Clear Blue Technologies International Inc. (0YA0.F) Earnings Call Transcript & Summary

Hi, everyone. Good afternoon. Thanks for joining us. I'm Nikhil Thadani from Sophiccapital, helping out clear blue on the Investor Relations side. Joining us this afternoon we have Miriam Tuerk, CEO and Co-Founder of Clear Blue Technologies. She's going to talk about some recent big changes at the company. a recent acquisition that we announced and also the closing of a private placement that we announced last week. At the end of the presentation, we'll open it up for questions and answers. You should see a Q&A box at the bottom of your screen. Please feel free to type your questions in there, and I'll read them out or e-mail them to us at investors at clearbluetechnologies.com or [email protected]. Thanks. And with that, over to yourself, Miriam.

Good afternoon, everyone. Welcome to this first corporate webinar update from Clear Blue in 2023. I think everybody is happy to see 2022 behind us. I call it the annus horribili,s, like Queen Elizabeth used to -- did for previous year. As always, please be aware that we may or may not be -- we may at some point in time be making forward-looking statements, and you should take them always with the proper judgment protocol as none of us can predict the future with any sort of 100% guarantee. But we'll do our best as is appropriate. So I want to just talk a little bit about market trends because Clear Blue was founded in 2011, and the world is really changing for us. So that the time is now. And so I think that while last year was a brutal year from an economic perspective, it was the first year in 11 years of Clear Blue's history that we had a drop in revenue. We had never had a drop in revenue before. And so obviously, that was an impact on the company. But the other macro trends of what's happened in the marketplace have had a huge impact in Clear Blue. And some of the things that we've done, specifically the acquisition of eSite, we're in direct response to capitalizing on that opportunity. So the first is that from a global perspective, the oil volatility, the global fuel shortages and the ever-increasing problems with the grid, has now caused a huge change put together with climate change and everything else in the mindset of the telecommunications customer. So I'll take both a direct telco example on the bottom left, one of the largest telcos in the world. And then largest tower operator, one of our favorite clients, IHS Towers in Africa. And both of them were working with us on solar new deployments. But what changed last year is they used to say, you know what, the existing sites I have, they were deployed with diesel generators and grid. I'm okay with that, not a problem. And that changed last year. So for economic profitability, operating cost reasons, in addition to climate change, they are now spending massive capital to deploy and adopt solar and solar hybrid systems. In the North American marketplace, the Infrastructure Act and the Inflation Reduction Act is driving significant investment in clean technology and infrastructure. And because of all the infrastructure problems with flooding in California and outages in Texas, they too are now starting to look at solar first for the infrastructure. So the macro trends coming out of last year are huge positive trade wins for Clear Blue. And so Clear Blue, I'm going to talk a little bit about what we do. We're about wireless off-grid power. And if you look at a previous infrastructure that went from wired to wireless, the telecom world, which is exactly what power is going to do, if you look around 2000, you might have thought this cell phone marketplace is a really good business. It's going to be as big as the grid connected business and look how nicely it grew. But once people could cut that cable the explosive growth in wireless telecom far outweighed the grid connectivity. And power is going through exactly the same thing. And so wireless power is being driven by growth of Internet, solar power, moving to digital, climate change, and we are the experts in wireless. So I'm a huge fan of visualcapitalist.com. Anybody who's in the capital markets are like knowledge information, it's the only e-mail I open whenever it comes. And so earlier this week, they posted 11 tech trends for 2023. So CB Insights, independent market research organizations came out with the top, 11 tech trends that are happening in 2023. And lo and behold, one of the top lists is virtual power plants, wireless off-grid power. And we, Clear Blue are the market leader in this huge trend where I wanted to say it's a $1 trillion market. I don't have the metrics behind it, but this is not a small change. This is a fundamental change in infrastructure, and it's the future of where power is going and we have a strong footfall in it. So when you look at Clear Blue that is the potential opportunity that we're looking at from a company perspective and the market we're going after. Clear Blue has the potential to be a $1 billion market company, a $1 billion revenue company and market cap company going after virtual power plants and wireless technology. So now I'm going to spend a few minutes talking about our technology, and then I'll go into the eSite acquisition financials and what's different for 2023 and give you -- try to give you the best outlook that I can. So First of all, our core technology is we make power electronics and control equipment. This is our bread and butter baby system that we have had for 10 years, our optimus controller. It is used in all of our Illumient street lights. It's used in all of our Nano-Grid products. We have new products coming to the marketplace, and now we have eSite. But every one of these charge controllers communicates wirelessly to our cloud management platform. And in our cloud-based management platform, we're all about big data analytics, and now we're starting to build AI. So you put those 2 things together, and we're delivering a value proposition of reliable power, maximum uptime, lung slight, easy to install and maintain. And what's special about what we do is energy forecasting and management and troubleshooting and remediation. So how do we deliver that to the customer? Well, we take that core technology that we have and we create off-grid and now with eSite hybrid power systems. We sell those systems in a onetime solution to our customer. And along with that onetime sale, we also sell them an ongoing service management contract. So every system we sell comes with the remote communications management and the service team, whereby clear blue manages and controls and operates those systems on behalf of our customers, very smart, integrated with their NOC systems and their smart city operations. And when you put those 2 things together, best-in-class hardware and system and marry that with best-in-class software analytics data and a service team what you end up with is mission-critical, reliable off-grid power. That's what we do. The customer benefits from our intelligent energy management. So I'm not going to give a full demo, but inside the software and the data, we are able to do things like energy and weather forecasting. I was on a Level 1 call this morning with a system that had an issue in the United States. And we were able to say, well, do we -- how is this thing? What's the problem? We could go right in as if we were standing at the pool and see exactly what the issue was. And figure out a solution and a resolution. And we called the customer, the customer didn't call us. Battery life cycle management, how is the battery and the energy storage part of it done. And then potential energy people always want to do more. They want to add more devices, they want to expand their cell phone capability. They want to add IoT devices to their infrastructure. And so taking that living, breathing power plant and expanding the capacity is something we're able to do with customers in a unique way. Nobody else can do that. If you know us already, you know that we're all about building a recurring revenue model. We don't just sell the equipment, we manage and operate it on an ongoing basis. And last year, one of the shining lights is that our recurring services revenue is starting to grow. It's a multiplier effect as you add systems over and over and over again. This year, we will earn recurring revenue from a system that was installed 7 years ago because we continue to operate those. And as the company grows, we deliver that. And as I think I've just explained to you, it's a growing market for us. And we only hit the very, very, very tip of the iceberg in terms of the market that we're going after. We have a marquee customer list. And I started my career off in sales. And any one of these customers when you are a salesperson, you wanted to get a project with the City of Toronto or you wanted to get a project with Orange, one of the largest telcos in the world. Getting these guys on board as a customer is huge and can be spent many years. Because of the innovative technology we have and the value we've been able to break into customers that normally the "big guys" are the only ones that could get in there. IHS towers would be a great example, Viasat, many customers. With the addition of eSite, we're really thrilled to be able to announce we now have American Tower as a customer. And if you're in the tower industry, IHS, and American Tower are the 2 leading -- 2 of -- I think there's 3, but of the leading tower companies in the world today, and we've got 2 of them as customers. We've got Airtel as a customer and a number of other telcos, MTN, satellite players like ViaSat, Atlas Tower. So you'll see Airtel, Atlas Towers, American Tower and Netis, just as an example of some of the customers we've now been able to add because of the eSite acquisition, which I'll talk about in a minute. So what's new and different for 2023? Well, unlike 2022, we've got 3 new products that are going to begin shipping. We've already announced our Pico-Grid product last year. We're very excited about that product. It is for satellite WiFi and Internet of Things devices. It's currently in field tiles, and it's going to be shipping -- begin shipping -- general availability in Q2 of this year. When you take this Pico-Grid product, it also allows us to enter the market into the solar streetlight business with a new product that I believe actually will start to -- we believe will be the majority of our sales in solar street lights going forward. And that's our new Illumient Senti product, which we've just launched this month. And it is also going to be shipping in Q2. From an investor perspective, it's important to understand that inside this system is a little Pico-Grid . So it's got a lot of common functionality. And then, of course, we're very excited about the acquisition of eSite Power Systems. And you will see here that it's no longer just called eSite, it's eSite Nano because we're going to be taking their power systems and marrying it with our Illumient smart off-grade management, our ongoing service. All of the things that Clear Blue is all about. And when you put the 2 of them together, you get a product called eSite Nano that also provides significant leadership in the marketplace. So we have all of our current products. The outlook for them are good. I'll talk about that. But 3 new products begin shipping this year, and we anticipate that, that's going to have a material impact in the size of the addressable market and the revenue results we're going to be able to achieve this year. So let's talk a little bit about the eSite Power Systems acquisition. So eSite is a Swedish company. It was part of another company that -- and it's spun out in, I think, December of 2019, 2 months before COVID hit. And so you're talking about -- and it used to sell its product through Ericsson. So in the telecom marketplace, if you use the word eSite, everybody goes, "Oh, that's the old Ericsson product." This is a Swedish engineered robust and proven technical product. And about $13 million has been invested in this product, and they've had systems in the field installed First generation as of 2011, second generation starting in 2016. For a various number of reasons, there was a unique opportunity for us to acquire the company in December of last year. and for a really great price. So we bought it in an all-share deal at 3 million Clear Blue shares. So an unbelievably good price, a noncash price for the company. Now there is obviously investment required and an increased cash burn that goes forward. And the main institutional investors that were behind eSite were so -- First of all, they believe in the market in the business. They're very knowledgeable about the market and the business that we're in, and they believe in it because they've been following eSite for many years. And then when they saw what Clear Blue brings to the table, our references, our expertise, our value proposition, they were very positively inclined towards us. And so in addition to us buying the company for 3 million shares, they actually participated and put money into the private placement. We are very appreciative of our investors, growing institutional investors is something that is important for us or any company along its evolution path and we gained a number of new institutional investors in Sweden, who are very climate change, ESG-focused and Africa is really their backyard, very comfortable with our European and African footprint. And so huge synergies and values for us. So what does that mean from a market perspective? Well, effectively, when you look at our current Nano-Grid product, which is our current telecom product, eSite Power Systems has the potential to double the market size. When you look at the telecom power market, you can see that. And this is revenue that medium sized and low-sized systems are the majority of the revenue and the super majority of the number of sites that are deployed in the market today. Clear Blue's current Nano-Grid product continues and will have a role going forward. That doesn't change. Our bread and butter, really strong value proposition, new solar-only and hybrid low-powered sites, Clear Blues Nano-Grid product, the dog hunts wonderfully and is very compelling and competitive. But as you move into the medium market, you get a lot more hybrid systems, and you're dealing with the retrofit market. So now all of a sudden, even though they want to go solar, they still have a generator, a diesel generator that needs to get managed. Clear Blue doesn't do that, eSite does. They also have much more hybrid 3-phase AC big power, Clear Blue doesn't do that, eSite does. So by adding the eSite product, we are now expanding ourselves to cover a much larger footprint and have a very strong presence in the marketplace. And we think that eSite has the potential to be a strong accelerator to Clear Blue's business and growth. It also provides a lot of revenue synergies. One of their best customers and favorite customers is IHS Towers, who we also know American Tower. We know the same people, Atlas towers. We know the same people. So the revenue synergies are quite strong between Clear Blue and eSite from a sales and marketing and relationship management and references and leverage the cross-pollination between the 2 companies is significant. eSite has more than 1,000 sites operating in Africa and Asia. As I already said, it's hybrid and larger power. It gives us access to retrofit market where Clear Blue's Nano-Grid product -- you could do it in some retrofit sites, but it wouldn't work in all retrofit sites. eSite has some specific attributes that make it fantastic for retrofit sites. So the synergy on a business and sales business development is quite strong. The customer base is quite strong. And with the addition of eSite we're adding 1,000 system, 19 customers in 15 countries to our base of existing customer references, and we're thrilled to have these new customers on board and are already in conversations with almost all of -- actually, all of them that are listed here. For future new opportunities both for eSite and Clear Blue. So coincident with the acquisition, we did a 2.5 million raise, which we were thrilled to have it oversubscribed. Many of you may know that the Tuerk family, my family, we're not high net worth people. We're hard-working kind of middle class. But we stepped up to the plate to provide leadership as part of this and kind of put -- got into the boat before everybody else did. And so we participated to the tune of $537,000. Other insiders within the company added in and so we actually increased our insider ownership in the company because we are -- and I'm a pretty conservative person, very risk adverse. And there's just no doubt that especially last year, which was our first down year was a result of the market. It was not a result of the business. We have a $400 million sales funnel, lots of opportunities. And in fact, we're seeing good indicators that we're going to come out of it very strong. So in addition to that, we were thrilled to have the eSite institutional investors also participate to the tune of $762,000. Pegroco, who was the 49% owner of eSite now owns just under 9% of Clear Blue because they participated in the private placement and we now have 4 new institutional investors, including Pegroco and a footprint presence in Sweden and therefore, part of the EU. The terms of the private placement were set at $0.07 a share with a full warrant at $0.12. The warrant has a 5-year term. And there's an accelerated conversion at $0.30. So it was a pretty attractive subscription. If you look at the value, I have -- some of you may know, Clear Blue's good friend in Germany, but he would say, when you look at the valuation of this company, there are many start-ups which have a business plan with nothing behind it that get a market cap valuation higher than where we're at. And that's really just because of where the stock market is at and the fact that we are a Uber or tiny micro cap. It's not something that is anything indicative of the company. And that's why we got very strong support. We also got support from existing shareholders and we're really thought. So the friend -- people who are close to the company and know the inside workings of the company voted with their feet and gave us support, and we are very appreciative of that as part of this placement. So everything is about cash right now. And we did a lot of work last year to derisk our balance sheet and focus on the balance sheet. And so in 2023, we did the -- we were successful in getting a government R&D grant for $5 million. The bad news is I don't have $5 million in the bank. The good news is every few months, I get a check from STDC, which pays out over the next 3 years. And it's just regular grant for R&D for us to advance our leadership position in that whole virtual power -- wireless power market. We also got a $4 million FedDev loan. Again, I didn't get the check -- we didn't get a check for $4 million in the bank. We get it monthly and they will pay us up until March of 2024, but that is a 0% 10-year payback loan, and then we did this private placement. So you take that and you add to the fact that we did do some pretty aggressive cost reduction and streamlining, we were bound and bent to be EBITDA positive last year. We thought we were going to do $12 million-plus, and therefore, we had a plan to be EBITDA breakeven at that point. Now with the reset of the economy, we reset ourselves. And so our EBITDA breakeven is at around $8 million now, which is less than what our revenue is from 2021. So last year was a down year, but the year before, we did more than $8 million in revenue, and that didn't include the eSite revenue. So that says that we should be able to be EBITDA breakeven or more than that positive this year. And so between that and the contribution of the STC FedDev and the private placement, our target plan, even with a bad year is for net-zero cash burn going forward. So, Coming out of last year, people are going to start to deploy capital. People are going to start to look at their return on investment and look at where they're going to go and come back into the market. And if you're following Clear Blue, you're going to be saying to yourself, "Well, what are the catalysts for value creation this year and beyond? What would I be looking for if I was an outsider coming into Clear Blue?" Well, I would say there's a couple of things. One, in the North American market, we are starting to see strong sales growth. North America has been kind of flat the last few years. And it's going to change this year. It's going to grow significantly for 2 reasons. One is the market is changing and the growth is now. I talked to a number of our distribution partners and agents in the lighting market. And they said to me that in the last 6 months, it's the first time where the leading question from customers is, tell me about your solar street lights. So the market is changing and it's really starting to adopt now. The second reason is that our eSite Nano product works well in North America. Nano-Grid, our current product is more an emerging market product, but eSite Nano really sweet customer base in North America. In fact, we have an existing reference installed in North America with eSite. They've already sold and installed into the North American marketplace. The addition of our Illumient Senti product and our Pico-Grid is also well suited. Those products are all international but good American growth. eSite Nano isn't in our numbers historically. It's going to add to our revenue this year in a positive way, and it's going to allow us to untap that retrofit market. It's going to take some time to build that, telecom companies, you're talking 12 to 18-month sales cycle. So it's going to take some time to see the results of that. But we believe that there's going to be an impact on our revenue, and you're going to see sales in the retrofit market with eSite Nano. Notwithstanding that, we come into the year with a $350 million pipeline, and last year, a lot of projects got pushed out. They didn't go away, they got pushed out. So we anticipate the conversion of that pipeline into revenues. And you should see the top line results as a result of that, that would be a catalyst that I would be looking for. And boy o boy, we are going to demonstrate that we are cash flow breakeven at around $2 million quarterly revenue. And we expect that the drop in revenue we had last year is a one-off. We are going to return to the growth rate that we had previously and that's 50% plus growth rate. Beyond 2023 on top of everything you're going to see in 2023, I think you're going to see, in addition to that, we have an extremely powerful platform, and you can see that with the eSite acquisition. You take our Illumient smart off-grid management capability and you marry it with a hardware product that is a fantastic hardware product but didn't have the cloud predictive analytics software to nearly the same level. They had some. It is a "smart product". But you add that together and you turbocharge growth. And we believe that will be able to demonstrate that with other acquisitions, the 1 plus 1 equals 5 mindset. And so beyond 2023, you'll see, I hope, additional M&A to turbocharge growth. On top of that, top line organic growth of the business, so not just growth in revenue from M&A, but growth from organic growth and then consistent positive cash flow, EBITDA growth in the company. So with that, I would like to open it up to questions and anything. So Nick, do we have any questions from anyone?

Thanks, Miriam. So we've got a few questions that just came in live, and we got some that came in over e-mail as well. Let me start with the ones that came in live first, perhaps with one that talks about the business, and then there's a few more financial ones that we can move to. The first question is asking where eSite products are manufactured?

eSite products are manufactured in Sweden by a very high-quality manufacturing company today.

All right. The second question is a bit more financial, and we have a few more like that came in via e-mail as one, but maybe I can start with the live question. They're asking if the company has enough cash to achieve our financial -- our fiscal 2023 sales targets?

So we've been trying to improve our guidance more and more and more as the company's predictability and visibility improved. And going into last year, we saw big improvement in that, and so we started to provide stronger and stronger guidance. As you saw last year, we pulled guidance because we went into a very uncertain world. So we're not providing any guidance at this point because it is -- and I'm no smarter than Christine Lagarde or Jamie Dimon or anybody else, Half of them are saying, we're going to go into recession half of them are saying coming out of a recession, and nobody really knows. As a result of that, we have 2 plans. I have a conservative worse case where are we at, if it's another 6 months of a bad year, and we have done everything we can to plan through that to make sure that, that is a cash flow positive plan for the year and net-zero cash burn. I will say, however, I by no means believe at this point that, that is our sales target. It's too early to tell. Everybody is kind of waiting to what's happening in the market, what's going to happen. But as you saw, the market was positive this month. We've started to get some good orders in and we have visibility to imminent orders. So it's entirely likely and our personal plan is to do way better than that. So in 2022, we did $8.1 million in revenue without eSite and we believed we were going to be way over $10 million last year. Our outlook has not changed, our uncertainty has. So we believe that we will be fine and manage through from a cash perspective without meeting any raise, we're buying. We are in the strongest cash position we've been for about 2 years now. as a result of all the work we've done. And we get monthly contributions from our fundraising, our non-dilutive fundraising. So every month, we get a couple of hundred thousand bucks in that helps with that. But from a sales target perspective, everybody in this company is going for it. And hopefully, we will do much better than that.

Great. Thank you, Maria. There's a few other questions that came in via e-mail. So I'm going to go back to those, starting with some of the ones pertaining to the business first. What have you seen recently with respect to market trends in your telecom satellite and lighting markets with regards to customer spending?

So in the North American lighting market, we have seen strong growth. I believe that by the time we get to the end of March or April, we will have exceeded our revenue target in the North American lighting business versus all of last year and all of the year before. strong growth, strong pressure, lots of imminent orders, and we believe the Senti is good. So we're going to have a great year in lighting. We believe not giving guidance, but we're seeing better than normal demand there. The satellite business is also ramping up, of course, there have been delays, and it's just a question of when those rollouts happen. ViaSat satellite-3 -- ViaSat-3 was delayed. When is it coming online and how are the rollouts going. And in the telecom market, we've had early conversations with some of our existing customers where they have said that they believe that they're going to do much better this year than last year. So I had a call yesterday with the CEO of one of our best telecom customers out of the U.S. and who is in Africa, and he's quite confident that things are coming online. So our customers are planning on a growth year, planning on a positive year and really trying to make up for the slowdown in last year. But it's still volatile and uncertain from a macro uncertainty perspective, so cautiously optimistic.

We've got a follow-up question online asking about this increased interest in North America. Is that mostly for Illumient and what's driving the interest in North America? Is it power grid outages.

So it's -- I have better visibility for Illumient than I do for eSite Nano and Pico-Grid because we're just -- those are newer products for us, whereas Illumient is an existing business where we had a really good distribution chain. In the Lighting business, number one, people now get the value proposition of solar, that it's not just a use it where I can't use grid, but I want to get away from the grid, it's cheaper and it's their go solar first question. And number two, we brought out a new lithium product a year ago. I just this week got a purchase order for $600,000 for that new lithium product that we brought out a year ago. That's a nice order. And with the Senti product, we're seeing a large demand. So it's an acceptance that it's time to go solar that it works, that it's valuable, and it's funded by the infrastructure and climate change acts and clean air acts that are really spending a lot of money on infrastructure and giving heavy tax exchange -- tax incentives for climate change and infrastructure investment in the U.S.

Changing track a little bit. We got a question about eSite. Why did you acquire eSite now? And can you give us some examples of revenue and cost synergies?

So we acquired eSite now because there was a fundamental shift in the market last year to also start to focus on retrofit. And we had many customers come to us and say, I've got these existing vendors in the retrofit market, but none of them do what Illumients and Clear Blue does. And now that I'm adding solar onto those sites, and I'm getting rid of the diesel generator, I'm turning the diesel generator down. I need you to work with me on my retrofit systems and on bigger sites. We're getting pulled into retrofit and pulled into bigger sites, and we did not have a product that would have fit that. Conversely, we have customers telling us, "Look, if I go out and buy these existing products from my traditional 10-year-old sites, they don't have the Illumients management." so we acquired eSite because it was smart ready. The hardware is Swedish engineered and quite smart hardware that can be very easily, quickly and for a low dollar value integrated with our Illumient software. So there's a lot of revenue opportunities there. cost synergies, certainly, supply chain procurement of all of the systems that we purchased and aggregation and scaling the 1 plus 1 equals 5, all the functionality in our smart off-grid can now be used for eSite. And then lastly, same customer base, same market, when we were doing due diligence on eSite before we gave them an offer, we're at a trade show and we're talking to one of our customers just walking up and down the floor and we said, "Oh, what do you think of that company? Where do you think of that company?" And they're always what do you think of this company? Oh, they're a customer -- a supplier of mine, this is what I think blah, blah, blah. So the synergies on the relationship and the IP are quite strong as well.

Great. The next question is asking about the order pipeline. We were expecting several large orders in 2022. How should we think about those in 2023?

So there were no orders that went away. They all got deferred. So they continue to be in our sales pipeline. And we see them as the potential deals to close in 2023 and are in conversations with them. So I'm not giving any guidance on time lines, the example I give is, December of 2021, I worked Christmas Day for the first time in my life on an order I expected in February, and it didn't happen. Now we're working on that same order again. So it is -- those opportunities are in our funnel and will be things that hopefully we'll be able to tell you about this year.

We got another one live from the webinar. What was the outcome on the collaboration with Facebook and MaYo technologies on the rural telecom field study? And do you have an update on that?

So the outcome of the project was that the project was successful. We produced the research study report, which is available to our customers and communicated it. The way our relationship works with Meta, they are part of the -- my brain is going thin -- telecom infra project. And so that was, I think, the third project we had done with them, but they're all project-based. So we expect probably in 6 months where we'll do another project with them in other areas. So the project concluded very well. And the report was published. We've been working with many customers and opportunities on it. And as far as MaYo, Peru is concerned, they have our installations. And as part of our illumient service, we continue to support, operate and manage those for with them.

Great. We got another one asking about the eSite manufacturing. Are you planning on bringing that in-house?

So Clear Blue on our core products -- sorry, that's the wrong word because we're all Clear Blue now. For our other more historical Clear Blue products, we contract out the manufacture and do final assembly and test in-house for products that are small volume or at the prototype phase. As we scale the production of volumes, we contracted out and to local subcontract manufacturers. So we don't plan on ever bringing in-house large-scale manufacturing, we are using contract manufacturers. And so the business model that eSite has aligned with ours. It's always hard to find great manufacturers and the contract manufacturer that eSite has in Sweden is actually a great company. We've done due diligence on them. And so we may even find ourselves able to use that company to help us on some of our Clear Blue products.

We have another question that came in live. You mentioned possible M&A in the future. Are you looking at small tuck-in acquisitions like eSite? Or are you thinking of acquiring larger companies, for example, NuRAN?

So we are looking at both. We are looking at small -- my view as always, and I kind of learned this from an early mentor, I keep my head down. I'm building the business. I don't care what the company has called and I'm just building a business. And if we do that, then this company has value going forward. Whenever we look at opportunities, we look at it from a shareholder investor perspective, stakeholder perspective, is this accretive. So I'm not only looking at small ones. We're looking at some small and medium. Obviously, a smaller acquisition, the question I would expect to get from you, and we do get this from our institutional investors, well, how are you doing on M&A? Can you really do M&A? Can you really add a new product to the existing Illumient platform. So we're going to prove to the market this year that we can successfully do acquisitions by doing the eSite acquisition and integration, and then we'll see where it goes. In terms of NuRAN, NuRAN is in the network as-a-service business which is a little bit different than what we do. We support telecom. So it's not kind of on my list of things I would look at. They are a really great partner of ours. And I've seen in other -- what I would say is their financing is taking a really long time longer than any of us wanted -- we're all stakeholders, including NuRAN investors. But I've seen other companies, and it just takes a long time. So no, I'm not looking at it today, but never say never.

Got it. I think we have a few more that came in via e-mail and seeing is we're at about 1:46. Maybe I can squeak 2 more in Miriam, that's okay.

Absolutely go right ahead.

Okay. So we understand you're not giving guidance at this point in time, but how should we think about the year 2023?

We want to get back to our previous growth trend. And I am cautiously optimistic, not naively optimistic, cautiously optimistic that we're going to have a good year. We've done everything we can to make sure that even if it's a so-so year, we're fine cash flow positive, no cash burn, et cetera, et cetera. If you look at our historical metrics, you know that Q1 has traditionally been 10% of our revenue. And because I'd have to have a purchase order by probably the middle of February for it to be something that I would have in Q1 and everybody is still finalizing their budgets and their planning, et cetera, et cetera. So most investment comes later in the year. So Q1 is always a bit soft. But right now, that's where I at. Given that, there's a lot of macro uncertainty and I just -- we had to pull away from guidance because it's the right thing to do given what the world macro environment. As soon as we can get back to stronger guidance, we will give you all the information we can.

Can you help us understand how 2023 would be cash flow neutral?

So we would be a EBITDA breakeven around $8 million. We have the non-debt, non-equity dilutive. So STDC is helping to fund our R&D program. And remember that most -- more than 50% of our investment is in R&D. We are a leader, think about chat GPT and Microsoft putting in $10 billion. We are building an AI platform. So the majority of our investment is in R&D. Our core business is running at good contribution margins. Our cost of goods sold contribution margins are profitable, and our OpEx expense is not that bad. So the non-dilutive government funding helps with our burn on a monthly basis, both the STDC grant and the FedDev loan. We've done the private placement. We have reduced salaries across the board. We've reduced headcount across the board. And now because of the position we're in, we have the highest cash position right now that we've had in around 2 years since this post [indiscernible] placement and the addition of eSite does add to our ability to get to top line. So at this point, we believe we can be at the very minimum cash flow breakeven net burn zero. But we hope that we can -- and are cautiously not naively optimistic that we will exceed that.

Great. And I think we've got another one that just came in, are you giving any guidance on your gross margin percentage going forward or the range of gross margin?

So that is something that's been a little bit more consistent in the company. So I think I can talk a little bit more about that with confidence. So our gross margins have continued to increase. And even last year with the abysmal results, our gross margins continue to increase. So in our Clear Blue business, we see our gross margins continuing on the track over 30%, starting to hit 33%, getting to 35%. eSite is a much smaller revenue company and is kind of earlier in the product and if you go back over our profit margins a few years ago, they were lower, and we've been growing them nicely. We are kind of at the beginning of that plan with eSite. So when you take the 2 of them together, I think there will be some temporary downward pressure by a few percentage points, not a lot as a result of eSite depending upon the combination between the two. But we have good confidence that we will be increasing our gross margins on eSite the same way that we did on our own core product and our own core products continue to grow. Of course, it's important to remember that starting immediately, the esite product, which was previously a hardware-only onetime sale now comes with recurring revenue. So you are going to see the recurring revenue aspect of that business as well.

What is the effort and time line to integrate eSite under your cloud management platform?

There are 3 steps to it. Step 1 is just connecting it together and getting kind of the low-hanging fruit connection. That can be done in a couple of months, and we are -- haven't confirmed yet when we're scheduling to do that because we've got the eSite launch -- sorry, the Pico-Grid launch and other things, but it will happen sometime this year, probably Q2, I would guess -- Q2, Q3. The second phase is to get all of the more rich functionality in Illumients into the eSite application, and that could be done this year. And then the third phase is eSite has some unique IP around weak grid. So most of us think the grid is on or off. But there's this middle word of really bad quality grid. And we have it in rural in North America, but you have it in spades in Africa. And eSite has some unique IP for that. They also have some unique IP on genset management. Some of these other things might take longer. So I would -- they're going to be part of our road map and that -- but I would say that's probably 2024.

Do you have any large eSite sales in the near term? Does eSite have any orders that are working on that will be recorded as Clear Blue sales?

I'm very proud to say we already have in our books, deposit received a brand-new eSite order for Q1. It's a small project, but moving forward, which is great because customers are confident, they're like once they met Clear Blue and said, who are you and what are you all about? They're like, "Yes, let's move forward." We are working on a number of deals, and they have a good sales funnel of opportunities as well. So it's much more uncertain than our own funnel because we have to kind of get in there and figure out what's going on, but they do have a very good funnel and I do expect that they're going to contribute revenue. So we already have some money in for Q1. And the question is when will those larger orders start to come in.

Excellent. The next question actually ties in nicely with one that we got offline as well, asking about retrofits. Are you able to retrofit existing eSite installations under your cloud management platform? And how does eSite give you access to the retrofit market? And why couldn't Clear Blue access this market previously?

So there are -- so let me answer the second question first because it's kind of a question about Clear Blue. There are lots of monitoring and management platforms out there that are just the cloud and just software. And they tend to go across multiple technologies. But they don't have the deep rich control that you have inside I'll use a simple example, right? So last night, I'm watching on my Apple TV and I've got Netflix and I've got Disney and I've got all these other ones. But then I kind of go down into Netflix and I have software in the Netflix world. So you have kind of 2 layers there. You have the upper layer, which is kind of across all of these different online services you can get. But if you want to deep dive down into a Netflix or deep dive down into Amazon Prime, you go into Netflix. And inside Netflix, you only see certain data continue watching this show or watch these other shows based upon what you watched in the past, blah, blah, blah. In our world, Clear Blue does the Netflix, we go deep on our hardware and the hardware and the software on the device, marries to the cloud. So that is the focus we have decided on because it's only when you do that, that you really crack the nut and deliver the value. These aggregator software, they're more the 10,000 feet, I can see what's going on with everything, but you can't really manage systems. And so going in and doing our software for other systems, and we have those requests every day, it's not our business, and it's not our value proposition. With eSite we have the access to that hardware and the local software on the device as well as in the cloud. And so we can bring that same rich in-depth experience that we do in Clear Blue's Nano-Grid product to now Clear Blue's eSite Nano product. And customers -- that's what customers are asking for, and that's why we made the decision to acquire a company that had both the hardware and the software capability. And it's also the reason why our competition cannot just tomorrow, all of a sudden bring out some software and do what we do. You have to change the hardware. You have to get right down to the device level to get the proper management capability. You could just do it at the software level in the cloud, every system in the world would be doing that today, but that's not possible. And that's why we have such a competitive advantage and a market leadership position in the markets we're in. You can't just add a layer of software to some existing hardware in the field. That's why we did the eSite acquisition.

Got it. And I guess this last question came in online and kind of ties in with a few others that we got offline as well. Can you discuss the low stock price given the acquisition of eSite and your EBITDA-neutral plan for later this year? Also, any color that she can provide on the institutional investors who came in on the private placement. And what gave management and insiders the level of conviction needed to participate in this financing given all this macro uncertainty?

It's macro uncertainty. And we all know that what goes down comes up and what goes up comes down. And so when -- we and the management, my family and the insider investors and the investors from eSite were kind of insiders as well because they knew the business, looked at this, they knew and we knew that the current stock price is just completely false. There's no scenario where this company would ever exit at that price. It's not the real value. It's less than any sort of start-up that's on a blank piece of paper, it's related to the macro thing. It was also related to tax loss selling. You know November, December is always a bad time frame. So we all voted with our feet because we know that it is a macro environment it was temporary. And sales and revenue is going to come back up. We're going to recover from last year. Every company in the marketplace has had lower their guidance last year. And downsize [indiscernible] et cetera, et cetera. And that the time will come when the TSXV and small cap will be rise again. So I don't know when that is. But we're building a $1 billion company and we're going to get there. And eventually, it's just going to outgrow the false. So I look at it as the cost of raising capital, not the cost of exit. And that's why we get the support we have.

Great. Perfect. Thank you, Miriam. So I think those are all the questions we had. Thank you for your time, everyone, this afternoon. As you can see on your screen, there's a few e-mails there. Please feel free to reach out at any time if you have any follow-up questions or would like a more detailed conversation. And thank you once again.

Thank you, everybody. Really appreciate your time today.