Cielo Waste Solutions Corp.

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.

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.

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?