2023-12-19 17:28:09 ET
Cielo Waste Solutions Corp. (CWSFF)
Q2 2024 Earnings Conference Call
December 19, 2023 12:00 ET
Company Participants
Ryan Jackson - Chief Executive Officer
Jasdeep Dhaliwal - Chief Financial Officer
Conference Call Participants
Troy Walsh - Private Investor
Brandon Kessler - Private Investor
Judy Woodrow - Private Investor
Presentation
Operator
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 Cielo Waste Solutions Second Quarter 2024 Financial Update Conference Call. [Operator Instructions] Thank you. I will now hand the call over to Mr. Ryan Jackson, Chief Executive Officer; and Ms. Jasdeep Dhaliwal, Chief Financial Officer of Cielo Waste Solutions. Please go ahead.
Ryan Jackson
Thanks, Jenny and good morning, everyone. I am pleased to be joined by with Jasdeep Dhaliwal today. And we will keep this fairly brief this morning and go straight to Q&A after we’ve made some initial remarks on the highlights from the PR that we did – that we released on the 15th. So we are happy to provide the most recent 6 months ended October 31, 2023 and as well as the filing of a restated unaudited interim financial statement for the 3 months ended July 31, 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 sedarplus.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.
Jasdeep Dhaliwal
Thank you, Ryan. Good morning, everyone. I wanted to go through, first, the financial highlights and will 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 million; total long-term or non-current liabilities were $1.9 million, with a working capital deficiency of $2.1 million. In the 3-month period ending October 31, 2023, our financing costs were $60,000; G&A, $616,000; research and development, $221,000; and a non-cash item, stock-based compensation, $187,000. For the 3-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 Saskatchewan property. The disposition of the land and the building resulted in the retirement of the principal mortgage, which was referred to the second mortgage of $11 million. The transaction itself entailed $2 million promissory notes. The purchaser is required to make best effort to sell the property. In the event the properties not resold, the $2 million promissory notes 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 the period ended July 31, 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 15 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 $0.06 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 of flow-through shares for up to $6 million. We are currently in the process of completing the 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’s assessment of when this reverse consolidation should occur, we are assessing a strategic component of project finance and other aspects that factor into the reverse consolidation for Cielo.
At my end, that wraps up the significant items in relation to the Q. I’ll pass it, and thank you.
Ryan Jackson
Thanks, Jasdeep. And as promised, short and sweet, we – just a quick clarification, Jasdeep mentioned as $0.06, it was actually settled at $0.05 as related in – stated in the PR. So, other than that, Jenny, we will open up the microphone, if you will, for any questions.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question is from Troy Walsh, an Investor. Please ask your question.
Troy Walsh
Hey, good morning folks. So, in the past, it’s been communicated that in order for us to able to qualify for any provincial or federal grants, the project needs to be at a commercial stage. So, seeing that we are at that juncture or planning those projects now, can we expect some grant money soon or have we applied for some of these things?
Ryan Jackson
Good question, Troy. And I also realized that I have an e-mail 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 Carseland and SDTC and also some opportunities for additional grant opportunities through the BC-LCFS, the British Columbia Low Carbon Fuel Standard. In addition to that, we also have been approved by Alberta Innovates for the feedstock trial, as we have mentioned in the past, for Aldersyde. So that’s a $0.5 million grant that we just received that we’re going to be able to draw down on. It’s a matching grant but still $0.5 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 an end-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.
Troy Walsh
Okay. Thank you.
Ryan Jackson
You’re welcome.
Operator
[Operator Instructions] And your next question is from Brandon Kessler, a Private Investor. Please ask your question.
Brandon Kessler
Thank you. Hello everyone. I wanted 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 Carseland Phase 1 completely or do you expect you’ll still need to raise additional money to conclude that first project?
Jasdeep Dhaliwal
Thank you for your question. The flow-through shares itself is the initial work that we’re doing for the Carseland 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.
Brandon Kessler
Okay. Thank you. I don’t know if it’s possible to ask a follow-up to that?
Jasdeep Dhaliwal
Of course.
Ryan Jackson
Sure.
Brandon Kessler
Thank you very much. So, do you – would you say that – because within the new year, we’re going to have the reverse – the deconsolidation will happen when management decides 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?
Ryan Jackson
Yes. 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 mother ship, if you will. Does that make sense?
Brandon Kessler
It does. That’s what I was hoping you would say. So, thanks very much for that context.
Ryan Jackson
Okay, my pleasure.
Operator
[Operator Instructions] Your next question is from Judy Woodrow, from – sorry, a Private Investor. Please ask your question.
Judy Woodrow
Hi, everyone. How’s it going, Ryan?
Ryan Jackson
Good. Judy, how are you?
Judy Woodrow
Good. Just have a question. With the environment – I think it’s the Environmental Protection where you have to put in for approval for doing this process?
Ryan Jackson
Yes.
Judy Boudreaux
Is that what it’s called, the EP?
Ryan Jackson
It’s Alberta Environment and Protected Areas this week.
Judy Boudreaux
Okay. So where are we at with that? Because that kind of 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?
Ryan Jackson
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 the projects, but they are all very much project-specific, and as well they should be. So, as it relates to the Aldersyde one, which is 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 till now, that was pre-Expander engagement and transactions. So we have this opportunity now to engage and allow Expander to get their hands around or wrap their arms around the application for Aldersyde, part of the $6 million – so that’s the Aldersyde application. So we’re receiving additional information request, 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 Carseland with the AEPA, part of that $6 million that we were talking about earlier is to fund that application process for Carseland’s expansion project. So, that one will happen. We’re also planning on the Dunmore AEPA application later on in – I’d say, probably planned for Q2 of – Q2, Q3 of next year, most likely Q2. And that’s where we’re at with those particular ones.
Judy Boudreaux
Okay. Thanks.
Ryan Jackson
You’re welcome.
Operator
Thank you. There are no further questions at this time. I will now hand the call back to Ryan Jackson for the closing remarks.
Ryan Jackson
Thanks, Jenny. And as always, if anyone has any follow-up questions, feel free to e-mail investors@cielows.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 support of Cielo is not something that is lost on either Jasdeep 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 the Cielo story in its current form.
Jasdeep Dhaliwal
Thank you, Ryan. Just as Ryan mentioned, happy holidays everyone, safe travels and we will see you the New Year.
Ryan Jackson
Great. That’s it, Jenny. Let’s wrap.
Operator
Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.
For further details see:
Cielo Waste Solutions Corp. (CWSFF) Q2 2024 Earnings Call Transcript