Cielo Waste Solutions Corp. (CMC.V) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cielo Waste Solutions Investor Update Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Ryan Jackson, Interim Chief Executive Officer of Cielo Waste Solutions. Please go ahead, sir.

Thank you very much, and good morning, everyone. Thank you so much for joining us at this -- well, I guess it's early hour of the Mountain Standard Time, but we're into the workday, of course, Southeast and in Central Canada. So today, Cielo Waste Solutions would like to announce the resignation of Mr. Gregg Gegunde as Chief Executive Officer and Operating Officer; and Mr. Chris Sabat as Chief Legal Officer and Corporate Secretary. Ms. Anna Cheong, who was acting as Interim Chief Financial Officer, has returned to her position as Controller. The Board has appointed myself, Ryan Jackson, as Interim Chief Executive Officer; and Ms. Jasdeep K. Dhaliwal, a Chartered Professional Accountant, as Interim Chief Financial Officer and Corporate Secretary. I just wanted to also mention that the company has engaged Echelon Wealth Partners as its financial adviser to assist the interim management team and the Board of Directors with evaluating a number of potential financing alternatives to further advance various capital development projects, including at Aldersyde. As far as an Aldersyde production update, we can tell you that as the Aldersyde Phase 1 facility has continued to operate, Cielo has continued to modify the improved design and improve design. Aldersyde Engineering, Operations and Maintenance have been making such improvements and, as a result, are repairing inline heater. The heater is expected to be available by June 20, 2022, at which time low rate, steady-state operation is expected. A change in feedstock dimension was recently implemented to further improve the process, which resulted in improved distillate quality but impacted solid settling characteristics. Operations strategy and piping modification was required to manage the waste stream due to changed solid settling characteristics. Interim operations have been positive, resulting in improved used motor oil recovery for reactor bottoms and reduced waste production. Aligned with our previous news releases dated May 12 and April 18 of this year, the primary focus of Aldersyde is to improve reliability, distillate quality and better understand constraints so that learnings can be applied to the research facility design and future full-scale facilities. Moving forward, management will no longer focus on -- nor provide guidance on feed production numbers as the current Aldersyde facility is uneconomical and these numbers are not required to achieve the previously mentioned objectives. Cielo's plan is to achieve steady-state production over a 10-day period followed by a planned outage to inspect equipment. Following each steady-state production cycle, operations and engineering will then evaluate the run and apply learnings for future trial runs and modified process parameters. There. Now I'm done reading. So just wanted to give everyone a little bit about myself. And then I'm going to turn it over to Jas, and she'll let you know a little bit about herself as well. Myself, I've grown and developed a number of businesses and, currently, I'm the majority shareholder, Managing Director of RAMECO Group's portfolio of companies in consulting, commercial real estate, health care, leasing, finance, biotech, green technology as well as retail. Taken part in a number of successful exits, and I'm an active investor. In addition to my business ventures, served on numerous Boards, including the Chairman of Medicine Hat Police Commission from 2009 to '13, and I was also a Chair of Alberta Law Enforcement Response Teams, or ALERT, from 2011 to 2013. Been a member of Board of Directors of numerous companies, and I was also awarded the Queen's Diamond Jubilee Medal in 2013 and the BDC Mentorship Award for Canada in 2014. I continue to serve on a number of public and private Boards and currently reside in Medicine Hat. So just wanted to let Jas have an opportunity to say a little bit about herself and then we're going to get straight into the Q&A.

Thank you, Ryan. Good morning, everyone. Thank you for joining us today. As Ryan mentioned, my name is Jasdeep Kaur Dhaliwal. I have been providing oversight as the auditor in Cielo since April 2021. I have a diverse background in business development, a strong foundation in insurance, internal control and financial reporting. Further to that, I've been involved in not-for-profit Boards and provide consulting services to public and private Boards. I'm very excited to be here. I'm very excited to be working with Ryan in providing leadership at the maximum accepted level. At Cielo, the Board and Ryan, I have always been excited that we have a potential tool in a global toolbox to mitigate climate change. At the same time, our aim is to create a product that is economical, and we deem to create a product that's profitable for investors. I'm very excited to be here, and I look forward to our journey to the full-scale facility. Ryan?

Thanks, Jas. A further few comments. I wanted to take the opportunity to thank Gregg Gegunde and Chris Sabat for the leadership that they've shown over the past number of months since last year. The work that they have done, these 2 gentlemen, especially as well as Anna, who remains in a controller function with respect to Cielo, have done yeoman's work. They have really put their shoulder into the wheel, so to speak, and made Cielo into the company that it is today. I can't thank them enough for the hard work and the dedication and professionalism that these 2 have shown. Further to that, I also wanted to let everyone know that Gregg and Chris have built a phenomenal team behind them. And we're really excited to work with that team and continue the good work and execute on the strategy that we all developed or the executive team developed and that the Board approved moving forward with construction of the 60-liter per hour research and development facility as well as continued learnings from the Aldersyde Phase 1. So just give everyone a chance to ask a few questions if they'd like. It was really very informal. We wanted to, of course, announce the change in management and also provide you a bit of an update with respect to Aldersyde. I won't be answering any technical questions specific to the specific operations. I'm a business guide. So that's -- I'm going to leave those to or defer those to a written e-mail question that we can get back to you on specifically but happy to answer any questions in a business context or, of course, Jas with a financial context. And we look forward to hearing your questions. We'll give everyone a few moments to queue up, if you will. And if there are no questions, then we're going to let everyone get back to their morning.

[Operator Instructions] Your first question comes from [ D. Bhairav ], private investor.

Yes. One of the comments that I have is I noticed -- I got a notice for this news release at 2 o'clock this morning and a message to call you at 7 o'clock. I assume there's not going to be too many on the call. Any comments on that for now?

Thanks for the question. And it looks to me, and I can't -- I won't try and count, but there's several number of people I can see on the call. So we weren't trying to -- we were trying to get to everyone early in the day. So -- and of course, we released the information when we did, but we're happy to have a conversation with an investor any time. I'm not -- whether or not it's in a public format or whether they wanted to give us a call or send us an e-mail. So -- but we do actually have a fair number of people on the call.

So secondly, it's getting concerning to see so many changes on the Board. On BNN, these specialists are telling us to stay away because management has concerns and whatever. As a shareholder, being at 27% of my investment, it really concerns me as to the company I'm invested with because if the Board keeps changing, it gives me an indication that there's something wrong with our company.

Yes. I could understand how you could feel that way. The Board actually hasn't changed that much. It actually -- in fact, it's been fairly consistent. We've added a couple of Board members, in fact, one in just this last fall with Sheila. But the Board actually hasn't changed much with respect to management and maybe that's what you're referring to. Each business and its evolution goes through a number of iterations, and management skill sets change as that business unit evolves. I can't comment on what others feel, whether one should stay away from stock. I feel like we're undervalued. Of course, I'm a shareholder as well. So clearly, there is skin in the game with respect to -- and most of the directors are. So we have a vested interest in making sure that the company continues to move forward, of course, in the most transparent and ethical manner possible.

Okay. Lastly, your comments that Aldersyde facility is uneconomical. Can you explain that part?

Well, it basically cost us more to operate than what we can produce off of what we can sell. So it's a simple question of we're continuing to make an investment into Aldersyde as it relates to the learning that we're getting from it to adopt and include into our design in the full-scale facilities. So at a certain point, though, we can't continue to operate it. We're going to learn what we can, but those -- that time is coming close because the research and development facility, from what I'm told from our lead engineering team, is going to allow us to learn a lot quicker and a lot cheaper and a lot less expensive. So it's as simple as just where it costs us more to operate than what we can pull in the way of revenue from it.

So what you're saying is that we are not going to be expecting production out of Aldersyde?

We are going to be doing low rate, steady-state production, as I mentioned, but the production in its current form is not going to be economical. In other words, we're not going to be able to make money off of it in its current design. In the new design that we're going to make in a full-scale facility, obviously, that's not the case.

Sorry, just I would like to build on that a little bit, adding to Ryan's comments. We've had quite a significant amount of learnings from Aldersyde, as Ryan mentioned. But from the economical piece, I'd like to build on that a little bit. Our capital expenditures no longer can be sunk costs. We've learned what we needed, as Ryan mentioned. But for investor dollars that -- the economics of that -- every investor dollar going into full-scale facility will serve more than it would continuing with those learnings. And that's where the economical piece comes in. I just wanted to add that piece in.

Your next question comes from [ Gary Dufour ], private investor.

Thank you, operator. Ryan, I appreciate this executive that you're walking into the lion's den, although per the previous caller, probably not as many could attend this call as might be warranted. I have to say, I've been invested for over a year now or just about a year in this company. And I greatly hope that a lot of the information that was transparently put out in press releases and in conference calls has not come to fruition. I go back to the March 21, where the company anticipates it will meet the Q1 '22 target of 20,000 liters per quarter. Gregg, in the last call, was indicating that the plugging and coking issue that was plunging up the system and resulting in lower throughput had been resolved. And now we're hearing something completely different. And we're hearing everything seems to always be packaged up, and I appreciate I'm putting a few thoughts together here, into one press release. We find out that you're going out with a new financing partner. You find out that the Aldersyde is no longer economically viable. You've got low rate. Who knows what low rate means? It clearly doesn't mean 20,000 liters per quarter, I would imagine. And we don't even know if the continuous flow at Aldersyde has been resolved or not. On April 18, it was indicated that the continuous flow had been resolved and that we're trying to get basically 30 days' worth of continuous flow production to substantiate those claims. Bottom line is, Ryan, the credibility of this company and the management team of which you are a Board member, I appreciate you just taking over the role as Interim CEO, but the Board of this corporation is abysmal in terms of the credibility. And I am dismayed. I am dismayed on behalf of myself but also all the other investors that have been listening and trusting. And every -- it seems every quarter, another piece of information comes out of the woodwork, no pun intended, that doesn't align itself with previous comments.

Understood, Gary. And I appreciate how you feel. And listen, the Board and you and everyone else have continuously been watching and learning along with, of course, our lead engineer team and the rest of the staff at Cielo and a lot of things that were expected and are expected are still expected. So the expectation that we have with respect to production, numbers are secondary to the learning that we get around the production of the distillates and by extension if we refine it into either diesel or into jet fuel or kerosene. So we could appreciate certainly that if we hang our hat on the production numbers of Aldersyde Phase 1, we could certainly do that. But we're not -- it's not an economically viable way to operate. Yes, we could produce the 20,000 liters of -- per quarter maybe, potentially, if we get to the steady state production, but that's the whole point of the R&D facility that we're building because we can produce. And 60 liters an hour is not a small number. So this is not a bench scale type facility, right? This is a full working model. So working forward, and I appreciate that you're frustrated, so are -- as I know a lot of people are because we're not proceeding as fast as we'd like. But this stuff takes time to get it right. And we do not want to go into a full-scale facility before we have exactly the kind of data, and we can't pull that data off of the first phase of Aldersyde. So I understand your frustration. I really appreciate that you made the commitment and made the investment, all of us have as well. And we want to make sure that we proceed. And yes, the Board is very aware of what's going on, and I appreciate how frustrated you are. All I can say is we're working as hard as we can to get through to the finish line as quick as we can.

Okay. I have a follow-up question if I might then with respect to the financing. At the last call, and maybe the Interim CFO can answer this question, at the last call, it was indicated that because of capital constraints, which I understand, being a small company and trying to raise capital is challenging, the capital is going to be directed towards the R&D facility. My greater concern right now is you have that mortgage that got converted with some warrants, et cetera, and you pushed out for 1 year the ability for that loan to be called. Where do we sit with respect to the debt on the balance sheet in terms of the investor being able to call in that loan and/or future financing because that's critical. If this company is going to have to raise significant capital either through debt or equity, it's going to have a material impact on the existing stakeholders in Cielo.

Jas, do you want to comment? Or do you want me to...

Yes. I can comment on that, Ryan. You can add on anything else. Thank you. Thank you, Gary. Yes, [indiscernible]. So when we're saying R&D, we're speaking to testing for the full-scale facility. So our operational focus is to continue to do that piece of the testing. So as far as a strategic plan, that's what Ryan and I are focusing on at this point. We're looking at Cielo as a whole, which includes that mortgage piece and other items. And as Ryan and I discuss the options for that, we need to find what's going to work for Cielo in the short term but also long-term plan of development strategy and where the full-scale facility will be. So as those items develop, we will be disclosing that material. But yes, we are excited to work with Echelon. They are excited to work with us. And we do have -- we are looking forward to the capital raise, which should be coming. Ryan?

Yes. And I'll add to that, Gary, from a business perspective, looking at the debt that's on the company, and I'm aware, of course, is that it's anchored, of course, with some assets as well, not the least of which is the Fort Saskatchewan real estate, which comprises the majority of that mortgage. So we're going to assess that, and we're going to make sure that there's an opportunity for us to see whether or not it's worth holding it or whether we can afford to hold it, and it will impact whether or not we have the ability to continue to raise equity or put on a certain amount of senior debt on the company. I'm not a fan of borrowing money on a company that's pre-revenue or low on revenue. So there's an equity piece here, and the fact that we are undervalued today is a good opportunity, quite frankly, to make some of those business decisions. So hopefully, that helps.

Okay. As a former CFO, I do concur with your comment about putting debt on a pre-revenue company and how dangerous that is. But as the people who are participating on this call are equity investors, maybe didn't get in on the initial offering but have come in subsequent to that, your comment about being undervalued, I'm not sure how anybody can make that comment today when right now the company doesn't look like it's extremely viable if I looked out 6 months from now without any financing in light of the recent news. So I'll leave it at that and open up the floor to others.

Okay. Thanks, Gary.

Your next question comes from [ Ryan Tripp ], private investor.

My question is, why did Gregg and Chris feel the need to resign? [indiscernible] why step away?

Yes. Thanks for the question, Ryan. And I can't comment on internal matters, internal appointment matters. All I can tell you is that they stepped away from the company. I can't comment beyond that.

I think that's everyone's question today.

Yes. No, and that's why we're on the call, right? We're certainly happy to answer any questions with respect to the company, but that's -- like you said, that's an internal matter. So as much as I'd like to, I can't.

Okay. My follow-up question to that is, how are we looking for time lines for the 60-liter per hour plant? Is this coming together as anticipated?

Yes. Thanks for the question. We have -- yes, we have the drawings, and we have, of course, received quote to build it. So it's coming together. It's come together quite nicely. We continue to learn, of course, through the Aldersyde facility as well on certain aspects of the design from what I've been told. But yes, as far as the 60-liter per hour facility, we're on track.

Okay. And we have -- we've learned about the shortcomings from the waste collection unit. I guess these -- we're not going to be seeing these issues arise with the next iteration.

That is exactly the plan. And if they do arise, the nice thing is, is that there -- the data that we get from it is a lot easier from what -- again, what I'm told -- I'm on just the business guy, but everything that I've been told is that we have the ability to learn quicker and fix it faster so that we can get to the full-scale facility designed and then start to build.

Your next question comes from [ Neil McKinnon ], private investor.

With respect to the RSUs and DSUs and large compensation plan that Gregg and Chris and the former CFO were granted in late 2021, are they walking away with all that compensation? And going forward, is the new -- are you guys going to expect more -- another compensation package? I mean it was quite lucrative what we gave them and here they are, walking away and not saying a word. Like that is extremely troublesome.

Yes. No, I appreciate that. And there certainly is -- and the compensation was expected to obviously address market, and we had obviously done some comparables that allowed the Board to put the compensation packages together for the executive. Quite frankly, that was the market at the time. And going forward, we're not going to be able -- not to be in a position anyways at this point when the company is at this inflection point continue to proceed with the same level of compensation for -- moving forward. And as far as Jas and myself are concerned, we're working through a significantly reduced portion of that for our time and the expertise and efforts that we're putting through, but we are not going to be used -- we're not going to be at near the same levels of compensation that we have in the past. In the past, that was market. That was what people were -- that's what people were getting paid for C-suite positions. So -- but we can't afford it. As simple as that.

Well, I'm relieved to hear you say that. I completely agree. The compensation that was given was just way too much. So are they walking away with all of those invested in 1/3, 1/3, 1/3? Are they walking away with all these RSUs and DSUs?

You know what, that's a great question. And I'm not sure that I can comment on that other than to say I don't know. And if Jas might be aware, but what I can do, if you want to -- I can certainly follow up with you. If you wanted to send an e-mail question to investors@, we could certainly -- I could certainly circle back with you on that.

Sure. I will do that.

Your next question comes from [ Aman Vadala ].

I've been an investor in Cielo for about 9 years now, and I'm afraid we're losing our kind of first-mover advantage in this industry. Can you comment upon that?

Thanks for the question, [ Aman ]. That's a great question. I think the one thing that we -- gets confused is the amount of biodiesel plays out there versus waste of fuels or renewable diesel. Biodiesel, of course, using some form of either canola or corn or something like that as far as their feedstock, whereas we're using feedstock that is not. So I think based on what the barrier to entry is, which is extremely high in this kind of a business, I don't believe we have. In fact, I think we're still way out in front with all of the intellectual property that this company possesses. To the caller's earlier comment around the value, this company possesses a significant amount of intellectual property. And the only way we could have gotten that was 1 of 2 ways, of course, engineering and design, but also through learning through running these things. And suffice to say that I can't imagine any other company that has -- is in the position that we are to be able to take everything we've learned and now putting it into the research and development facility that also then allows us to move quickly into the full scale. So I don't believe that's the case. And that's why I say that we're undervalued.

Okay. And just a follow-up question as well. Do the previous time lines still apply in the plans going forward to, as you mentioned, the demonstration facility followed by Fort Saskatchewan. And then also in regards to the financing, if they do apply? In regard to the equity piece, I'm looking at the stock being down 50% for the day. So that will be very detrimental to existing shareholders.

Yes. And we're on pace, we're on time than the existing time lines that we've put forward. So the stock is going to do what the stock is going to do. There's a significant amount of retail float out there that's going to -- people are either going to see this as a buying opportunity or they're going to want to exit the stock. We have to keep our eye on the bubble, and we believe that it's an opportunity to buy. It's certainly not the other way. So if someone came in at a higher number, I would suggest that this is a good way to average your stock. So we see this as an opportunity in sort of our financial partners.

And if I could add to that, Aldersyde was the opportunity to invest investor dollars in our output. So the distillate quality, improving that piece with the R&D facility, as we call it, or the pilot facility, we get to look at now input. And that's a step forward. We may not be looking at what was, what we would call, ongoing production where a lot of the comments are in liters. What we are looking at is what investors care about, which is margin, which is profitability. And that's where the R&D facility that we refer to is so important to understand that aspect as we move into the full-scale facility.

Okay. And my last question was just in regards to -- over the last year, it seems like we've moved away from using the word renewable. And so if we still have a renewable product, if we are still using the desulfurization and also what the status of the joint ventures are.

Sure. We're working through -- sorry, the first part of that question was, again, I'm not sure I heard the last one.

Sorry, the first part was over about the last year, we moved away from using the word renewable in most press releases and calls. Do we still have a renewable product? And are we still using desulfurization?

Yes. So first question is, yes, we still have a renewable product or the ability to make a renewable product. And this is, again, more of a technical question around what is the carbon intensity score based on the feedstock that we're using. So if it's plastics, it's waste of fuels, if it's wood waste or something with a lower carbon intensity score, it's a renewable. So the bottom line is that we're going to use whichever feedstock yields us the best rate of return. So -- and whether it falls inside the renewable or waste to fuels category doesn't really matter a whole bunch. And as far as the desulf unit, that's not really material to whether or not we create that kind of a fuel. So that's just on the other side, again, I'm going to defer to the engineering folks, but the desulfurization is essentially allowing us to get to a highway grade fuel and, I think, a lot of cases in the marketplace. In certain cases, we don't require that. But the desulfurization is, of course, part of the overall finished product piece.

[Operator Instructions] Your next question comes from [ Kenneth Kelly ], private investor.

I just wanted to comment. I think your comment [Audio Gap] skin in the game are a little misleading [Audio Gap] insider trading really aggressively. The only buy I've seen in the last 2 years comes from Raj at [ $1.05 ], well, 2 weeks...

Ken, you're cutting out there.

Sorry, most of the stock that I see that anybody has, has been given to them. The float has increased dramatically in the last 2 years. So I think it's a little misleading to -- on the call to suggest that they have skin in the game. They were given skin. Nobody has put any skin in the game. I think that's a fair comment or I'm not reading the insider trading reports properly. Second question would be finances. The stock is at $0.08 today, probably soon to go lower. And if you've got Echelon, they're going to have to raise money. Yet, it's not going to be -- it's not going to be [ 15 ], it's going to be 7 or 8 plus warrants plus -- so there's a massive dilution coming forward here. I don't know how much money you had left in the till. You haven't talked about that at all, but I'm sure that's not very -- I'm sure there's not a lot there. So I'd like a comment on where the finances are and certainly something I think be careful on the -- how much skin in the game the insiders and directors have because mostly it's been getting to them.

Jas, do you want to comment on the financial question?

Most definitely. We are working with Echelon to finalize the financing. As the information develops, that will be disclosed. As far as our operations, we've scaled our operations and rightsized the company to what our intention is, which is an R&D facility. So the capital we will be raising is to reflect what the nature of our operations are, which is, the R&D facility, the step-up towards a full-scale facility. So the nature of capital we need is only -- is reflected in what we need it for. And that's where Echelon is partnering with us to help us with that thing. Ryan, would you like to add anything further?

Yes. No. Ken, just with respect -- I understand your perspective on -- from an insider perspective. This is, of course -- this predates about -- my comments predate the current situation. So that was the only thing with respect to the insiders. There's -- you're not wrong, but that's -- my comments predated that.

Your next question comes from [ Anthony James ], private investor.

Sorry, I had you on mute. I appreciate the call, obviously, if not the news everyone was expecting. But to follow up on a previous caller's question, when you're saying that RSUs and everything that was issued previously that was predated your involvement on the management side, but you did make the comment earlier that you believe the stock is undervalued. So is that now an indication that current management would be facilitating purchasing at this value? Do you have knowledge or you're convinced that there's -- this opportunity will flush itself out. Granted, there's been hiccups and bumps along the road. But if it is undervalued, as an investor, a shareholder, you would expect management to put their money where their mouth is effectively and start taking down sizable position at this discounted rate.

Yes. When one is allowed to do so legally, that's exactly what I expect will happen. We've been in blackout, Anthony, right? So I mean, obviously, we can't buy until disclosures have been made. So obviously -- go ahead.

Totally understand the compliance issue and following regulatory -- I mean nobody wants to see you buy right before you announce, you achieve continuous flow and the stock takes off. No, that's not...

Exactly. I'm talking to you from my one phone call from [ jail ] is what I'm doing.

No, absolutely. But as you can see that when insiders have a view of a company -- I mean I could flip this around and say, I haven't seen anybody unloading any stock prior to this announcement, which I guess could be viewed as a positive also, right? So just a question on the financing. What is the time line? What do you guys expect? Granted, things take time, and the markets right now are very [ tumultuous ]. Like, I mean, there's a lot of turmoil out there and -- but what is your sort of time line on getting the financing in place?

We're working hard to -- with Echelon on exactly that, and you're going to see something in the short term. It's not going to be something that we're going to [ draw out ]. There's a number of moving parts to it, and we're going to be announcing something in the short term. That's about all I can tell you about that right now.

Appreciate it. And is that financing sufficient enough to achieve material milestones?

It is. Jas?

Sorry, to go back to your question, please -- if you go back to the question about skin in the game, Ryan and I as Board members are here in management to help provide the Board's leadership with a hands-on approach. Every single Board member, Peter, Sheila, Larry and Don, is also providing governance with a hands-on approach as well, understanding the governance rules. Skin in the game, we definitely have emotionally, and we do believe in this company. Yes, we've had -- the challenge is this. We've, in the past, talked about the ability to produce an operational milestone. As the Board looks at it, as Ryan and I look at it, that is very, very important. However, as we move into the full-scale facility, the economics is also an important piece. So we need to balance both of those expectations, and that's what the Board's and my strategy is at the management level. And I just wanted to add that piece as well.

And Ryan, just one thing, you said to contact you, is there a direct e-mail or is it just through investor?

Just so it doesn't overwhelm my Inbox, we just use the investor and then of course, I'll get back to you.

Your next question comes from [ Gary Dufour ], private investor.

Just a follow-up. And maybe because you don't have the engineering background, et cetera, in the R&D facility that you're -- the 60-liter facility that's being constructed or soon to be constructed and commissioned, do you have any sense or does the Board have any sense from previous discussions with management or with Gregg, et cetera? Approximately how long it may take to get viable data? And I do appreciate what you're saying about having good constructive margin data and inputs that you can then go out to the investment community and be able to prove the economic viability of taking plastics or [ wood mats ] or whatever and run it through and, obviously, generate a profit. We all want that. But do you give the investors a sense of how long it might take for this R&D facility to start proving, one way or another, the results that then you can take to the investment community on an institutional basis?

You know what, based on -- and we publicly released some of this information, Gary, and other releases, but I'd have to check the tape, but I believe that we had promised or that we had expected the time line to be within this calendar year. That might have slipped a little bit, but the construction is going to happen fairly quickly.

Okay. So you believe that the facility -- the R&D facility -- test facility will be kind of up and running within the next -- would it be unfair to say by Labor Day?

I wouldn't hold -- I wouldn't suggest that -- and I'm not going to -- I won't give you a day, I won't give you a quarter, and I would suggest that, and I'm going to I'm going to go back and reserve the right to be corrected. But from what I understand, the expectation is that sometime in Q4.

Calendar Q4, not fiscal?

Yes. Sorry. Yes, yes, yes. No, it's not fiscal, not fiscal. Yes, no, calendar, not fiscal.

Okay. And do you have a sense also of all the different inputs that could be used? Would plastics or certain type of plastic be kind of the #1 priority because it is maybe the most available in landfills, et cetera? Would that be where you target?

Well, that's what management has told us in the past. They would like to see the next feedstock that we test or maybe even the first feedstock, I guess, in the 60 lph. I mean, AEP has to grant us the permission to do that. We have to go through the regulatory hoops to do that, but plastics is at the top of the list from everything that I've discussed with management. And there's a lot of feedstock to that.

There are no further questions from the phone lines. At this time, I will turn the conference back to Mr. Ryan Jackson for closing remarks.

Thanks, everybody, and thanks for your questions. Of course, none of us, including myself -- this is one of these things where one always gets a little bit nervous when you see a management change such as this. What I can tell you is, we've been doing this for a while. This is not my first rodeo. Jas is a very accomplished finance person. So we have a significant brain trust behind us as well. And I want to say that everybody is working together, that we're not working in silos. We're all working towards the same goal, which is, full-scale commercial production facility. And if you look at other people in our industry, we're progressing in the very same manner and, I believe, at a faster speed than most as we alluded to earlier. So really excited about the future of the company. I see this again as a great entry point. In fact, one of those things where you just have to take your lumps with respect to a management change announcement. And we're looking forward to continue to build the business. And that's what this is. We can't lose sight of that. This is a business, not a science project. So that's what we're building. Jas?

Yes. Thank you. I echo Ryan's thoughts and sentiment. I think as challenging as changes, the most important thing, like Ryan said, is we've been operationally focused. It's always been about liters per hour operationally. What we need to build is a business around a concept that we are confident and aim to make economical. And that's where Ryan and I strategically come in to ensure that our confidence in the product has a strategy around it, our confidence in the project that is going to be viable in our mind has a business, economic and profitability for investors. And that's what our aim is with the changes. We cannot have any more sunk costs. The focus is economics going forward, and I'm really excited to work with Ryan. And the Board has been very involved. And we're united to see Cielo move forward to full-scale facility. Thank you.

Great. Thanks and, of course, always [email protected] if you have any questions.

Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you for participating, and I ask that you please disconnect your lines. Goodbye.