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12/19/2023
Good afternoon. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to the Shell Away Solutions second quarter 2024 financial update conference call. All lines have been placed on mute. 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 the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. Thank you. I will now hand the call over to Mr. Ryan Jackson, Chief Executive Officer, and Ms. Jasdeep Dhaliwal, Chief Financial Officer of CLA Solutions. Please go ahead.
Thanks Jenny and good morning everyone. I'm pleased to be joined by with Jasdeep Dhaliwal today and we'll keep this fairly brief this morning and go straight to Q&A after we've made some initial remarks on the highlight from the PR that we did or that we released on the 15th. So we're happy to provide the most recent six months ended October 31st, 2023. and as well as the filing of a restated unaudited interim financial statement for the three months ended July 31st, 2023 and 2022. Copies of the unaudited Q2 financial statements and related management's discussion and analysis can be found on our issuer profile at cdarplus.ca. All financial information in the news release is reported in Canadian dollars, and of course, anything that we say today is also reported in Canadian dollars. I'll now turn the call over to Jasdeep Dhaliwal, the Chief Financial Officer for Cielo.
Thank you, Ryan. Good morning, everyone. I wanted to go through first the financial highlights, then we'll speak to some of the key transactions throughout the quarter and subsequent to the quarter. Total assets for the period ended October 31, 2023, were $13.9 million. Total liabilities, 5.3. Total long-term or non-current liabilities were 1.9 million, with a working capital deficiency of 2.1 million. In the three-month period ending October 31, 2023, our financing costs were 60K G&A, 616K research and development, 221K, and a non-cash item, stock-based compensation, 187K. For the three-month period, the net loss was $1.4 million, which consisted primarily of G&A of $0.6 million, research and development of $0.2 million, and finance costs of $0.05 million. And as previously mentioned, the non-cash item of stock-based comp of $0.2 million. The key transaction that occurred in the prior quarter, which, as I mentioned, ended October 31, 2023, was the sale of the Fort Siscatchewan property, The disposition of the land and the building resulted in the retirement of the principal mortgage, which was referred to as the second mortgage of $11 million. The transaction itself entailed $2 million promissory note. The purchaser is required to make best effort to sell the property. In the event the property is not resold, the $2 million promissory note will be terminated and the company will not be entitled to further proceeds of the disposition. For this piece, it is important to note that a small amount of impairment was missed in Q1 2023, so the period ended July 31st, 2023. Impairment was recognized for land and building, but miscellaneous costs that were incurred were not considered in the calculation. Therefore, a restatement of Q1 2023 financials were also filed on December 15th as well. Subsequent to the period end, We are very happy with the closing of the transaction of the IP licensing agreement with Expander Services, Expander Energy. The nature of this transaction resulted in 906 million common shares that were issued for 6 cents, with the total value of the transaction at 45 million. For individuals looking for further details, questions have come our way. They are noted in the subsequent events section of the financial statements. And it's important to note for this transaction, the transaction itself, the $45 million was issued in common shares. No other consideration was provided for this transaction. In the current period, we have also launched a private placement for flow-through shares. for up to $6 million. We are currently in the process of completing this private placement and the closing will be announced later this week or prior to the year end. The other item to note that occurred in this quarter was the shareholder approval for the reverse consolidation or consolidation of shares that occurred at our annual general meeting. As far as management assessment of when this reverse consolidation should occur. We are assessing a strategic component of project financing and other aspects that factor into a reverse consolidation for CLO. Brian, at my end, that wraps up the significant ideas in relation to Q. I pass the mic back to you.
Thanks, Jasdeep. And as promised, short and sweet, just a quick clarification. Jasdeep mentioned a $0.06. It was actually settled at $0.05. as stated in the PR. So other than that, Jenny, we will open up the microphone, if you will, for any questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. 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. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the 2. If you are using a speakerphone, please dip the handset before pressing any keys. Once again, that is star 1 should you wish to ask a question. Your first question is from Troy Waltz, an investor. Please ask your question.
Hey, good morning, folks. Hi there. So in the past, it's been communicated that in order for CELO to qualify for any provincial or federal grants, the project needs to be at a commercial stage. So seeing that we're at that juncture or planning those projects now, can we expect... some grant money soon or have we applied for some of these things?
Good question Troy and I also realized that I have an email that I need to get back to you on as well so apologies for the delay there but as it relates to grants we have a number of grants through the expander technology deal as it relates to Carsland and SDTC and Also, some opportunities for additional grants, opportunities through the BCLCFS, or British Columbia Low Carbon Fuel Standard. In addition to that, we also have been approved by Alberta Innovates for the feedstock trial, as we've mentioned in the past, for Alderside. So that's a half-million-dollar grant that we just received word that we're going to be able to draw down on It's a matching grant, but still a half a million of non-dilutive expense there as well. So you're very correct in assuming that we have now the ability to point to fundable projects that are able to be granted versus, geez, we just want to build a bench scale unit or even a pilot facility. This is not that. So we're quite happy with our ability now to apply and receive what we expect to receive in the way of non-dilutive money.
Okay, thank you.
You're welcome.
Thank you. Once again, that is dollar one, should you wish to ask a question. And your next question is from Brandon Kessler, a private investor. Please ask your question.
Thank you. Hello, everyone. I want to ask about the flow-through shares that can be used to raise up to $6 million. Can you confirm, is that going to be sufficient to fund the Carsman Phase 1 completely, or do you expect you'll still need to raise additional money to conclude that first project?
Thank you for your question. The flow-through shares itself is the initial work that we're doing for the Cardlin project. It will not be for the complete amount if you're referring to the capital cost of the project. It's just the initial, what we can call the feed work or the initial engineering cost to get to the level of the CapEx for project development.
Okay, thank you. I don't know if it's possible to ask a follow-up to that. Of course. Sure. Thank you very much. So do you, would you say that, because in the new year we're going to have the reverse, the consolidation will happen when management decides it's the best time, but can you say with confidence that we're past the point now where there'll be future dilution? Like, are we going to be at the point now where the projects can be funded in a non-dilutive manner?
Yeah, and that's, Brandon, that's a very... Good question, and also one that we expect and we've always maintained that we want to protect the cap table as much as we can. The benefit of the expander transaction allows us to now look at conventional forms of financing for what would be a cash-flowing project versus additional research and development work. So the short answer is yes, we expect that there will be a nominal amount of dilution outside of the $6 million that we're currently in. Should there be any additional, it would be attributed to project-specific financing, which most likely happens outside of the company inside a limited partnership structure or project-specific corp. that would not allow or not have us dilute the mothership, if you will. Does that make sense?
It does. That's what I was hoping you would say. So, thanks very much for that context.
Okay. My pleasure. Our pleasure.
Thank you. Once again, please press star 1 should you wish to ask a question. Your next question is from Judy Beaudreau from, sorry, a private investor. Please ask your question.
Hi, everyone. How's it going, Ryan?
Hi, Judy. Good, Judy. How are you?
Good. Just have a question. You know what's the, I think it's the environmental protection where you have to put in for approval for doing this process?
Yes.
Is that what it's called, the EP? Yes.
It's Alberta Environment and Protected Areas this week. Okay.
So where are we at with that? Because, you know, that could have started a while ago, then it got thrown back because they had more questions, and then Expander is supposed to be helping with getting this approved?
That's right. So each project or each location has its own process and its own application, Judy. So I only wish that it was as easy as us being able to just apply once as a company and be able to just put an umbrella over all of the projects, but they're all very much project-specific, as well they should be. So as it relates to the Alderside one, which I think the one you're talking about, the one that we currently have inside the AEPA, we have received a supplemental request for additional information, and from the time that we actually applied and provided that initial application until now. That was pre-Expander engagement and transaction. So we have this opportunity now to engage and allow Expander to get their hands around or wrap their arms around the application for Alderside. Part of the $6 million, so that's the Alderside application. So we're receiving additional information requests, which is very good news. as it relates to it coming back and saying, no, they want to know more, which is always a good sign. The other application as it relates to Carsland with the AEPA, part of that $6 million that we were talking about earlier is to fund that application process for Carsland's expansion project. So that one will happen. We're also planning on the Dunmore AEPA application Later on, I'd say probably plan for Q2, Q3 of next year, most likely Q2. And that's where we're at with those particular ones.
Okay, thanks.
You're welcome.
Thank you. There are no further questions at this time. I will now hand the call back to Ryan Jackson for the closing remarks.
Thanks, Jenny. And as always, if anyone has any follow-up questions, feel free to email investors, that's investors with an S, at CLOWS.com. And we'll be happy to get back to you with a written response, as always. And as we wrap up, certainly I'd be remiss if not wishing everyone a happy, safe holiday season. wherever it may take you, whether you're staying at home or traveling, we wish you all the best. And your continued service, Yellow, is not something that is lost on either Jazz Deep or myself. And we want to let you know, of course, that as always, we'll be back in the new year with some updates, most likely a webinar that we'll have planned around the progress on projects and some of the other stuff that we'll have early in the new year, as well as continuing to tell this yellow story in its current form. So thank you again, everyone, for joining, and I'll allow Jasdeep to say the same before we sign off.
Thank you, Ryan. Just as Ryan mentioned, happy holidays, everyone, safe travels, and we'll see you in the new year.
Great. That's it, Jenny. That's a wrap.
Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining You May Always Connect.