Cielo Waste Solutions Corp.

Good morning and afternoon. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to the CLO Waste Solutions Q3 2023 Financial Results 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 would like to ask a question during this time, simply press star then number one on your telephone keypad. And if you would like to withdraw your question, please press star then number two. Thank you. and I would like to turn the call over to Mr. Ryan Jackson, Chief Executive Officer, and Ms. Jasdeep Dhaliwal, Chief Financial Officer of Cielo Waste Solutions. Please go ahead.

Thanks, Sylvie, and good morning, everyone, or good afternoon, depending on where you're at. Yesterday, of course, Cielo did release its financial results for both the three and nine months ended January the 31st, 2022. We did obviously release copies of the United Interim Financial Statement and the related management discussion and analysis documents as well on all information can be found on cedar.com. This is Jasdeep's show today, so we're going to turn it straight over to her, and she'll be able to provide you with some financial highlights as well as a couple of operational tidbits as well.

Thank you, Ryan. Good morning, everyone. Thank you for joining us for today's call. Very excited to share the financial results for the period ended January 31, 2023, but also very excited to provide information Subsequent updates as of yesterday as well. So let's start with the numbers, which is the most important piece in relation to the financials. So as per our PR, our total assets at January 31st were $31 million, total liabilities $19 million, and total non-current liabilities $9.9 million. Working capital was negative $5.2 million. And the three-month ended, we had financing costs of $620K, G&A of $1.1 million, research and development, sorry, 1.1 million, my apologies, for the GNA, research and development of 442K, and share-based compensation of 143K. And as often shareholders and stakeholders have questions throughout the quarter, especially subsequent to a PR, we make note of those questions and let individuals know that we will be covering them on a public platform to ensure the risk of selective disclosure is addressed. So in my sharing of some of the significant transactions, I have incorporated some of those FAQs, we can call them. So the first question that was coming our way was distillate sales. In the past, in January, sorry, February 2022, we had completed distillate sales. And the questions from investors were, how come we're not seeing these on the financials? The reason for that is our revenue is not consistent and reoccurring because we are still a pre-production, pre-revenue company. So it sits in the financial statements in other income, other revenue line. So we did complete distillate sales, again, as PR'd in December 2022, 80,000 liters, and that is in the financial sitting in the other income and expenses line. The other item that was completed as a significant transaction was a board approved a retention strategy for key employees and for management for the CEO CFO position. Important thing to note in this retention strategy is The CEO, CFO options will not vest that were granted, do not vest until certain milestones have been met. The key milestones is preparation, engineering design, construction design for the first full-scale facility. Those are the major transactions we can speak to in the last quarter. Ongoing at this time was also the R&D facility. As previously mentioned, The R&D facility we can refer to as the micro-refinery or the scaled-down version of the full-scale Alderside facility that existed. This allowed us to improve our CapEx and really work with parameters in our input reaction output, the input being the feedstock. The reaction is how it reacts with our catalyst and other pieces. And then the output is going to be distillate, as previously disclosed by Mr. Ryan Carruthers, our EVP, The focus of the R&D facility is not to create diesel. We've established in October 2021 we can take distillate, using our desulfurization unit, produce diesel. The purpose of this R&D facility is to improve import reaction output, so to optimize it as much as possible to get the economic data. And we're starting with biomass, as previously mentioned, moving into railroad ties. So it is my pleasure to let everyone know that the R&D facility did arrive at the Alderside location. It is currently being commissioned, and we're very excited for the results. And Mr. Ryan Crothers, Brian Graham, and the rest of the team are working tirelessly to commission this facility. To Ryan Jackson and I, we just thought you plug it in, turn the lights on, but clearly there's a little bit more work to do, and we understand that. Subsequent to year end, so that was the most important piece that I'm sure everyone wanted to learn more about. The other piece which is very exciting for us from a financial or corporate standpoint is we had an opportunity to convert our loan. So we had a $4.5 million loan which was called the existing loan in the financial statements. This was converted from debt to shares with our lenders, FCF. The purpose of this is The loan was due in September 2023, so it was a current liability. There was an opportunity here to convert that into shares. The lender was willing to and interested in reinvesting that in the company through the share issuance instead of wanting a cash repayment. And for us, that was a vouch of confidence and we appreciate SCF's continuing support in that realm. The key important piece on a qualitative level here with this transaction We had a few questions on this. Where was Alderside and where was Fort Saskatchewan held for security? For Loan 1, which was referred to as the existing loan, and Loan 2, which was referred to the financials as the new loan, both of them held Fort Saskatchewan and Alderside as security. As part of doing the debt for shares conversion, Alderside was released. from loan one and loan two, and only Fort Saskatchewan is held as security for loan two. Now this ties into the next exciting piece, which is Cielo intends to sell the land for Fort Saskatchewan. This was also included in the financial statements in our MD&A disclosure that the board has approved this transaction. Further to that, ongoing has also been, our strategy has been to minimize corporate spend continue to focus on providing Mr. Ryan Crothers, Jason Gilberts, and Brian Graham the resources they need to execute on this R&D facility and ongoing testing of railroad ties. It's important to note that we do have a two-pronged approach. One approach is the R&D facility. We will be testing biomass, railroad ties, because they're both wood drives. That's considered part of one trial. Subsequent to that, the innovation line continues in Alderside, the R&D facility. What we have going at the same time is progressing on construction for the Dunmore Medicine Hat facility, which would be our first full-scale facility. Ongoing conversations are occurring with CP Rail and working through planning ahead for Alderside and for Dunmore Medicine Hat as well. As far as giving an operational update and a financial piece, that sums it up at my end. Brian, anything further at your end?