Cielo Waste Solutions Corp. (OTCQB:CWSFF) Q1 2023 Earnings Conference Call October 4, 2022 3:00 PM ET
Company Participants
Ryan Jackson – CEO
Jasdeep Dhaliwal – CFO
Conference Call Participants
Operator
Good afternoon, ladies and gentlemen and welcome to the Cielo Waste Solutions Quarterly Investor Update Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. [Operator Instructions]
I would now like to hand the conference 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, Michelle and welcome everyone. And thank you for joining us today. Of course, Cielo is a waste to fuel environmental technology company and today or rather on as of July 31 2022. And further to the press release that was issued on September the 30th 2022, we’d like to provide a synopsis of the financial results for the three months ended July 31. All of the amounts in this news — in the call will be in Canadian Dollars. And of course when we talk about quarterly, we’re talking about a fiscal quarterly Q1. I’ll turn it over to Jas to go over the financial highlights.
Jasdeep Dhaliwal
Good afternoon, everyone. As Ryan mentioned this is our Q1 quarterly financial results for the period ended July 31 2022. So just to do a brief overview of the financial results, and as it was welcomed by the shareholders and by our investors, a quick review of the key events that happened within the quarter. So total assets decreased in Q1 by CAD19.7 million and compared to April 30 2022, this decrease was in PP&E offset by an increase in cash and prepaids. As noted on our income statement, we had a CAD24.4 million write down or impairment of our assets related to decommissioning of the Aldersyde facility.
Another significant event that happened that we’ll touch on in detail in a little bit is Cielo completed a public offering of units issuing 139.6 million units at a price of 0.07 for gross proceeds approximately of CAD9.8 million. Total liabilities also decreased by CAD1.1 million. There’s a decrease in accounts payable of CAD1.4 million offset by an increase of CAD0.1 million in long-term loans.
Total non-current liabilities decreased by CAD2.3 million as of July 31 and the net loss for Cielo for the three months ended for July 31 was CAD27.6 million, an increase of CAD24.6 million from 3.0 for the three months ended July 31 2021. The working capital of CAD9.0 million in July 31 can be compared to CAD1.2 million at April 30 2022. We had financing costs in relation to the capital raised — into raise the short-form prospectus which I will touch on of CAD635,000 and other costs were G&A CAD900,000 approximately research and development CAD550,000.
And as I mentioned previously, impairment loss of CAD25.3 million. Just want to touch on the two key events that we can speak to are transactions that were noted within the quarter. The first one was impairment. As noted in our May 2022 press release, Phase 2 of the Aldersyde facility was paused due to inflationary period where the budget and the cost to proceed with a Phase 2 was resulted in increase of double the expected CapEx. As previously stated, as you’re aware, that Aldersyde facility was a retrofit of a previous biodiesel facility.
Moving away from Phase 2 does not impact our ability to move closer to commercialization, but rather takes us directly to the R&D facility to obtain economic data. From impairment standpoint though the trigger in May 2022 was the fact that the assets in Aldersyde, we have to make an assessment on do they fit into a full scale facility or R&D facility. Assessments completed by, led by Mr. Ryan Carruthers, our EVP Operations resulted in impairment of CAD25.3 million.
Other questions we’ve been asked in relation to this, do you want to take this opportunity to address frequently asked questions is when we speak to an R&D facility and we’re discussing a write down of Aldersyde, are we starting from scratch?
And our answer is no, we are not. If, as noted previously, we tested biomass, which is a wood derived feedstock, we will be able to take the learnings or the data gathered and enhance that as we work on a scaled down version in the R&D facility to obtain the necessary economical data. So another term that can be used in synonym for R&D facilities, the optimization, it’s the last nine yards, the ability to measure the variables that can be changed at an R&D level in the optimization facility of the R&D facility are now feasible, which Aldersyde would allow us and if we wanted to bring those metrics in, that’s what Phase 2 would have been. So that’s the impairment piece that we wanted to highlight.
The other significant piece for Q1, we’d like to highlight is the capital raise that occurred in July. This was a milestone moment for Cielo. So to just our very sophisticated investors but just want to walk through the process for the few again, frequently asked questions we have in this area. The short form prospectus process was that a preliminary short form prospectus was filed and filed on SEDAR, a question-and-answer, a disclosure review of all our public disclosures ensued with Alberta Securities Commission, we were able to successfully address their concerns and ensure our disclosures were in line and reflected the true operations and strategic vision of Cielo.
As noted in the short form prospectus, under the use of proceeds, we outlined what the use of the proceeds from this raise will be, which is predominantly the R&D facility and the minimal support on the G&A, the corporate expenses side. This short form prospectus was filed in Alberta, BC and Ontario’s and in Ontario, investors who could participate in this jurisdiction did. And this was a milestone moment for Cielo because that in that enhanced review, that additional review of our public disclosures was essential for Cielo because it showed that we do have a strategic plan, a vision and having a support of the Alberta Securities Commission helped solidify our strategic vision.
Those were the top two events, we can note and as mentioned, the use of proceeds is outlined in the short form prospectus. So as we’ve been making strategic decisions throughout this quarter, and in future quarters, we keep in mind that the use of proceeds from this raise are predominantly for the R&D facility. Other aspects of our results mentioned, just because the questions do arise, our quarterly financials are reviewed, it is not an audit completed by KPMG. And other than that the net loss, as previously mentioned was CAD27 million noted on the financial statements. Ryan, nothing further I will pass it back to you.
Ryan Jackson
All right. Thanks, Jas. And what we’ll do is we’ll open it up to questions in a moment but did want to provide further to the R&D conversation a bit of an update as it relates to the R&D facility and the construction and eventual commissioning in Q1 of 2023. As of right now, the process flow diagrams and piping instrument diagrams have been finalized. And we have preliminary 3D modeling that allows us to procure long lead items with respect to the construction of the facility.
Everything is continuing in Aldersyde as it relates to the decommissioning activity, and it remains on schedule and on budget. So that’s the essential operational updates such as it is with respect to the R&D facility and we will now Michelle, I’ll throw it back to you to open it up for any questions.
Question-and-Answer Session
Operator
Ryan Jackson
Thanks, Michelle. Certainly, we appreciate everyone’s participation in today’s call and wanted to turn it over to Jas for any final comments that she might have as we wrap this up with respect to Q1 and looking forward, Jas?
Jasdeep Dhaliwal
Thank you, Ryan. Thank you for the shareholders and investors who do reach out to us. Ask the detailed questions on a one-on-one basis. Looking forward to talking to you further one-on-one and thank you for your continued support with Cielo. Thank you.
Ryan Jackson
I’ll echo those same comments that Jas made and continue to thank all of the investors for their questions and their engagement. We always remain open to anyone who wants to engage with us directly. And of course, we’re very public with respect to the phone numbers and the email that we are open to receiving and happy to address questions at any time. Also appreciate the Board’s participation as always, and look forward to our AGM that’s going to be happening in later this month. Thanks everyone and Michelle, that’s a wrap.
Operator
Thank you. Ladies and gentlemen, this does indeed conclude your conference call for this afternoon. We would like to thank everyone for participating and you may now disconnect your lines.
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