here because there has been a communication gap. That isn't to say that the missed milestones were a result of misrepresentation, in our opinion. In our opinion, the inflationary conditions and various other factors played into meeting those milestones. As far as skin in the game, I personally participated in the last race that occurred in July, as did other board members, and so did Ryan himself. And all of this is reflected on SETI. My apologies, I don't have SETI pulled up right now. But that information is available online for you.
spk05: Hi, guys. Sorry, I got disconnected. Gary, that was perfect timing, too, I might add.
spk07: No problem. No problem. Well, I mean, that's fine. I haven't gone into SETI. I guess I will to see, you know, how much has actually been put in by each of the board members as well as the management. Um, you know, I look at this company right now and truthfully, uh, and, and jazz, you can speak to this. CMC is effectively controlled by FCF. Um, you know, they basically dictate the terms of their financing and the fees that they get, the upfront fees, the warrants, et cetera, and any pop. Um, so I, I guess I, as my followup question then with respect to the financing and the control, first of all, who is FCF? I've not been able to dig your, dig up any, uh, information on them specifically. Um, And I guess as a follow-up, you've indicated that next year you'll require incremental capital to complete the project, the R&D, testing, etc. What other interest has there been from other financial institutions other than FCF to put money into CMC? And approximately how much extra capital do you believe you'll have to raise in 2023?
spk05: Jazz, you want to, I'll take the first half and you can take, you can follow up with the capital then. How's that sound?
spk02: Sounds great, Ryan. Thank you.
spk05: Okay. So Gary, around the, so FCF is a syndicate of investors, right? And they're through the, and you've, and in press releases we've mentioned, and he's been quoted, Vikas Sharma is the, we'll call it the president or the CEO of FCF. they're certainly not a controlling shareholder. They're below the threshold of that by a significant margin, actually. So the financings that we have and that have occurred over the past, quite frankly, without FCF support, Cielo probably isn't here today. So there has been a balanced approach with respect to the amount of debt and the equity that FCF has made and invested in over the course of the last number of years. And we work with them. They're very much a stakeholder, shareholder in the company. They certainly, though, have an equal voice to yours or to anyone else's as it relates to any operations of the company. They don't have a board seat. They're not on the board or have observer status. So with respect to the interest of the company, they're not, you know, from a matter of influence or questions or anything of that nature, it's all still very much the board and, of course, executive management that has the rudder and the engine room, so to speak. So as it relates to the future financing, certainly if they want to take part in anything that we're going to be doing through, whether it's a rights offering, as we discussed earlier, you and I, or whether it's through a short-form prospectus raise or one of the types of things we're doing, whether it's debt, any of those instruments or any of the structures that we're going to do, we're going to do what's best for the company. We're not going to kowtow to any investor or anything of that nature. We're going to certainly make sure that we do what's best for the company and the company's interests. Jess?
spk02: Thank you, Ryan. And as far as future capital, as noted in the short-form perspective, the $9.775 million that was raised is for the fabrication and the operations of the R&D facility. Subsequent to that, it is reasonable in our mind and for shareholders to understand that we will need additional funding. What that looks like is dependent on various factors. So we are pulling the economic data, anticipating a full-scale facility, We're always assessing. It's a fluid analysis, as you can appreciate, Gary, once the economic data is coming in, once we're setting up and understanding the full-scale facility, what those numbers and those values look like. And in our mind, we are constantly working to figure out what the best approach is. As Ryan has mentioned, and I know in discussions that have been had with you, carrying debt pre-revenue, pre-production isn't reasonable, so we have to figure out a strategy around that. At the same time, we do understand the amount of outstanding shares. So it's a balanced approach. It's constantly analyzing to figure out what will be the best approach for the next tranche or the next milestones that arise for our financing.
spk07: Okay. Can you not just give a broad stroke range then? Do you anticipate that for 2023, you may not have it finalized, obviously, as you're starting to lay out the R&D facility and do some various testing, but you must have a sense. Are we talking an additional raise of $10 million of capital, or are we talking a larger number than that or something smaller than that? It gives the shareholder at least a sense. If you're right, and I do agree with you that pre-revenue taking on debt is a fool's errand, approximately how much more dilution is going to occur. That's really what I think most shareholders are looking at now and why the stock is probably sitting at seven or seven and a half cents.
spk02: I understand that. So the 9.775, if you look at, I believe it's page 10 of the recent MDNA, that is documenting all the R&D activities. And that is until we're looking into 2023. Our fiscal year end is until April 30th. It's once we have the economic data and once we have a sense of what the economic data represents in our opinion, we're able to assess what the budget for the next stage of growth looks like. Because at this point, it's the fabrication of the R&D facility. It's the modifications and the economic data that needs to come in. Once that information is available as a foundation, then we can assess the subsequent year's budget in our opinions.
spk07: Okay, thank you. I'll let the shareholders ask their questions, and then I'll come back at the end because I have a few more. Thank you.
spk02: Thank you very much. Thank you for your continuing support.
spk01: Your next question comes from Carmen Calderon, private investor. Please go ahead.
spk06: Hi, guys. Thanks for taking my call today. I got a big question here regarding... direction you guys are taking the company and now as to what we were told a year ago or even before that that all these all these products that um you guys had testing worked now do they work is one thing because it seems like you guys are going back to research and development like it's nothing has worked and what's the big pivot away from from plastic This is what we were sold on was plastic. And that's why everybody flocked to this company was because of the plastic. That was going to be your big seller. And your big money of investors was going to come in with plastic. And now it seems like you guys are putting it on the shelf. Is it on the shelf or is it going to be off the shelf? Or what's going on with that?
spk05: Thanks, Ron. So I'll take a step back. So we're... The varying different feedstocks have been tested bench scale, right? So there's a number of feedstocks that have been done over the course of the last number of months, years that have been at a very small scale. So from understanding proof of concept has been achieved. And as we go forward, we have to work within, of course, the guidelines that we have with our license with the AEP. and part of the license process is going through and applying for testing the different feedstocks that we have so the lowest hanging fruit for us interestingly enough is actually railroad size given that we have the feedstock agreement with cp rail already without a feedstock for plastics formally we have to take it in order of i guess we'll say from a business perspective The railroad ties versus plastics and with pen shavings was another one that is very, very close to the wood waste that the railroad ties will do. So that was a natural fit. And from an application standpoint, it was the quickest way that we felt we could get AEP approval, which we're still waiting for and it takes a little while to get. As we move forward, plastics and rubber are very much on the list. And we have to be mindful, though, from a feedstock standpoint with respect to plastics, that it is, from a carbon intensity standpoint, it is a very high carbon intensity score versus wood waste and rubber, right? So because it's a petroleum-based product, we have a higher carbon intensity score, which is going to affect the renewable status of the fuel. So we've talked about waste of fuels as a result of it and whether or not the plastics which produce we understand and will be able to process still has a number of things, a number of variables that we still have to sort out. But plastics is very much on the list, but it's just not at the top of the list as a result of the feedstock agreement we have with CP Rail and the efforts that we're doing there. And also from a feedstock standpoint, plastics is a lot more complicated than just one kind. There's seven kinds of plastics, right? So we have to work through a lot of that. And of course, I'm I'm parroting a lot of what our folks in the engineering side of the house and the operations side of the house has told us, but it's very much still there.
spk06: Do they think they'll be able to get the sink to work? Like you're saying they're running into so many problems with the plastics. Are the engineers saying that they should be able to get the sink to work and get it under scale, do you think?
spk05: They're very optimistic that plastics will be one of the things that is a very productive feedstock, a very efficient feedstock to process. The whole process, though, going through it, is a lot more complex than the wood waste, and that's why we understand wood waste very, very well, and that's why we're doing what we're doing in the order we're doing it in. Jaz, you were going to say something to follow up.
spk02: Yes, thank you, Ryan. Thank you for the question. As Ryan mentioned, as noted on page 11 on the MD&A, what our research and development schedule is, we noted in our webinar a couple of weeks ago that we have provided proof of concept various times in 2021, which is we can take a feedstock and convert it into a distillate, and we establish the desulfurization unit to take distillate at a certain point and refine it further by lowering the sulfur content into a diesel. What the targets were set last year were operational. Certain liters per hour, those are operational targets. What we're referring to R&D is the research and development on the economic data. So revenue, OPEX, margins, figuring out the financial modeling around R&D various feedstock. So what we've recently done is applied for a permit with AEP for railroad ties and pen shavings. And once that research is complete, the anticipation is we would complete further modifications, apply for further AEP permits to modify the unit and operate. And next on the line is rubbers and plastics. And so what we're It's not trying to provide proof of concept here. What we're trying to provide is economic data to figure out the metrics of the full-scale facility. So if we're looking at a pipe that's, and I'm throwing numbers out there, my apologies to Mr. Ryan Crothers, our EVP. But if in the R&D facility, a certain piping is 200 feet long, if it's a full-scale facility, what would be the percentage of the correlation to a larger facility? ensuring all of our economic data on various pieces is available for the next stage of development. And that's where, please do refer to our recently released MD&A, page 11, that sets out the schedule of the economic data, not just simply the conversion of taking a feedstock and converting it into an output.
spk06: Okay, one more thing. You have to apply for these permits, am I correct? Yes. And it apparently takes very long to get, am I correct?
spk05: It takes longer than we'd like, that's for sure. Okay.
spk06: Okay. So why are we applying for the plastics and rubbers as well so that we have them in our back pocket and ready to go once we're done with the railway ties and the straw so that we're not waiting another three to six months or whatever it is to obtain the next permit? You know what I mean? So we can get on the rubber and the plastics. We're way ahead of you. Are you? So how do you put them in?
spk05: We've discussed it internally about proceeding with the application for the other feedstocks, in additional feedstocks.
spk09: Okay, and? We plan on doing that. Okay. Soon?
spk05: Yes.
spk06: That's what everybody's waiting for, to get to the plastic.
spk05: Well, it is. So are we. Yeah, no. Listen, we're certainly, Carmen, going to be – the process is exhaustive, right? And it's just we only have a certain amount of internal resources for these applications to be done in addition to, of course, all of the other things that we're doing. So it's certainly not something that we have dismissed, as I mentioned earlier. And we're making – we have plans to do this well in advance of even receiving the last approval from AEP, or sorry, I should say the next approval for AEP.
spk06: Okay, thank you.
spk05: Chas, you were going to, I cut you off, sorry.
spk02: No, no, that's okay. I was just going to, you covered my points very good. Thank you, Ryan. Okay.
spk01: And your next question comes from Philip Bonilla, a private retail investor. Please go ahead.
spk08: Hi, how are you guys? Hey, Philip. Good. Yeah. Hi. My name is Felipe. I'm a retail investor out of Nova Scotia. My question is, some of my other fellow investors already covered them, but I want to ask, what is stopping you guys from going to a municipality and telling, hey, can we get an agreement on your recycled plastic so we can also start testing that instead of, I don't want to say wasting time, but it seems like right now we're wasting time with wood. processing wood, doing a process that is already being done by other companies. Taking biomass and converting it to fuel, it's already been done. I work in that area, and it's something that many companies do, even hospitals do it to get some energy. So what is stopping us from skipping that step and just going straight to plastics? I know we have some permit issues, but can we start getting some agreements on securing some feedstock from from certain municipalities, from their waste departments?
spk05: That's a great question. We certainly have had numerous, and when I say numerous, countless conversations around feedstocks that we are pursuing. As I mentioned to Carmen, the feedstock agreements that we currently have in place, we certainly want to fulfill, and we certainly want to make sure from a business perspective that we're doing that. In addition to that, of course, yes, whether it be plastics, whether it be any sort of rubbers and anything else, all of these feedstock conversations are happening every day. And we're working towards understanding, though, before we can get to a certain quantity discussion or any of those sort of things, we have to understand our capacity on the other side of this, right? And what our outputs are, as I mentioned. input, reaction output. And without that data, and I know it's kind of a, we've got the cart, all we need is the horse, but without that data, we can't go to a municipality and say, Hey, we will take X number of tons of your feedstock because that's what we need to be able to produce. And then we'll, right. So we just, we're having those conversations. I don't think we're not, but we want to make sure that when we do, We have the data around what we're going to be, what our capacity is going to be able to be. So we certainly are working towards even, you know, some sort of a high level conversation that we have with them currently, right down to the specifics around the feedstock and what that looks like. The last thing we want to do is promise them that we can process a certain amount of feedstock and it's either too much or not enough. So we have to have that data that Jazz mentioned earlier.
spk08: And my second question is, yeah, thank you. But my second question is, are we actively trying to apply for grants from government grants that apply to green energy? It seems like we've taken out loans and we've taken on debt, but I haven't noticed anybody saying, oh, we're actively pursuing a grant that can help us, you know, better our income or better our acquisition power to move our project forward.
spk05: And so we have done a number of applications. Unfortunately, a lot of the applications were around what we would call – we're using certainly something that isn't a new technology. It's thermal catalytic depolymerization. So it's been around. But what is new is our process. And one of the things we have to provide – if I use that term, both the feds and the province. And there is grant money available for facilities. We have to be able – we keep coming back to the data, and that's why it's starting to become evident why this R&D facility, capital D for development, is so important so that we can actually provide the quantitative information that they require to be able to give us that non-dilutive – amount of money through grants or whatever else, whether it be SDTC, whether it be WD, whether it be any number of the other green initiatives that are out there, we certainly are aware of them and we certainly are going to continue to apply them. We have to be able to have the quantitative data to be able to provide them, to be able to show them that we actually can process X to get Y, which will equal Z.
spk08: Right. I guess my concern with the R&D facility is that I hope it doesn't become like the next fusion, you know, is the energy of next year, because we seem to be pushing the R&D facility year after year to the next year.
spk05: Yeah, well, we've given you some pretty specific deadlines around the R&D facility. I've I was on a call last Friday with the folks that are in the middle of making it, and everything that we have that has been told publicly, we're still holding to that timeline. So I know we've slipped a few times with respect to R&D. Keep in mind, R&D has always been, it hasn't really been on the tip of our tongue until about a year ago. So, you know, we have been working through a number of things in the meantime, and Jazz mentioned the learnings from Alderside and some of the things that informed the design of the R&D facility. So, you know, we're very confident, short of some sort of catastrophic event that happens that's out of our control that we'll be able to meet the timelines that we've stated publicly.
spk08: Awesome. Well, listen, I appreciate your time to answer my questions. Thank you. Yeah, you bet.
spk01: Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. If you are using a speakerphone, please lift the handset before pressing any keys.
spk05: Deborah, I know that Gary had some questions that he wanted to finish up with, so perhaps, Gary, if you're listening, you might want to jump back in the queue.
spk09: To the...
spk07: the MDNA here that was just put out and it's pretty extensive and I do appreciate that having worked on these myself in a former life I appreciate the amount of work that goes into putting them out so can you explain something here that just doesn't quite you signed a contract this is predates you guys it was signed with CP Rail in November of 2019 so almost three years ago it expires in three years time October 2025 to take 500,000 railroad ties annually And you CMC for the contract, to my understanding, has to have the capacity today to accept chip and recycle these railroad ties. So first question is, does CMC even have that equipment today to take a railroad tie full of creosote and whatever else and chip it down to be able to put into, um, you know, to start the, the, the feedstock process? Yes or no.
spk05: Uh, we do through a third party vendor, Gary.
spk07: So that's being done through a third party.
spk05: It is, yeah.
spk07: And will that continually be done to take those railroad ties we chopped up through third party, which is obviously an incremental cost, because they're going to have a profit margin in there to do that work for you. Is that the plan, or is it to bring that in-house?
spk05: The plan, so two things, and this has still been working through, we're still working through what that might look like, but my own personal view of this is that we would want to do that in-house and not be held ransom or hostage for by a third party with respect to our feedstock and the availability of it. But it has to make economic sense, obviously. If there's someone who can do it better and cheaper than what we could internally because they know what they're doing, then obviously that's something we have to look at. But at least for starters, while we do the chipping and the grinding with respect to especially the feedstock that we're going to get for the R&D facility for the testing, that's all going to be sourced through a third party. And we've had those discussions with them already. and had that lined up. But it's a wait and see as it relates to how much it's going to cost to do that with manpower and everything else. So we think we know the answer, but we're still not quite there yet.
spk07: So if I'm sitting as CP Rail right now, I must be thinking I signed a contract with CMC back in November of 2019. to clear up a potential problem that we have, which is obviously used railroad ties. And here we are, you know, halfway through the contract and nothing's happened yet. I would think that's a little disconcerting to CP Rail, should it not be?
spk05: I would imagine it would be. We've had a conversation with them just recently about the timelines and how they've slipped. And we're just in the process of having that conversation. So I can't really speak much more to that because they're internal conversations. But, yeah, they were disappointed with respect to us not being able to hit the initial timelines that had been originally agreed upon. But they understand that things happen as well. Jaz, you were going to say something too.
spk02: Yes. Gary, I just wanted to ask you and build a little bit on what Ryan shared Feedstock preparation in itself is a piece of the input stage. As you know, we stated in the webinar, input reaction output. Pre-process of the input reaction output is the feedstock preparation. That in itself is an analysis we're completing as part of the R&D facility. And that would be factored in in the financial modeling, the in-house, out-house, out-of-office, sorry, out-of-the-Alderside facility analysis. area, what's the best approach as far as feedstock preparation prior to the feedstock being part of the process being converted to distillate. So that's an ongoing assessment that will be occurring as a part of the economic data.
spk07: Okay, thank you. And not to flog a dead horse, because you've mentioned it in the webinar about Alderside being uneconomical, but I guess, Jaz, I need to come back and just circle back a little bit as What was the cost? What was the variable cost, the materials and labor? I don't care about depreciation and fixed cost allocations and all that kind of stuff that you and I have lived a life doing. What was the true variable cost to produce that 80,000 liters on just materials and labor?
spk02: You must have that number. We can have that discussion. The best person to have that discussion with you would be Mr. Ryan Carruthers because we have to keep in mind, Gary, the ability of Alderside phase one and its ability for measurement. That's what Alderside phase two was going to provide us, right? The new measurement tools coming in as we had press released. That information and that details of the world that we live in of per unit or per liter revenue generated, less the direct costs, overhead costs to come to a gross margin. That data was limited, and that's where it didn't make sense. And what makes it uneconomical, the investment, is the 50% increase to get to alderside phase two to get that measurement data. The reasonable fiscally responsible next step is to go the R&D facility route because now your CapEx is being applied at a smaller rate, not at a big alderside facility. So it's really challenging, and it was, and that was one of the reasons to make that really challenging decision of, What have we learned from Alderside? We've learned enough that anything further reinvested into Alderside isn't a reasonable use of investment dollars. And that's why the transition to R&D to get exactly what you're asking for the economic data. I believe the word that we use is material balance, which could be considered conversion rate. Per volume of a biomass of an input, how much of it comes out as product, how much of it is residual, what does the process look like in that conversion rate, and then applying the financial modeling, the economic data to that going, is this process economical? And that's where the values will be very, very helpful in the foundation of our next level of financial modeling and the full-scale facility coming up.
spk07: Okay. I guess one last question. I'm not even sure how you can answer this, but maybe, Ryan, you can give it a shot. We've now had in the last year three CEOs. You're in an interim role. I assume you're eventually, based on the fact you've given up your CEO role at Renewable You, you're dedicated. And unless somebody better comes to the table, you're going to be the CEO for the foreseeable future. But, you know, I opened up by talking about the transparency and the credibility. You know, Greg and the team laid out a plan. It seems like that plan has now been shifted to something else. what comfort can you give us as shareholders who've seen a dramatic loss in share value over the last probably nine months or so that you guys are on the right track and you know other things that we've been told whether it was plastics that was discussed earlier on you know this is the right this is the right approach for us to take as a corporation or are we going to be facing in another three four months time you know another pivot point where we're going in another direction
spk04: Sure.
spk05: I mean, ultimately, Gary, the proof's in the results, right? And I mean, all I can do is, all we can do, Jazz and I and the rest of the team, is tell you that we have, we believe, and the path that was laid out by Greg was one that we're still on. We haven't deviated from it, other than to suggest that we weren't going to go out and try and raise an additional $25 million to build the second phase of Alderside without proof that it would actually be able to be completed and be economic without the data that we needed from the R&D facility. So we're still on the path. We've actually focused a little bit more on a specific path rather than on two parallel ones. To that point, I would suggest that we're still very much aligned there. And as we move forward, absolutely. We feel that we're going to be able to execute on what the plan is, which is to get data. And from there, go straight to the path to commercialization, which will allow us to build the facility. Certainly, if the board finds someone better than Jazz and I to run the company, we're 100% behind that. and we certainly don't want to though look at this as a we're just keeping the seat warm we're focused on executing on that plan and getting this company to a point where we're at altitude and we're now set to drive the revenue into the company and and of course as you mentioned the dilution with respect to raising capital without revenue is is certainly you know, not something that we want to do, nor obviously death, but that's why a lot of the partnership models that we're looking at with respect to the facilities that we've announced with, whether it be a renewable you or another partnership model is, is going to make the most sense because it's off balance sheet and it's non-dilutive. So I know it's a lot and I'm, you know, from a reassurance standpoint, honestly, it comes back to jazz using the metaphor with respect to the Chicago bulls. We're really going to let our game do the talking and, and you're going to see the results. And then the market will judge us by, or judge the company by those results. So that's about the best I can give you. And Jazz, I welcome you to fill in the neat blanks.
spk02: Definitely. And I'd like to start off first, Gary, thank you for your continuing support and holding us accountable. I know you do speak on behalf of various shareholders who have questions, and we thank you for that. We thank you for giving us an opportunity to add to what we're already sharing. What you've seen in the last year, Gary, and to other shareholders is the evolution of Cielo. As we mentioned in the webinar, as we mentioned today, we've transitioned from ad hoc problem solving that was going on throughout Cielo where something would happen and we have to fix this urgent issue and not a long-term strategic vision. Subsequent to that, it was a formalization of processes, formalization enhancements, of health and safety and other aspects of the business and to create a launch pad of success for the company. And at the request of the board, and willingly, Ryan and I are here because we do believe in this company, not just as we can change the world. That's a huge piece. But the economic data and the journey that we're on is very essential because those need to be balanced. Shareholders do want an ROI, and that's where providing that ROI is with lower CapEx investment, we believe is the next best step. And we are here to hold ourselves accountable to shareholders. And we do believe in the team that has assembled to see this through. But again, Gary, thank you for your continuing support and holding us accountable. It means a lot to us.
spk07: You're welcome. I mean, I guess if I just one final comment, managing expectations, it's challenging for a CEO, CFO. I guess if I, you know, in looking back, I think the extreme disappointment, if the stock price hadn't rocketed up last summer to, you know, ridiculously high valuations, and some people got sucked into that, and everybody's responsible for their own decisions, you know, I'm not saying right or wrong, but Um, if, if the share price was sitting at, you know, seven, 10, 12 cents, and it was back at 8 cents while the process was going on, that would be a different situation, but the expectations got way out of hand relative to the reality of the situation a year ago. And unfortunately, I think you guys find yourself in a, in a deep hole now from a credibility standpoint. Um, and of course, you know, the first rule of holes is to stop digging when you find yourself in one. So I think you're, you're slowly filling in the, the, the soil at the bottom of the hole and, and, and, resurfacing so I do appreciate the credibility and the transparency and all I can suggest is that sooner rather than later to start showing degrees of success will help improve the confidence of the retail shareholder in the company and the last thing would be is if another financing is to take place you talked about the syndicate earlier on with FCF I would really expect that that goes out to some sort of rights offering that the existing shareholders can participate or choose to participate if they so wish, rather than just going to a select group of people and not opened up to existing shareholders. And with that, I'll end my probably far too many questions today and just thank you again for your participation.
spk05: Thanks, Gary. As always, it's good to have the conversations. And of course, as everyone knows, our coordinates are on the website and in press releases and everything else. So certainly don't stand on ceremony if there's ever a time that anybody, regardless of how many shares, we're always willing to talk to anyone.
spk02: Yes, thank you. And thank you to all the shareholders for your questions and holding us accountable. As the questions pop up, like Ryan mentioned, both of us are here to address your questions. And thank you for participating today.
spk04: Deborah, I'm not sure if we have anybody else. We do.
spk01: We do have another question coming from Gerard Landrum, an investor. Please go ahead.
spk03: Hello. I just wanted to ask a quick question regarding conflict of interest with Renewable U. And also just basically where Renewable U is in regards to CLO. Right now, I know the MOUs, they are pretty much impossible to fill as they're written because of Alderside not working. But I was wondering if those would get rewritten or do we have to wait for a full-scale facility before Renewable U will join in?
spk02: I could take that question.
spk05: Yeah, I was just going to say go ahead. That's what I was going to say.
spk02: So as far as addressing conflicts of interest, I will be taking this question. Yes, as disclosed in the MD&A, Mr. Long-Jackson does have 10% or less holdings in renewable use. Given the stage of development that CLO is currently experiencing, conflicts of interest are common in our opinion. What we do as an organization and what organizations in our position do is ensure there's processes that ensure those conflicts of interest are addressed. Any discussion or conversations that happen with Renewable You are discussed with myself along with, if needed, Mr. Ryan Feathers and Anna Chung, our controller, as needed. Renewable You has been very patient, very supportive of our journey of innovation as we refer to it. It has its challenges and its hiccups. We look forward to having those conversations as there's further developments. At this point, there's no revisions, no changes. But you are right. We have recognized internally that those MOUs aren't applicable. As you mentioned, some of those milestones are for the Alderside facility that no longer exists. So we will be revisiting that in the near term and assessing what reasonable terms will be for the MOUs. As far as your question on timing, when they will be signed, if it's a full-scale facility, we haven't engaged in those conversations yet, but we anticipate we will be in the short term to make sure at least the MOUs are up to date.
spk03: Okay, thank you for your time, and thanks for answering the questions.
spk02: Thank you for your support. Thank you.
spk01: And your next question comes from Carmen Calderon, a private investor. Go ahead.
spk06: Hi, guys. Thanks for taking all of our questions today and taking the time. I just want a quick update on what's happening with Alderside now. It's not operating. It's waiting for research and development. We're sitting and waiting now for Q1 for the –
spk05: R&D facility be ready to go or are you guys still testing stuff and running it to get more info out of it yeah we're actually so we are actually decommissioning and demobbing as they say getting the facility ready for the R&D facility to be delivered and there's a lot of work that has to be done to get that to that point. And it's, uh, been moving very steadily. Jazz and I were actually at the, uh, in Alderside last, I forget jazz Tuesday. I think it was, um, this past Tuesday, a week ago. And, uh, we took a look and, and it's, it's progressing very well, but, uh, it is not operational, um, and, uh, is actually getting ready to, uh, to rock and roll for the R&D facility.
spk02: And if I could build on that to address the question, just to build on it. As noted in the MD&H, it's from a disclosure standpoint, the R&D facility was the facility that was previously retrofitted, which was an old biodiesel facility, and that's where CapEx was applied. Alderside is also the location, the physical location where the R&D facility will be to utilize the existing infrastructure in that area. I'm sure you understand that, Cameron, but just for other shareholders who may not understand, Alderside, especially if you're not from Calgary and surrounding area, is a physical location. When you see it referred in the MD&A or documentation in our disclosures, Alderside facility was the retrofit of the physical facility itself. That is being decommissioned. The R&D facility will be at the Alderside physical location using the existing infrastructure. Okay. Thank you. Thank you.
spk05: No, that's a helpful distinction, actually. We shouldn't be doing that anymore. I shouldn't be doing that anymore.
spk02: We're all learning.
spk01: At this time, we don't have any further questions. You may proceed with your closing remarks.
spk04: Great. Jazz, I'll let you go first, and then I'll wrap it up.
spk02: Thank you, Ryan. Thank you, everyone, for your insightful questions and giving us an insight and perspective into the shareholder mindset. We sit here and make the best decisions for the company. We are here as board members and as interim CFO CEO to make the best decisions for the company. But these calls are very important to us, as are any questions that you send our way via email and phone calls. So please continue with your engagement. We believe in this company. I believe in this company and its impact. It will have on the environment and climate change. But in addition, we're very excited for the journey that lies ahead in regards to ROI and the economic data. And we're very, and most importantly, I personally really believe in our team and our board. And I thank you for your time today, Ryan.
spk05: Great. Thanks, Jazz. And I echo those very same things. And I also, though, I want to let everyone know and thank you, Jaz, personally for all the work that you've done on this audit and your team. It's not a small venture. It's certainly significant work and the amount of time and effort that everyone has spent for you and your team, you and Anna, Antonina, everyone, Ryan Carruthers and all of those folks. Certainly really appreciate all of the hard work that's gone into MD&A and into the audit. And to the shareholders, certainly appreciate everything that all of the questions and the conversations that we have every day. And certainly as we go forward, Teco Jez's comments, we believe in the technology. And of course, we want to continue to look at the waste of fuels business as a business. And that's what excites us probably the most is that this business has some good bones with respect to the technology that has been proven through concept right through to implementation and execution of a full-scale facility. So thanks again, everyone, and Debra for your time hosting, and we'll talk to you again soon.
spk01: Thank you. Ladies and gentlemen, this concludes your conference call today. We thank you for participating and ask that you please disconnect your lines. Have a great day.
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