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

Hi, everyone, and welcome to Cielo Waste Solutions Live Corporate Update and Corporate Review. This is Will Maze from RB Milestone. Cielo Waste Solutions is a waste-to-fuel environmental technology company with the goal to transform waste materials into fuels without harmful emissions. Cielo shares are listed on the TSXV under the symbol CMC and on QTC -- OTCQB as CWSFF. Joining us today is the company's CEO, Ryan Jackson; CFO, Jasdeep Dhaliwal. And Ryan Carruthers, Executive Vice President of Operations. They will be providing a review of the corporate strategy and progress made to date as well as upcoming milestones. At the end of the presentation, we'll open it up for Q&A for management to address. [Operator Instructions] Please note this presentation is being recorded today, June 22, 2023, and will soon be made available on the company's website at cielo-s.com. Today's call may contain forward-looking statements that are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements and are not guarantees of future performance of the company. No assurance can be given that any of the events anticipated by forward-looking statements will occur, or if they do occur, what benefits the company will obtain from them. Also some risks and uncertainties may be out of control of the company. Cielo has a full disclaimer contained in their presentation. Lastly, RBMG is not a registered investment adviser or broker-dealer. For more information, please visit rbmilestone.com. And now it is my pleasure to introduce Mr. Ryan Jackson, the CEO of Cielo Waste Solutions. Ryan, the stage is yours.

Thanks, Will. As always, and welcome, everyone. I see there's been some great participation today. And I think it's important for everyone to understand that we are looking forward to being able to present to you where we were and where we are now. And in the future, of course, we'll also be providing and sharing with where we're going. It's always good to look back and to be able to provide a certain amount of context on the things that we both noticed as we came into the roles that Jasdeep, Ryan and I did. And also, of course, with respect to the Board of Directors of the mandate that we had going forward into the future. So without further ado, we'll turn this over to Jasdeep for the beginning of the presentation. Jasdeep, it's all yours.

Thank you, Ryan. Welcome, everyone, to our 2023 fiscal year-end review. Very excited to share our results, but also very tied to share results in the context of our strategy but also in the context of our operations. As many of you know, Ryan Jackson and I joined -- we stepped away from the Board of Directors and joined as part of the management team in June 2022. Initially, in an interim role, subsequently, that take was dropped in September 2022. As we assess the environment within Cielo, its ability for success and also looked at our own skill sets as entrepreneurs, but also the individuals who have experience in building this business, we knew we could add value. And we're very happy to be here, and we feel we have moved the needle of Cielo quite significantly over the last year. Our goals over the last year have been, first and most to develop a clear and attainable path to commercialization. We stepped into a situation where the inflationary environment resulted in a pause on Aldersyde Phase 2, as many of you are aware. We continued down the path of obtaining learnings from Aldersyde Phase 1, pursuing the fabrication of the R&D facility, which is a scale down of the Aldersyde Phase 1 process, and then from there, the plan is to scale up in our first full-scale facility. We continue to maintain a strategy to evolve from ad-hoc problem solving and the entrepreneurial approach that was initially used as Cielo. And we wanted to be a data-driven business. Transparency was a key role in that. In the last year, Ryan Jackson, Ryan Carruthers and I have had 7 significant touch points with shareholders. We've had 3 quarterly calls and 4 webinars through RBMG, and we'll continue to do so in the months to come. And last but not least, we continue to oversee stakeholder interests, ensure capital is prudently deployed as we build our long-term shareholder value. So in pursuing goals, what were our objectives? Our first objective was to commission the R&D facility. As I just mentioned, Aldersyde Phase 1 was an existing process. This process was proof-of-concept that wood biomass can be converted to distillate. To save on CapEx, what we did is we took the existing process, scaled it down in the R&D facility to allow for state-of-art equipment, process parameter control and other items that Ryan Carruthers can speak to. We continue the planning for the proposed full-scale facility. We compiled based on our understanding preliminary performance and for first facility. And we also took the initiative of really take a hard look at Cielo. We took a very hard look at Cielo, and looked at, are we positioned for future success and what changes need to happen within the organization to position ourselves for future success. Here's a brief overview of highlights that occurred in 2023. We came into a situation where we were able to complete a public offering of $9.8 million gross, which I'll get into in the slides to come. As mentioned, Aldersyde Phase 2 was paused, completed the fabrication of the R&D facility, extinguished debt total aggregate amount of $6.5 million, which was due in September 2023. We leased an asset, which we believe, the Fort Saskatchewan assets, in the short term, at least is a redundant asset, we were able to lease that. With debt for shares conversion that allows us to break even for cash flow for that facility -- for that location, apologies. In Q3, we built what we believe is our dream team, completed sale of distillate for the second time. The original sale happened in January 2022. And as I mentioned, we continue to commence the planning for the first full-scale facility. Here's an operational overview. The piece I want to speak to here is the lease -- the Calgary office lease. The Calgary office lease was a reassignment of our space. We believe our company, previous management believed company was at a certain point of growth at that time. When we came in, we believed that growth wasn't going to occur in that moment, and we had to rightsize our overhead. We have to rightsize their staffing and also office space. So the reassignment as it's reflected in the financials resulted in significant savings in G&A. We continue under the leadership of Ryan Jackson and Ryan Carruthers on the R&D facility, the permitting and the testing, and as I mentioned, continue to work on the first commercial facility as well. I know there's many individuals when we look at our financials, we're looking at individual numbers in the accounting world, and I'm sure for investors, we're looking at ratios as well. We want to take this opportunity to highlight a few key ratios for you. The one ratio is the current ratio. Last year, in 2022, this ratio was 1.39, which means for every $1 of liability, we had $1.39 in assets. This year, for every $1 in liability, we have $0.14 in assets. However, if we're looking at the financials, this change is the reallocation of long-term liabilities to short-term liability, which means in the next fiscal year and the next 12-month period, we have $10 million -- $11 million of debt that needs to -- that matures; [ $2.25 million ] which we're in the process of settling with Renewable U of the deferred revenue and also approximately, you can say, $1 million of royalty payable. The reclassification of majority of these items from long term to short term has resulted in a decrease in our current ratio. From a debt-to-equity side, our debt-to-equity ratio has increased to 98%. If you look at the diluted impact on the next slide. Fully diluted, we are 1.1 billion shares. We understand the impact of that. But at Cielo, as we look at our financing strategy and we look at our ability to bring in capital into the company, the balancing act is quite challenging, and we do our best to make the right decision to add shareholder value. We've extinguished $6.5 million of debt, bringing on more debt. Being a prerevenue preproduction company is very challenging, the ability to service debt and look at what our interest rates would be. In the same breath, when we're looking at equity, we're looking at that equity in our currency. It is the investment that people are -- individuals and investors are willing to make in Cielo, believing that there is a technology and a future for this company. Therefore, it's the balancing act between the cap table and between the balance sheet, and we continue to assess that as we are finalizing our financing and looking at our capital structure going forward. I'd also like to take this opportunity to look at the majority of the transactions that have occurred this year on -- at a quarterly basis. So our first quarter end was July 2022. We completed a public offering. Gross proceeds were $9.8 million. To complete this public offering, extensive review of public disclosures needed to be completed by the Alberta Securities Commission. The process for this public offering was that Alberta Securities Commission completed extensive review of disclosures, asked Cielo to provide additional disclosures in our MD&A, our financials and the prospectus that was filed to ensure there was transparency to shareholders on the use of proceeds and our company. The first step we took with $9.8 million gross cash flow into the company is we allocated $4.2 million to the R&D facility. Ryan Carruthers, would you like to take this opportunity to provide additional information on the R&D facility and why it was essential that instead of moving from Aldersyde Phase I to a first full scale, why the R&D facility was necessary.

Sure. Thanks, Jas. Good afternoon, everyone. I mean just to refresh everyone, what the purpose of the R&D unit really is to achieve a high degree of detailed performance characteristics. So feedstock yields, optimum carrier fluid design, reactor design, catalyst experimentation and a detailed material balance for the system, all of which are critical for the path forward before we move to a commercial facility. The R&D facility will get -- will have the flexibility to experiment with a greater range of pressure and temperature regimes, reactor configurations and catalysts to enhance quality of the fuel yield. In doing so preserving CapEx being at the physical side of the unit, it's much more cost effective in the design changes. It really is a scale down unit intended to be the blueprint for the full-scale project.

Perfect. Thank you, Ryan.

Welcome.

We also looked at our overall budget across departments at this time. We allocated the $4.2 million to the R&D facility that we -- Ryan Jackson, Ryan Carruthers and I. At this time, Ryan Carruthers was appointed EVP in July 2022. The 3 of us sat down and looked at our budget. We made some difficult decisions, and we looked at where spending was essential at this time, and where it wasn't. These hard, very challenging decisions resulted in a 47% decrease in G&A. So in 2023, our G&A spending was $3.6 million, in 2022 is $6.6 million. I commend the team of individuals who work beside us Kate Ayotte, Kimberly Schubach and Jason Gilbertson in assisting us to make some of these changing decisions. Moving on to Q2. As previously mentioned, Aldersyde Phase 2 was paused. We continue down the path of Aldersyde Phase 1, which was designed to provide proof-of-concept by achieving steady-state production for a certain period of time. Once this was complete, it was deemed by the operations team that some of the assets used in providing proof of concept would not have further economical benefits to Cielo. This resulted in impairment of $26 million that is recognized as a onetime impairment on our income statement. It's important to note that if you remove impairment as the onetime expense recognized in the income statement, our net loss for the year is only $10 million because as noted as an aggregate, is $36 million. Ryan Carruthers once again, would you like to take this opportunity to please share details on what the learnings were from Phase 1 Aldersyde and how they benefited the design of the R&D facility?

Absolutely. So Phase 1 really provided proof-of-concept and really had highlighted the focal points where improvement was absolutely necessary. It validated our initial reactor modifications that extended run times. As everybody recalls, in the early days, we had run time as short as 36 hours. We were able to extend that to 7 days in Phase 1 with early modifications. And even at that point, those ancillary equipment that we're preventing us running beyond the 7 days. So it offered us an opportunity to test a prototype waste handling system, which will be employing a further refined version in R&D unit. So significant advancements and again, proof-of-concept all came from Phase 1.

Perfect. Thank you, Ryan. And to move from one Ryan to the next. Ryan Jackson, could you provide some detail on the Fort Saskatchewan property because this is an initiative that you led and this is where your expertise lie.

Thank you, Jas. We have, in the course of doing what Jasdeep referred to in the end of Q1 or part of that hard decision-making that we went through. A lot of it was fiscally based, but we also had an understanding of what -- of how thin we would be spread operationally, which led us to decide to bring Fort Saskatchewan down to Aldersyde by extension. Part of that process, though, was also understanding whether or not we could find someone or something that could occupy or purchase the land. We were presented with an opportunity for tenants in the short term in the second quarter. And as a result, we ended up entering into a commercial lease of 15 acres and the building. There was still a remainder of lay-down space that we have that we continue to look for a tenant for. The conversion of the $2 million converting by debt to shares that was a part of that from our partners at FCF was very important to allow us to not have a negative carry. This, of course, also allows us to bring in a potential financial buyer. I'll allude to that here in the coming slide. Over to you, Jas.

Thank you. Moving on to the next quarter, please Our third quarter ended January 2023. We completed the hiring of our core leadership team. Each member was multiple office hours. Our hours of operation are not office hours. We're trying to make the best strategic decisions for the company. It's a good mix of individuals who I've already mentioned that we have multiple hats that take on multiple roles, but also have a passion and a belief in the technology and what Cielo is capable of. It was important to ensure the retention of these individuals through a retention strategy that was approved by the Board. For Ryan Jackson and myself, this is stock-based compensation -- sorry, this is a stock option policy, which allows for options to be exercised $0.065, which will be the later of January 2, 2024, or the delivery of railroad type testing, commissioning of the R&D facility as well as completion of construction drawings and process flow diagrams. So if those deliverables are not met, the stock options do not vest, which does not allow Ryan Jackson and myself to exercise them. The other aspect is also we completed the sale of distillate and produced and sold 80,000 liters of unrefined distillate to a third-party refiner. As I previously mentioned, this is our second time doing this and in creating a saleable product that we were able to sell to a third party. And the question we always get here is how come I don't see it on your income statement? In the exciting world of accounting, this is not reoccurring revenue. It's onetime as we are a preproduction prerevenue company. In the financial statements, this is in other revenue and expenses. And last but not least, moving on to the next quarter. Our fourth quarter, April 2023, which is also our year-end, the focus of the accounting team at this time was to complete year-end financials, focus on ensuring that we had transparency, completed a revised format for MD&A, which was delivered 4 months in advance of our filing date. Our filing date is August 2023. For us, the 3 management individuals stand before you and our entire team, transparency and also timely execution and providing information to shareholders is very important. At this time, these 3 initiatives that you see on the screen were spearheaded by Ryan Jackson. Ryan, can you speak to these, please?

Certainly can. And in the exciting world of real estate, not unlike the exciting world of accounting, I'm sure that people will be riveted by this, but nonetheless, Fort Saskatchewan, we decided to list with, of course, the Board's approval. And, I guess, it was around a March mark with respect to the listing at $17 million, and this is based on a broker's opinion, and we have listed it with and you have it listed on Cushman & Wakefield website and also it's on the MLS as well. We do have through that process of extinguished an additional $4.5 million of debt through the debt for shares conversion again with our partners at FCF. This should not be viewed as an insignificant transaction because it really does position the real estate to be sold at market and allows -- also there's a certain amount of realization of equity value inside the real estate that currently exists. And even if it didn't, in a worst-case scenario, Cielo isn't in a position where now we would be considered upside down as it relates to the value of sale versus what we actually hold on the balance of the mortgage. Going forward, we have a number of parties that are interested in the -- and have fielded a number of inquiries, whereby we have quite frankly, ongoing discussions around the sale of the Fort Saskatchewan property and a number of different variations on that very same thing along with a number of different suitors that are looking at it. In addition to what we anticipate to be a sale being completed at a certain point in time in this fiscal year, we'd like to think that the lease that we continue to realize on with our tenant is going to continue to allow us to have a no-negative carrier -- very little negative carry with respect to showing the debt on the property. The other part of this that's also attractive is that from a financial buyer perspective, looking at least a certain amount of debt servicing that can be attributed to a purchase would also be part of that scenario. So we have a financial buyer opportunity. We have a strategic buyer that might also be looking at it from a strategic perspective as it relates to the petrochemical and refining corridor that is the Fort Saskatchewan or the industrial Heartland space. And we have a very positive and good outlook on what we can do with the properties. So that also then leads us to focusing really on our first full-scale facility, which just didn't up in Fort Saskatchewan. It was used initially or purchased initially for the purposes of maybe potentially locating a facility there. That then pivoted to an R&D idea with respect to that, and then what we've had now is the iteration down to Aldersyde, which is a great operational and logistics spot for us. And also, as it relates to the land or the real estate, we certainly don't see a value erosion with respect to the real estate that we have currently in Fort Saskatchewan. So a very good option instead of obligations. And I'll turn it back to Jasdeep.

Thank you, Ryan. I'd like to progress further and just speak to the income statement highlights. We've spoken about the balance sheet ratios and the impact from the transactions have had. On the income statement side, the impact part for the transactions that were completed throughout the year has been very consistent, we were able to decrease the expense related to research and development, the focus there being on the fabrication of the R&D facility, G&A has significantly decreased. And once again, I'd like to highlight that the net loss is $36 million, but out of which $26 million is onetime impairment. And moving forward to the next slide. Ryan Carruthers, would you like to speak to the R&D facility and the major deliverable that we completed within the year?

Sure. I mean, as previously disclosed at end of April, we actually completed commissioning on time. What I'm actually happy to report this time as with total costs assessed, we actually came in on budget as well which I feel is a significant achievement for Cielo, another milestone achieved. Really, we sit right now, the R&D unit is ready to run simply waiting on permit approval.

Wonderful. Thank you. I'd like to take this opportunity to pass it to Ryan Jackson to lead the conversation on some of the work we've been completing over the last few months with EPA. Ryan.

It has -- thanks, Jasdeep. It has been a very, I guess, we'll say it has garnered a lot of attention at it, and rightfully so as it relates to our investors and shareholders with respect to Cielo, trust me for every bit of attention that is started from investors and shareholders, we can certainly say there is an exponential increase due to the management focus as well. What we have to understand and you see I'm not going to read to you what this slide shows, for those of you that are dialing in, there is an understanding that this is not a rejection but a need for further information. We want to be clear that while all of the back and forth that we have with the regulator, there is exactly that of back and forth. And this is something that is unique to the regulator as much as it is to anyone else. No one else is asking to do this other than Cielo. So there's a lot of learnings that have, quite frankly, happen on both sides of this. And additional information to ensure that the mandate that the regulator has fulfilled is very important. So with that, of course, we have to continue to provide and iterate additional information to provide both that has not been asked before or obtained before with the first Phase 1 facility and that we have now received preliminary results from a lab that does understand the understanding of what it is exactly in the compositional makeup and analysis, and we expect that report to be here very, very soon. That data that we have will then, of course, be put into the final application we have, a draft application, that is very voluminous. There's a lot of it. And trust me, this has been a very interesting running experience all the while for both the regulator and for Cielo. So we want -- actually, I want to take a chance to thank the regulator at Alberta Environment and Protected Areas for actually engaging in the discourses they have with respect to the application that will be forthcoming, and that will be forthcoming very, very shortly, and that then will lead us to the ability to run that R&D facility that Ryan had shown you with respect to the pictures earlier. We did engage a third party by the name of Matrix Solutions. That is something that we have leaned on their expertise and experience quite a bit. As a result of that, they are reviewing this application with Cielo's help and they've done hundreds of these. So this is not something whereby we're learning how to apply by any stretch. This is very much a matter of when, not if. And with that, I will send it back to -- or actually, again, I'll send it back to Jasdeep.

Wonderful. Thank you, Ryan. I really appreciate that update, provides a lot of clarity on our EPA process. Ryan Carruthers, let me start with you on providing further clarity. I know you touched on this topic in your last webinar. But why is there a focus for Cielo on railroad ties?

I'll give that over to Mr. Jackson.

Okay. The other, Ryan. Certainly, we have, of course, current agreement in place with CP Rail as it relates to the feedstock of railroad ties. And what a lot of folks probably have seen in their drive down along through any parts of Canada, but especially out in the western part of Canada, which is where the majority of these railroad ties will be sourced, you see a lot of these piled up on the side of the road. Now we do understand there is a desire and there is a desire in scale as part 2 for us to be testing other types of feedstock such as plastics and rubber. The one thing that is definitely a recurring sustainable feedstock though is railroad ties. And our understanding of wood waste, and what that means to look like and how we convert it to fuel has a significant bearing on how efficient we believe we can be in dealing with a different type of wood waste, which is railroad ties. Now they are soaked with creosote. And as I mentioned earlier, with the EPA, we have a way to be able to address those nasty things that are inside the compositional analysis that we're seeing with respect to the lab. But beyond that, we're not paying for our feedstock, right? They're paying us to take feedstock. Now that's a problem we're solving both on the front end and the back end. Front end problem we're solving is obvious. We're getting rid of both a visual and potentially bad noxious subsidence that's sitting -- leaching into the groundwater or going up into the air if they're burning in a foundry for a cogeneration facility. But the second problem we're solving is we're a meeting a significant sustainable fuel need on the back end of this. There is a mandate coming, and everyone is aware that both whether you're in the marine or transportation world, and I guess transportation obviously, that is we need to be able to have a sustainable fuel, whether it be aviation, marine or railroads, cars, trucks, you name it. This is another need -- another problem we're solving because there is a significant trade deficit in Canada alone of hundreds of millions of liters of fuel that we import currently in the biofuel basis. So we're solving another problem on that end as well. Also, and it's important to understand this, and then I'll move on because I'm ranting a little bit. The railroad ties is allowing us to focus on a problem that we can solve today. We know we'll be able to solve additional waste stream problems. And I know that there's an emotional attachment to plastics, and we will take a look at that in a very serious nature. And also with rubber, the sustainable nature of this feedstock though and the profitable nature in which we're able to process it is significant, and that's what we've decided to focus on. And that's why we're doing railroad ties first. Jasdeep, over to you.

Thank you. Appreciate that, Ryan. So let me wrap up 1 year, the question always is, where's the next year going? And we just wanted to highlight 3 key areas on what we're working on. Working capital, yes, we are in discussion with Crestmont. For Cielo, it's how do we want to position ourselves as not only in this moment, but in what we consider our vision and our strategy to be in the next 6 to 8 months. As I've already discussed, yes, debt is an option. But servicing debt, if other -- if funds are needed in other operational activities, is that a hindrance or is that a benefit? The secondary piece is dilution. So if we go the path of issuing equity, the diluted impact of that. And let's not forget, Fort Saskatchewan is available for sale. How does that impact cash flow coming in from that possible stream as well? So when an update is available, one will be provided to shareholders. At this time, we are working through our working capital, and we look forward to providing an update as soon as possible. Ryan Jackson, I'll pass it on to you for project Pipeline.

And that's one of the many projects we have is working capital project in addition to others. There's a number of projects that Cielo continues to work on outside of and in addition to the project Pipeline and relating to specific funding projects around processing wood waste, railroad ties, et cetera. We also have, of course, a number of business conversations that happen on a daily basis along with some other letters of intent that we have considered and that we want to look at over the course of the next little while around other wood waste or other feedstock opportunities that might come our way and that we're actively seeking similar to that of CP Rail, along with, of course, our EPA project, among others. So a lot of business conversations around feedstock, around, of course, the subsequent offtake of those general things we create, whether it be -- whatever molecule it might be, whether it be aviation fuel or diesel among others. So as Jasdeep has referred to, one we can tell you, we certainly will. We certainly don't want to selectively disclose anything here or within any investor and shareholder conversations. That's why we have these webinars to be able to provide you along with the press releases to provide context. And I'll leave it over to Ryan Carruthers for the rest.

Really, my piece is that the keys are in the ignition. The R&D unit is ready to go as soon as we have permit approval, we'll be firing up and testing railroad ties. As soon as we do receive that approval, it's our intent as well to file an additional amendment and that will be to allow for processing of plastics and other materials. I look forward to starting this thing up and getting some information out of it.

Thank you, Ryan and Ryan. And on the screen before you, it's the 3 of us. We are the leadership team here at Cielo. You can only steer as good as the navigation that's provided you, and we are grateful for Ryan Jackson being the captain of our ship for the guidance he provides through sometimes the fall get Cielo as we're dealing with legacy issues, figuring out our strategy, understanding some of the limitations, especially looking at our dilution and also to Mr. Ryan Carruthers on the operations side, who consistently provides us with information and further confidence in our technology and our ability to deliver. Last but not least, I think it's also important to mention individuals who are not within Cielo, our external legal counsel, Antonina Szaszkiewicz, who spearheads conversations with TSXV and also provides invaluable guidance to us when we're looking at strategies within Cielo as well. And last but not least, they do work beside us, but in the work chart, they sit above us, which is our Board of Directors. Ryan Jackson, could you share more -- a little bit more about the Board of Directors' involvement and also some of the activities that have been undertaken over the last year.

Certainly. And I echo, of course, the rest of the team that is within the organization. It's a small mighty team, and we obviously have done that on purpose to ensure that the G&A that Jasdeep showed you earlier remains very lean. Of course, the Board of Directors that you see in front of you, Sheila has been a tremendous chair and one that we rely on as a leader from all of her work that she's done in the space and the Corporate Governance that she displays is second to none. The Honorable Peter McKay and Larry Schafran provide us with that balance that we really do depend on because the Board has been asked to do a lot of heavy listing as a committee of the whole in a lot of general waste. So of course, I'm also on the Board and would like to think that we have a very solid team. I know we have a very solid team to move this company go forward.

Perfect. Thanks, Ryan.

Just go back to Will.

Thanks, guys. Thanks, everyone, for a very important update. And as noted, we're now moving into the Q&A portion of the presentation. [Operator Instructions] If we do not have time to get to your question, we will respond via e-mail in a timely fashion. We've had many questions submitted prior to the call. So why don't we go ahead and get started with those.

First question here, multipart. What are the near-term events or milestones on the path to commercialization? What is the status of the Fort Saskatchewan property? With so many shares outstanding, maybe current and prospective shareholders are reluctant to buy more shares in fear of a reverse split. Can you address those topics?

Sure. Well, I'll take that. So the first part of this is, what are the near-term events or milestones on the path to commercialization ? I think we've been clear with respect to that. We have, of course, the R&D facility permitting that is going to be required with startup. We have it ready to go, is commissioned as Ryan Carruthers mentioned it's keys are ignition, EPA holds the fuels -- fuel cell, if you will, to be able to start the vehicle. We are, again, confident, and I want to reiterate it is when, not if that we are going to be able to proceed with this, and we believe it will be in a timely fashion. The second part of that question is the Fort Saskatchewan property, I mentioned that before. We've had a number of inquiries and interest in the facility as well as the land that is adjacent to the facility. And Dow Chemical announced a billions of dollars of investments in the Fort Saskatchewan area to their facility directly to the north of us. We're hopeful and mindful that, that is not an insignificant project that is going to be done over the next 5 or more years. So we continue to have a number of conversations with our brokers around the Fort Saskatchewan facility and a number of interested parties have already inquired. The prospective shareholders that are reluctant to buy more shares for a reverse split, that's something, quite frankly, that is, I know it's a math thing and that's more Jasdeep's thing than mine, although I can significantly say that there's -- substantially say that the value of the company doesn't change based on the number of shares, the value of the company based on the price of the share. So that is all relative. And a reverse split, we've gone on record numerous times to say there isn't a reverse split without some reason to do so. And that would have to be and would be viewed as accretive to Cielo's shareholders. This isn't a matter of us doing a reverse split so that we feel better about ourselves and our outstanding shares. This is something that has to make business sense, and it would also, as I mentioned earlier, be of value to the company and to its shareholders.

All right. Thanks, Ryan. Next question up is asking what differentiates Cielo from the competition in similar companies?

I'll take that one. We were, I mean, in Cielo employs a patented process. And to my knowledge, to be quite frank, we have no direct competitors in the waste of fuel space, specifically as it pertains to railroad ties.

Okay. Thank you. Well, it's a statement that came in transparency and frequent updates appreciated. Please continue.

I mean, as mentioned, we've provided 7 updates. I think Jasdeep mentioned it to shareholders through webinars and quarterly results, those are over the 12 months, and we're going to continue to do so.

Great. Another question coming up on financing, really please assure shareholders that more dilutive activities and events are not planned or likely. We have been very patient after what has fired under the previous leadership and Boards.

I'll take that one since it's talking about numbers. I can only echo what Ryan Jackson mentioned. We will take the best approach possible to add shareholder value. We're constantly assessing the 3 streams of financing, Fort Saskatchewan is one possibility, debt and also equity. We understand the dilutive impact, and we understand also that our shares are our currency and for shareholders, I believe in our technology, and technology that we believe we can deliver on as well.

Okay. Next question up is I still believe in the potential of the technology. I would like to know some of the numbers for the carbon credit side of the proposition.

Really, the R&D unit, the operational R&D that's going to allow us to optimize the process and then ultimately better understand the energy input required to support the TCEs or thermocatalytic depolymerization process. So that will be utilized in calculated portion of the [ CI ] score, but we'll need to finalize the specs of the product to fully determine our CI score. So all I can say is it's coming.

Very good. Next question up is I'd like to ask about the value to the shareholders. When will shareholders see some return on their investment?

So loaded question, Will, but one that is fair to ask. The value that we are creating in the company has to be viewed beyond just the quarter that we're currently in. This is a marathon, not a sprint that we're in the process of doing. And if you look back at the tremendous amount of work that's been done by the company in the last fiscal year, that is the purpose of this call today, we have to now look to suggest that this company is now positioned to be able to execute. We have to look after an investor/shareholder looked at me and asked me this question after you took a look under the hood, what led you to -- what decisions were made earlier. And it's where in the past, this is something that has really good bones, and it's kind of a house metaphor, but it really does have good bones. This company has a ton of upside potential through the railroad tie story, and our ability to execute on that is now in place.

Thank you, Ryan. Next person would like to know what's going on with plastic waste management?

I guess I did touch on this briefly earlier, but really once we've receive the permit approval process railroad ties, we'll be submitting an additional amendment that allows us to test plastics. So some will ask why wasn't that application? Or why wasn't plastics added to the initial amendment? Reason being that makes that application far more cumbersome, more lengthy to put that application together as well as more lengthy for EPA to review it. So the quickest path forward was to split railroad ties and then following that will be an application amendment for plastics. So subsequently, we'll complete the required modifications to the facility for plastics, if required. And in addition to that, the same, as Ryan mentioned earlier, I do want to reiterate that our shortest path to profitability is railroad ties.

Next question up, somewhat related. Cielo -- when will Cielo will be ready to scale and commercialize this technology. I'm a believer and patiently waiting for good news.

Thank you. We're also believers in our technology. The learnings and data generated from the R&D unit will allow commencement of the design in the full-scale facility. So scalability was a key consideration during the original design of R&D, so everything we're doing within R&D will and can -- will be scaled up during the design engineering of the scale.

Great. And related to the facility. Can a person take a tour of your facility.

Due to the confidentially -- confidentiality of our patented process, we do not allow tours of our facility.

Got you. Next question up. Does the company already have an engineering partner for scaling up operations?

To Ryan's earlier point, we had to convince them that those pictures weren't going to be too much to show. But yes, there's certainly -- we have issued an RFP, and we are currently adjudicating the EPC that we would be selecting, and we're having those conversations as we speak.

Next question, please provide a plan and time line to profitability?

I can speak to that because it speaks to profitability and finances. We have developed preliminary performance. Once we obtain EPA for approval for permitting and running through railroad ties, we can confirm those pro forma results. What are gross margins, what is our EBITDA, what is our CapEx? Once we confirm those values, we can release them to shareholders through a press release. And subsequent to that, continue the path to commercialization and developing our first facility as well. Some of those steps, like I said -- like Ryan mentioned, have occurred at this time, but we're limited until we have the R&D data that verifies our performance, and we can release those results to shareholders.

Next question, This investor would like you to provide more detail on why the initial permit to process railroad ties was denied? They had watched the previous webinar and it seems that the team is very confident on getting the permit. But given the current share price and the investment community seems to be much more skeptical than the management team. Please provide an expected date for the permit approval.

Okay. That's a multiparter. So we did provide earlier and understanding that the application was based on deficiencies initially, and we had to -- and were asked by EAP -- AEPA to reapply with respect to the deficiency of the information. And it doesn't necessarily have anything to do with the ability for the project to be successful. This is an ongoing discussion that is part of an internal process within the regulator and it's meant to be more efficient because it's not a matter of trying to correct someone's homework and get them sent back by the teacher to their desk to do it again. It is just that simple. We are really working through a lot of the requests that are continuing to iterate from [ AEP ]. We do believe now and have the sufficient data that we need to be able to make that application. And with a fulsome application comes a fulsome response and that is exactly what we expect. The expected date of the permit approval is something that is really not in our control, and we've said that right from the jump. We've always said that there has been and will be a commissioning of the facility to be in an expected date of x, we did not, however, commit to an expected date of approval based on the very intricate nature and very specific nature of the application. And all of these applications, I would imagine, are very specific. And when we're putting -- or when they are -- when people are asking to do something with bad things, we want to make sure we're not putting bad things in the air and fair enough, the regulator has to ensure that that's indeed happening. And it's actually making us better as a result. It's something actually that we welcome as a company to be able to demonstrate that. We are actually going to be -- expect us to be considered an ESG company, not really good if we don't put, if we put that stuff into the atmosphere. So all of that being said, we aren't -- there isn't one reason why we were rejected. It wasn't a matter of us being rejected. It was can we have more please and that's very important to understand.

Next question regarding the R&D process and the success seemed very vague in the previous webinars. Although you have said the design can successfully process railroad ties. I know the previous design had issues with clogging and was unable to process the feedstock. How are you so sure that the new design can do this at a large scale? What sort of waste material is generated from the process? And is the creosote free and easily sold or disposed off?

Multiparter for sure. I mean, I think to clarify, so the detail of the R&D process and its success. The R&D process or unit has not been operational yet. So I think maybe what they're referring to is the previous processing plant, which we referred to as Aldersyde Phase 1, really, it was created to provide proof of concept. So the process failed to provide continuous operation in past 7 days, but it was due to ancillary equipment failure. The coking and plugging that occurred previously prevented run times beyond 36 hours. So the modifications we made in early 2022 actually resulted in significantly extended run times. But as mentioned, failure to run beyond 7 days were not due to the plugging and coking. It was due to the ancillary equipment failures. We do not anticipate having the same issues with the R&D facility that unpackage the rest of that question as well. Waste material. Waste material will be handed by an appropriate AEP approved disposal facility. Those contracts are already in place, and the disposal facility is aware of what they will be receiving as is the AEP aware of the waste product being generated. Is there anything else to that Will?

I think you've hit all the points there, Ryan. Thank you. Next question in. Now that you are planning to build the Dunmore facility, do you have projected numbers of revenue and profit? What is the expected diesel output?

As previously mentioned, Will, we do have projected numbers. We do have projected revenue, gross margin. However, we cannot release them until we verified that these numbers are accurate. These numbers are based off of learnings from the proof-of-concept Aldersyde Phase 1 stage, therefore, running railroad ties to the -- through the R&D facility is essential to confirm and verify these values before we release it to shareholders. And part of that will be the diesel output that we'll be disclosing as well.

Next question up. Is the Crestmont financing contingent on permit approval? Any risk to the financing falling through? If so, what alternatives have you to explore?

Multiparter again. So, no, the Crestmont financing is not contingent on permit approval. The Crestmont relationship that has been going on and has been with Cielo for quite a period of time prior to even the LOI, the binding LOI being signed and disclosed late last calendar year. There is an understanding that this is a very good exercise and due diligence process that Cielo has undertaken with Crestmont. Akin to that of the EPA, quite frankly, with respect to how long it takes to really get into the weeds in a company that has a significant history. And that is something that when you're asking someone not just for a certain amount of financing from a working capital standpoint, but this is a much bigger picture opportunity that we're identifying with our funding partners, and Crestmont is one of them. So to understand the larger, bigger picture financial strategy, I think, it is important to not get lost on a short-term working capital conversation, which we have a number of different alternatives for. That's really not the point. The point is, well, it's great you guys are going to be able to pay your bills, how are you going to fund the first full-scale facility and subsequent facilities to that? And it's important for us to be able to answer that question. And there are people, Crestmont being one of them, that want to have an ability to answer that with us and for us. Does that make sense?

Yes. Thank you, Ryan. Next question up is do you know what the concentration of benzopyrene would be in the tires -- tie sorry. As I understand it, it only takes a small amount to be deemed hazardous and then since Alberta Environmental does not allow the important -- the import of hazardous waste into the province, I was wondering if you were able to get a permit exemption for the ties to be able to bring them in from other geographies?

Short answer, railroad ties are not considered as hazardous waste, and there are no restrictions regarding their import. So no permit exemption will be necessary.

That's great. We're actually running up on time. I think maybe if we just have some concluding remarks and maybe some milestones that investors could look forward to.

Thanks, Will. And I want to again take this opportunity to thank everyone for joining us today. It's very important for everybody to understand that we are working at this very, very diligently. And now, as I mentioned earlier, that we have positioned the company in the way it is under the stewardship of Jasdeep and her team. And with respect to Ryan and the readiness that we have with respect to the operational side, we are now really positioned to move forward with a very success focused basis, and we want to make sure that we execute quite frankly on the plan. And we know and have demonstrated what that plan is. I want to thank also, of course, the people behind the scenes that make this thing possible. And to, of course, our Board members and everything else as mentioned before. But most importantly, yes, thank you to the shareholders and the investors who joined us today and also those who continue to be passionate about Cielo. This is something that we all share, and we all have a common goal here, which is to make something good out of something bad. And that's precisely what we intend to do. So, thank you to everyone joining us today. And Will, I'll actually defer to Jasdeep and Ryan for any final comments they might have as well. Ladies first.

Thank you, Ryan. Thank you to all the shareholders and investors who joined today. Thank you to our entire team for putting together our revised MD&A. Transparency is very important to us, but clarity is just as important. So we'd love feedback from investors and shareholders on the new presentation, and we continue to look to your feedback on how we can communicate not just financial information, but our strategy better as well. And as always, Ryan, I and Ryan are available to take your phone calls and questions as you need. Ryan Carruthers?

Yes. Really, we're just -- we're excited to fire up this R&D unit as soon as we possibly can. We're waiting with bated breath, and we'll get this thing fired up, get the data and move this company forward. We appreciate your patience, be confident that we are doing everything in our power to advance us forward.

Well, thanks everybody and thanks everybody for joining the webinar today. As Jas mentioned, we will actually be sending out a feedback form to those who registered for the webinar, so please make an effort to reply to that. Also, today's webinar recording will be soon made available on Cielo's website. And if you have any additional questions that have not been addressed, feel free to send them to [email protected]. Again, that's [email protected]. We also know that we have not gotten to all the questions on the Zoom, and we will make every attempt to reply to those in a timely fashion. Thanks again, everybody. You're now free to disconnect.