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

Okay. Hello, everyone. Good morning, good afternoon. Hello, Germany. Hello, Canada, Hello, hopefully, Sweden in other parts of the world. Welcome today to our 2024 fiscal earnings call. My name is Miriam Tuerk. I'm Co-Founder, CEO of Clear Blue Technologies. I'm joined today by Farrukh Anwar, who is our wonderful illustrious hard-working CFO; as well as Jonathan van der Veen, who is a leading marketing from a Clear Blue perspective. We're going to give you a presentation and overview of the results as well as, as much information as we can going forward. And then we're going to open it up for questions. And I do want to encourage you to please feel free to ask all the questions you think you want to ask. Obviously, there's been a lot happening at Clear Blue, and we want to make sure that we address all of your concerns. Of course, please be aware of forward-looking statements. And I'm going to talk about the financial restructuring that we have now completed. The last piece of the financial restructuring that we needed to undergo was to deal with our banking relationship in our bank line. That was successfully concluded a few weeks ago, and the share consolidation was occurred. So it's done. It's behind us. We're finished and our plan going forward for 2025 is to deliver positive EBITDA, positive cash flow and growth that shows that Clear Blue -- that everyone's support and assistance through this process has not been wasted and that there's a good future value going forward. To talk a little bit about the 2024 results. I was looking at the template we use with results and I have shown a graph with an upward trajectory line going from the bottom left to the top right for margin and for recurring revenue. And I just don't think there should be anything with a line going from the bottom left to the top right. So we've shortened the results a little bit in our presentation to you. Then we're going to spend a bit of time talking about the future outlook and take some questions. So how did we get to where we are today? And I think -- as I've said to a couple of people, first of all, I don't want anyone here to think that we are looking at this going, oh, there's all these old third-party results, third-party things that happened that didn't that we don't own personally, et cetera, et cetera. We own this, we're accountable and we're not letting anybody else be the get out of jail free card. That being said, I think that we have had a series, not just one, any one thing wouldn't have mattered, but a series of events that have had an impact on us. And I think that the new normal is chaos uncertainty and impact from an external perspective. And so making sure going forward that if this list had 2 or 3 more things and you could add trade wars to this potentially as an external factor, we need to make sure it doesn't impact us. The net result of 4 years of this stuff was that we had a cash crunch not because of our ongoing operations, but because of the historical buildup of what happened in the past. And we've asked ourselves the question, well, some companies out there have done very well. Like why is Clear Blue not just shining star and all that stuff. And I think when you are an early-stage company and you hit the inflection point at the early stage, at that inflection point, you've got a couple of key customers and a couple of key products that are starting to ramp. And we went into COVID having doubled our revenue the previous year and expecting to double our revenue into the COVID year, and we hit a wall. And our early customers hit a wall. So we kind of lost that momentum from a go-forward perspective. What we've done in the last few years is add significantly to our product portfolio so that eventually that momentum just overcomes everything that is happening in the market. So we are looking at it internally to see what we need to do always and holding ourselves accountable. In terms of the problem that happened last year, the biggest issue that we had was that our balance sheet -- we had not been able to raise equity as pure shares starting when COVID hit. We are a technology company. If we were a U.S. Silicon Valley VC-funded company, we would be putting $10 million into the company every year instead of $1 million or $2 million that we have been doing. But we stopped being able to do that as pure equity and ended up doing it as loans and debentures that were convertible. So the need to convert those equity -- debt equity structures into pure equity and to reduce our expenses significantly to consolidate the shares get a little bit of extra help and restructure was a key thing that we needed to do, and we have done that now. So we did a restructuring in 2024, Q4. We have reduced our expenses by over $3 million. And in addition to another $1 million in interest savings realized, figuring out how and when we scale based upon revenue is going to be something that we're going to be very careful about that. We're probably going to scale resources later than we would have in an optimistic world, but we're going to be very conservative, and we're a lean team now fully capable of executing on our 2025 plan. We have a lot of growth opportunities in front of us and just figuring that out is going to be key. We've undertaken a share consolidation to clean up the cap table. We had one customer come to us and say, hey, I want to help out. I know I have this long-term loan, I'm going to pay it in advance, which was fantastic. That helped out. We did a small private placement with many of our long-term shareholders participating, management participating. We had both suppliers and employees who converted accounts payable to equity. And so really, every company stakeholder participated and supported this, the customers, the shareholders, the lenders, the government, suppliers and employees. And then lastly, we said, listen, we've come through this. We need a little bit of breathing room. So we also got reasonable loan extensions, installment reductions, deferment and reduction of interest rates and loan conversions to the point where we feel very comfortable that we can support the debt that we have. No company should be 0 debt. So debt is good because it's not all then on the equity side. We're happy with the balance we have now. So Farrukh, I think you are going to take it over here. Would you like to walk through the restructuring a bit and give your commentaries on this?

Yes, for sure. So basically -- hello, everyone. Thank you for joining. So we went into this financial restructuring, thinking that how do we set up the company for success. So in order to set up the company for success, what we wanted to do was conserve cash and be in a position that our cash outflows would basically be lower going on forward. So the first thing that we did on that was we converted our debt into equity because there was convertible debentures were interest-bearing long-term interest on that. So what we did was we converted our convertible debentures and related interest. It was around $7.2 million, and we converted all of that into equity. And obviously, some of you who are on the call helped out with that. So really, thanks for that. Then the shareholders, which some of our management/shareholders, they had loans to the company of approximately $1 million. So they pitched in as well because they wanted to lead from the front, and they converted their debt into equity as well. So along with that, we had certain other external debt from some of our shareholders in Sweden, other places as well that had helped out in the past. So they converted their debt as well into equity. So you can see in the second line, over hear, $994,000 of shareholder loan plus external debt of $1.5 million, we converted into equity at 33 million and 50 million common shares, along with warrants, respectively. So the way that we priced it was $0.03 per share with a full warrant on converted at $0.05. So this was basically post consolidation, then we consolidated. So you can see the consolidated numbers over here as well. Second thing that we did in order to conserve cash was we converted our business line, which was with the bank and our royalties, one of our partners. They helped us out in converting that into 3 different streams. So it helped on our balance sheet as well. So now some of that was converted into equity. Some of that was converted into a term loan and some of that into royalties. So now we don't have -- so when we get our royalty revenue, that's when we have to pay royalties. And this royalty is at a lower rate than compared to what we had in the past with previous royalty partner that we had. And then included -- that's not on the slide, but Miriam mentioned in the previous slide. Then what we also did was we worked with our long-term loan partners and restructured their debt as well. So now we've got for 2 of our biggest lenders, they have increased the term of the loan for 2 years. And the principal payments are also gradual increase. It's not a flat repayment going on forward. So that also would help us in conserve cash. Thank you, Miriam. Do you want to take the next slide?

Thanks, Farrukh. Expense reduction on the OpEx side was a very big part of it. We did a number of things and a significant effort was required to do all of these things. The first is that we moved our Illumient cloud service to more of an open source platform. That resulted in about $600,000 worth of savings. It doesn't have any real impact on the service level to the customer. Some of the data is now slower to go and get access to. And we've got a bunch of people who have to do a lot more manual work to keep the cloud service up and running. But the savings was significant, and we really wanted to make sure that we had an OpEx budget that was something we could live with. We did do quite a bit of headcount reduction across the company. Some of that was attrition. Some of that was obviously making very, very tough decisions. And we've had to be very, I think, slow down our R&D development progress. Part of it also was that we had a very large project for our Pico product, which I'll be talking about later. And we had some major investment that needed to be done over the last few years around that, partially supported by SDTCs. SDTC provides 35% of the funding for that project. And a big chunk of that has come to conclusion. So while we are significantly down in headcount, some of that was just we were able to handle from a product completement perspective. I do want to comment in this high increase of cost of living in the marketplace. No one in the company has had a salary increase for 2 years. We have not had any material attrition of people leaving for that reason. Those people who have left have left for personal reasons that are -- would have happened no matter what. Management has taken almost no salary through 2024. There were many months where there was 0 or very, very low. That's not sustainable going forward. Eventually, someone's got to pay the bills, but a huge sacrifice by everyone. And I can tell you because I'm the recipient of the questions everybody just sucked it up because we believe fundamentally in the value of the company, obviously, the debt conversion to equity. So if you put all of that together and the impact for 2025 is $4 million in savings. As part of this, when we went to everybody, they wanted to see that there -- the debtors and the lenders want to see the shareholders helping out. The shareholders want to see the debt -- everybody needed everybody to help out. So we did do a private placement. It was led by management to putting more money into the company in addition to the loan that was already converted, et cetera, et cetera. But just so hugely honored to have our 2 major shareholder bases, the Ventum Echelon team and our Germany, Switzerland, Sweden investors all helping out and participating in the private placement. RE royalties did also top up the loan by giving us a short-term bridge. I do want to emphasize, it's a short-term bridge. We got $125,000 this month, and we'll be paying back $100,000 of that in Q3. So it's just to help us transition. We -- I should comment that the STDC next payment for $1.3 million is making good progress. We passed through all of the technical aspects of the review. STDC is now called the IRAP Green Fund. It's part of the IRAP NRC program now, whom we've got a long relationship with. And the final financial approvals are just -- and reviews are just being finished. So we expect those funds in Q2. So that $100,000 was just a small bridge to help us get over that hump. I'm now going to turn it over to Farrukh, who's going to walk us through the balance sheet. Farrukh, over to you.

Yes, for sure. So as I mentioned earlier, and you can see on the balance sheet that we've completed a significant debt restructuring in the latter part of 2024, eliminating over $4 million in convertible debentures, $1 million of shareholder loan and replacing short-term obligations with a combination of equity, royalties and a new term loan. So some of that you can see in this -- in the year-end balance sheet and some was completed in Q1, which is basically the short-term loan of $750 that you can see with the Note #12 in front of it. So that's the one that got replaced with $325,000 in Q1. So that will significantly improve our balance sheet even further in Q1. So -- as a result, we improved our balance sheet flexibility with aligning our obligations with the company's revenue generation capabilities. We also restructured our long-term debt for year-end to Q1. And now we've got extended payment terms and a longer period to pay off that debt. So it would also help in our cash conservation efforts and set us up for success. Total assets at the end of the year were $5.8 million compared to $12 million in the prior year, but that was basically a planned reduction in intangible assets. So you can see the main decrease is just because of intangible assets, a noncash item as such on the balance sheet. It is over the years that what we incurred on our intangibles. Those were there. And then we just -- when we are improving our balance sheet, we just restructured it to not show on the balance sheet. And that's what you can see the reduction mainly in our assets. But you can see the working capital remains positive at around $928,000, and we ended up the year with around $340,000 in cash. Miriam, do you want to talk about the cap table? Miriam, you're muted.

Sorry. Here you go. I'm talking to myself. Don't usually do that. So post share consolidation, we now sit with a cap table that I think is reasonable. We have 77 million shares issued from outstanding. We have 61 million shares. Of the 61 million shares, there's 54 million, which has an exercise price of $0.30. So there's a fair amount of runway in the share and the stock price before we hit that item. That is as a result of everyone that basically had to help with the restructuring. I think because there was so much of the shares -- equity raises over the last few years were done as convertible debentures hopefully, there's a wide audience of people who have those warrants and therefore, would be happy to be in the money for them. But it positions the company in a good way from a go-forward perspective. So now we're going to move over to 2024 results. I'm going to pass it over to Farrukh, who's going to talk a little bit about the P&L table from a profit and loss perspective and EBITDA as well.

So as you know, the company was conserving cash in 2024. So there were -- as a result of that, revenue for the year-end came up at around $2.76 million, reflecting the deliberate delay in timing of project deliverables compared to around $5.4 million in 2023. Gross profit was $1.35 million, delivering a gross margin of 49%, an improvement from last year of 46%, a result of tighter cost controls and improved product mix. So as Miriam also pointed out earlier about the operating expenses and other cost savings that we did. So you can see a portion of that being reflected over here. Operating expenses were reduced by over $700,000 year-over-year, demonstrating our commitment to managing our cost base prudently. The benefits of these reductions would be more prominent in the current fiscal year because some reductions were during the mid to the end of 2024. So now true -- and then some of the savings were previously being capitalized in intangible assets. So that would also be reflected in the current year as well. So we remain focused on executing our strategy, managing liquidity and capturing growth opportunities, particularly in the smart of the grid telecom power market. And you can see the net loss for the year was $11 million, primarily because $4.3 million on the impairment of intangibles, and we had higher interest expenses associated with our pre-restructured debt. So all of this that if you can see on the financial statements, you can see the interest and accretion on convertible debentures, interest and accretion on the short-term debt, short-term loan and other charges. So those would reduce significantly going on forward. Yes. So on the next slide, Miriam. So you can see over here, if you look at our non-IFRS adjusted EBITDA, so it did increase -- the negative did increase a little bit. There was some degradation, but it was mainly because of the reduction in revenue. All the other items, you can see those onetime -- if you take the EBITDA and you take out the effect of all those onetime items, which includes the impairment of intangibles,and around $744 million gain from the debt modification, which reflects our successful restructuring initiatives. So you take effect of all of those. So the non-adjusted IFRS EBITDA, it degraded, but not to the extent as it was completely restricted, and it was just mainly because of the reduction in revenue.

So obviously, I think everyone can understand that we're not going to provide guidance. No one in the market is providing guidance. And given our own situation, things -- we're still too small a company to have things predictable. So we are going to avoid providing any sort of firm guidance going forward. I think we're going to be very focused on showing results. So in a month at the end of May, you will get the Q1 results, and we will continue to move forward with results. In terms of the results at the end of the year, though, we did have bookings of over $5 million, which is a big increase from the previous year. It's over doubling the amount. And as you can see, if everything goes according to the time lines, that should have $4.5 million in revenue in 2025 with ongoing recurring revenue from a go-forward perspective. So it does position us to have -- going into this year, what we did have is a nice order of books of opportunities from a go-forward perspective. When I take a look at the future, I just want to speak a little bit about the macro outlook from that perspective. Obviously, I think there's a question about tariffs. We get less than 20% of our revenue from the U.S. depends on orders, et cetera, et cetera. But my estimate this year is that it's going to be 15% to 20% of revenue. And so we have been dealing with tariffs. It's been chaotic. The amount of time and energy that the company has needed to undertake to ships up early, to deal with tariff issues, to fill out [indiscernible] forms, to have lots of different discussions with customers. That has caused a lot of time and energy to focus away from just getting out there and selling. So that's the real challenge of the tariffs. However, it seems like the U.S. customers are resigned to having to pay them. So it's not like people are walking around in the U.S. going, oh, we're not going to pay for them. Everybody knows they're going to have to pay for them. The question is going to be whether or not it's 150% or is it 20%. The biggest impact to us is the China tariffs. It's not really about our issues. We're pretty good. Canada is no problem. Our content is not really going to be materially impacted. One of the things we did do out of COVID is there was these forecasts of 3, 4, 5 years without being able to get a power electronics components. As a result, we own a lot of power electronics components for the next builds. And so short-term spikes in microprocessors and stuff don't really impact us in the short term. But China tariffs, how much it takes to bring a solar panel or a battery and these things can only be gotten out of China to some extent. But certainly, on the batteries, it's almost 100% out of China. No other country in the world will do something as so poisonous to the environment as making a battery. So that's going to be across the market. It will hit every -- it will hit the industry. It will hit the sector and not really have a huge impact on Clear Blue any more than anybody else. So I don't think it adds a disadvantage to us. The question will be, is there going to be a capital spending stop from that perspective? And what does that look like? So we are watching it cautiously and managing through so far, but don't want to understate that, of course, as Prime Minister, Carney is saying, it's the global macro stuff that we all have to watch for and see what's going on. When it comes to the Africa in telecom market, I'm not as worried right now. And I think the key reason for that is that I always remember the story when we had the bad 2008, I think GM and Chrysler were going bankrupt, but Ford was okay. And the reason Ford was okay, was because they had, had their issues 2 or 3 years early. So it depends where you hit it in the cycle. And because of what happened with COVID and then with the interest rates and the Ukraine war, a lot of the African projects were stalled because they didn't get their funding. And that critical funding is now in place. So once you have the critical funding in place and approval and maybe you're pulling down tranches and doing phases, but you've gotten over that hump, nothing is changing that rollout. So from what we can see, we're not really seeing a lot going on in Africa from that perspective. I think the other thing is that I'm in a lot of X-Path hotels when I'm in Africa, and there's -- every country in the world is there, but not Americans. So Africa is really very European emerging markets, Canada focused, Canada has huge pavilions at all the shows. We're very visible there. And so I don't see it yet. One of the things we did do was funding is so critical to moving forward that Clear Blue has formed the partnerships with a couple of funding agencies, one of which, which is MPOWER. And by bringing the financing company to the table, we have been able to take a little bit more have a little bit more influence in the timing and the speed of some of these projects. So the hotspot announcement that we did in March, which is a very large project. It will be 312 sites and timing to get the contracts and everything in, but we've got the MOU signed and we're at the contract finalization stage. How long that takes is the part that we can't forecast. But that deal would not have happened if we had not brought the funding partner to the table with us. And so having funding partners, the partnership with RE Royalties would also be, hopefully, something that will help us to do that. I think the second thing is the pressure to deliver connectivity and solve power challenges with solar is just huge. There is -- forget about green, we have to reduce our operating expenses as telcos and towercos because they cannot afford to pay for the diesel anymore. So the move to solar to displace diesel because the grid is not solid. I mean I was just talking, Spain and Portugal had a huge outage. And so people are now saying we need this in place for Europe. So that pressure is significant and then connectivity. Governments are saying, we've got to connect our people. So I don't see anything yet in the African and telecom market. I think on the other side, satellites got a huge boom, and I'm going to talk about that a little bit. The need for more Starlinks in the marketplace, both from a competitive health perspective and the demand is huge. And I think, obviously, we believe we are sitting on a rocket. We have a really good opportunity there. Okay. So I'm going to talk about each product a little bit. In the North American marketplace, we did 2 things last year. The first is we launched our new Senti product. Our Senti all-in-one product is having a lot of positive acceptance in the marketplace. Obviously, all of these companies and customers start with Phase 1, see how it goes and then go with 2. The picture on the left is from the Niagara River. The picture from the right is from the Queenston Heights Brock's Monument area. We're pleased to have Pennsylvania, Turnpike, Hamilton, Minnesota, Ajax, Port Hope, Imperial, California, Gainesville, Texas. And you may have heard me talk about in the past, Kelowna, orders across North America, Mississauga, Toronto, also doing a lot. But one of our objectives was to hit the South more strongly. So Gainesville, Texas, Imperial, California as a result of that. I want to show you just because I've talked to -- I'm a little bit of a geek. This one on the right here is actually really neat because it's a classic example of our patent. And I've had other lighting companies call me up and say, hey, can we buy your patent? We'll pay you for this. And the reason is that an all-in-one is one fixture. And the challenge is in this 3 pole site is very clear. You've got to put each light in the direction you need it. So this one's got to point this way. This one's got to point that way. This one's got to point that way. So the light has to point in a certain area, but the solar needs to face south. And so our rotating turret here is our patented IP that allows the customer with an all-in-one to have the light pointing in the direction it needs to point and have the solar panel pointing in the direction that it needs to point. This is -- for the guys that are geeks in the lighting marketplace, this is really, really cool stuff. So we're very optimistic about that, and we're seeing lots of projects and lots of opportunities in getting into those and then you get phases of projects. So we have one project where we did a pilot last year, and the customer is going well. We're going to want to do a few thousand systems. We're going to order in quantities of 100 at a time, and each year, we'll see what the budget is. And so you start to get this annuity of ongoing things. The other thing that we're hearing is doing a couple of small little projects is okay with a dumb system, but if you want to do large rollouts, you've got to have smart remote management. So our Energy-as-a-Service offering is critically important. The other piece is power utilities and transportation -- Department of transportation in Nevada. Those are the big kahunas. Those are the guys that do thousands and thousands. And we formed a partnership with Cooper last year. That partnership is yielding very strong relationships. And again, utilities are in the Energy-as-a-Service business. So they want managed systems. So 2 years ago, we didn't have any power utilities. We've got [indiscernible] Power, who is a huge and wonderful customer of ours, really pleased with the work we're doing with them. We're working with a number of utilities across the U.S. doing a lot of pilots and testing. We've got DOTs across the marketplace. So that coupled with an investment in a new sales team with a new model, we're employing a lot of AI on the sales side as well from an automated tools perspective. We do think and see that because we have the largest funnel ever in terms of Illumient and our lighting business, and we're getting some very large agents on board. The opportunity in front of us is the best it's ever been. Again, the results are the results, and we'll see where we end up. Micro, as you know, we acquired eSite 2 years ago, and it's really coming fully online. This is -- it was still raining and we haven't gotten everything installed. But this is a new micro product. So what we acquired from eSite is this upper piece right here, building a very small modular capability, adding in our -- and integrating our Illumient software, dealing with cost reductions for cost competitiveness. And then, of course, realize that for these larger contracts, it's an 18- to 24-month sales cycle, and we just -- so last year, we brought on our new micro product with the smart management capability. We've got the test systems and the production systems and the first installs out. Where we're sitting right now is we have 2 orders. One's got a contract, the other one is at the LOI stage. And that -- we're targeting rolling out 190 sites just from those 2 contracts, which would be $3 million in Q3, Q4. Timing to be confirmed and moving forward, but that's what we have in our sales funnel. I think the other thing that's really key is these customers who buy these large systems almost always are dealing with hybrid. They have diesel, and they need to get off of diesel. So sitting with senior leadership of large towercos and talking about the road to zero diesel and how we're going to get to zero diesel is something that's getting people's attention and is part of our focus. Nano is the dog that she just keeps hunting. It's now -- it's our oldest product. And it's in third generation. For its use cases, it's still the best, most competitive, most wonderfully packaged product in the marketplace. We are frequently now competing against Huawei. It's between us and Huawei. It's between us and Huawei. It's between us and Huawei. And we win on the service, the value of the product, both the hardware and the software that anybody has ever told me -- heard my story. So why would you have 4 cabinets? Why aren't you just going to -- if you look at the traditional telecom, they have these big cabinets that are huge. And I kind of actually went into the engineering team and say, why can't we just have 1 cabinet instead of 4? Well, guess what? Look what's around this site. You have to hand bomb these boxes and cabinets. So instead of having to get a lift truck with a cherry picker to carry this huge heavy thing, we've built a modular system that a bunch of guys can carry it from the road up the hill. So even on our hardware side, I remember Francis [indiscernible], the CEO of [indiscernible] saying to me, I just love your product. I'm so excited. This is very early days and I'm like, always good, tell me how great the software. He love the cabinets. Because we are in the field, and we know what it takes to get this stuff. It might be because I have to take a boat to get to my cottage that I think about these things. Anyways, the cost savings and the value to the customer is so significant that we're able to get, I think, which are unheard of margins for a small volume hardware company. And that's the value of the software and the solution and the package we bring together. So this is just a wonderful product. So in November at the AfricaCom Conference, Eutelsat and Clear Blue did a joint announcement of the partnership between the 2 of us. And basically, it's important to understand that Eutelsat has their Eutelsat product, which is their geo product. They also acquired OneWeb. Which is the low earth orbit product that competes against StarLink. And the demand for that product with really good Internet is significant. And all markets eventually get to a point where there are multiple vendors in the market. And certainly, there is a strong desire now by Europe to ensure that they have a value proposition from that perspective. So Eutelsat is getting significant investment by the EU. They are planning on doing very aggressive rollouts. They understand that power and network connectivity go together and they need a smart power capability. And it's our smart energy management technology, that valuable IP that we -- all that money that converted on the cap table to equity was spent in R&D dollars. They weren't spent in OpEx. Don't -- please don't think that it was spent in OpEx. It was spent to build the best technology in the marketplace that nobody else has. And when you get somebody like Eutelsat that says, I'm going to take Clear Blue's Pico product, and I'm going to bundle it with every modem I ship to the emerging marketplace. And we're putting -- I think -- I don't know for sure, but I believe the EU has announced that they're going to put $2.6 billion into satellite services to make sure they have a competitor and Eutelsat is very much part of that. It's a huge opportunity for us. And we believe that the long-term value proposition is that this partnership with Eutelsat could deliver in the next 3 to 5 years as much as $25 million revenue for Clear Blue. So it's very exciting, and it's one of the reasons why management and the employees have doubled down so much and why we believe in this company. So I just want to cut 2 more summary slides and then we'll open it up to questions. Why Clear Blue? We are unique in our focus on small industrial power applications. We're unique in our focus on an ongoing recurring revenue service model. We're out in the field. We're actually dealing with the realities of the problems out there, managing on an ongoing basis. We're unique in our approach that we are -- have always been focused in going after a global market without a significant dependence on the U.S., and I should have really said on any single or major market area. It's not just the U.S. We love the U.S., and it's a great market and a great opportunity for us, but it has its cycles. And we just need to make sure that we're diversified. Smart Power for solar, hybrid, weak or no grid getting off of diesel, managed. We put our money where our mouth is. Our energy forecasting, our smart load, predictive analytics and growing that into AI and the fact that it's full service. That's why Clear Blue is -- that's why customers come to Clear Blue, and we hope that's also why shareholders believe in Clear Blue from a go-forward perspective. Okay. So I called this Clear Blue 2.0. It's been a tough pill for all of us to swallow. I don't think -- I actually hadn't even realized the level of stress that everyone was under until the end of January, where I actually realized I was starting to sleep again and every muscle in my body wasn't painful. But I have a mentor, his name is Chip Hazard, and he's one of the Tier 1 VCs in the U.S. And he said to me, the only value is the value at exit. The value of the share price or the pre-money valuation in a private company in between is really just your cost of raising capital, and we've had to raise capital and be part of the market where it was. So it's Clear Blue 2.0. We've come through that and really going to be pushing the rest of the company now to stand back and say, what's the best of Clear Blue 1.0, but what do we need to change? How do we transition? How do we take ourselves to the next level? Our #1 focus and plan is positive cash and positive EBITDA in 2025. We believe that we're going to deliver that for the year. And we are targeting to try to deliver that every quarter, not just at the year. We want to show that we're at an inflection point. It -- somewhere along the line, you never know when you're there, but when you look back -- you know you hit an inflection point. We could have hit that inflection point when COVID hit, but it got knocked out from under us. And hopefully, and we believe with the sales funnel we have that, that inflection point is still in front of us, and we got to get it going and into the results. And then we want to build back and build and grow our investor confidence. And we're going to do that with backward-looking results. We are very busy on a lot of projects. We're going to try to get out to the market a little bit and tell you more about what we're doing. But the proof is in the pudding, and that's what we know we need to deliver. So Jonathan, I'm hopeful, I think there may be a lot of questions. Do you want to just throw them at us and then Farrukh and I will answer them. I think I might need to unmute, Jonathan. Hold on one second.

Yes. So we had lots of questions coming in through the presentation. So I'm just going to start at the top and work our way through those. So the first one is from [ Russ ] regarding the SENTI product. He's wondering where and who is the current largest market for the product, penetration, price point of SENTI and if there's Energy as a Service component to each sale? And then just kind of -- yes, just kind of overall outlook on the SENTI product.

So one of the beauties of having a smart product is you have the ability to take one product and use it for multiple applications. So it's important to understand that the -- what's inside of Pico product is also what is inside the SENTI product. Right now, our primary focus is in North America. We may expand to Europe in a few years, but we're focused in North America with this product. And it is currently priced somewhere between $1,100 and $2,700 per light depending upon the configuration, quantities, et cetera, et cetera. The all-in-one streetlight marketplace, I will tell you that we often sell the pole. So sometimes the order is like $3,000 a system. It is the most compelling of the solar all-in-one. And just like your light bulb today is now 2 watts because it's an LED light bulb and that 2 watts is replacing a 40-watt light bulb. LED lights that are 6, 7, 8, 10 watts work really well now. One of the big aspects of our Pico and our SENTI is low energy consumption. So we've had to really work hard to make sure that there's a really efficient system in that technology. So price point, I think I've talked about, we believe that it's probably 50% of the addressable market in North America. There isn't a really good market size out in the market because it's an emerging market and the forecast. So I've got 2 market research studies from 2 -- 3 years ago, and one of them has a market sizing that's 10x the other market. It's a completely different definition. So I'm not comfortable talking about size of market. There's -- I don't believe there's any real good data. But we launched the product last year, and you can see the list of orders. Everybody has a project and they're happening everywhere. I don't think there's any municipalities you drive through where you don't have these solar lights. So the market is quite significant. Next question.

Yes, this is from [ Felix ]. Wondering about what the decision process was when it came to reducing the headcount.

What was the decision process when it came to reducing the headcount? It was gut-wrenching. It was gut-wrenching. It was a mixture of where we could reduce the headcount without impacting revenue. So obviously, our R&D budget had to slow down. We would not have invested in our R&D budget if we hadn't gotten the SDTC funds, and we were able to bring -- we just had to bring that back a little bit from that focus. Some of it like the software, can we deliver in a different model? I will tell you, it takes a lot of work to manage that software infrastructure without all those automated tools, but we just had to do it. Part of it, I have to say, would have also been salary and cost. When you do a downsizing, you kind of look at the -- people have a tendency to want to keep the management team in place, and we looked at it and said, well, it's got to be from top to bottom. Our management team is pretty lean. So we went without salaries and then the middle management, we had to reduce. In Africa, unfortunately, if you -- you can have 2 employees who are of the exact same skill set. And if one of them has 3 years of a reference working for a Western company, their salaries will be 5x what the other ones are. And so that forced us to have to make some tough choices.

We have a couple coming in from Todd. So this one is regarding the U.S. accounts. So just in regards to tariffs, what are -- if we have any the mitigation plans surrounding the tariffs?

So what we have done is we've updated our pricing calculators to take into consideration the tariffs. Some of it, we've been able to bundle in and some of it -- so it's costed in and we can take it, but our margins are the same. Some of it we're -- like what we've done, I'll give you an example, we've quoted a job last week where we said this assumes 10% tariffs with 25% with China. If it's anything different, we're going to have to charge you extra or we'll give you a rebate on it. But that's what we've used as a baseline because there's so much uncertainty. Now the interesting thing is these projects take 2 years to construction plan, et cetera, et cetera. You can't just up and change it. And -- but the timing of when we deliver, right? So that's how we're mitigating it right now. I think the most important thing that needs to happen if you want to say, how can this not impact this market is, number one, get to a stable base where people kind of know where they think it's going to land and it lands there. That's number one. And number two, let's avoid a global recession where people don't pull all of their investment. In terms of the near-term projects for the next 6 months, those are down the road in terms of construction projects. We have one customer that I didn't speak about. It's a data center company. And we have done, I believe, 4 projects. And there's -- 2 of them are shipping this year. And there's a fifth one coming, and it's kind of a nice big one. And I'm like really looking at going, geez, we get that one. We're happy. What's the chance? And my comment back from my sales guys is I said, well, can you guarantee it? And he is like, I can't guarantee it. Sales is ruthlessly trying to improve its forecasting to make sure that we're not overly optimistic on timing. I go back and I look at what did I say we were going to do and why didn't it happen? And the November forecast -- that October, November forecast from last year, every one of those deals has happened and is happening. They just didn't happen in the time line, and we had to kind of delay the shipments a little bit because of what we were going through. But that's a 450-page construction drawing package. It's not going to get changed. We're spec-ed in. So...

Okay. So this one now is around raising funds. So do we foresee the need to raise funds in the future?

No. We are working very hard not to raise funds. Our plan assumes we don't. What I will say is if the company delivers its results and we show good trajectory, like if we have a good year this year, we're going to want to invest in sales. And if we have a good year this year and the stock price just goes up and the market is interested and people have some appetite, we might do a small raise to improve the cash balance, working capital, pay down some debt. But at this point in time, our 2025, 2026 plan that management is tracking does not require us to raise money.

Okay. So this is again from Todd. So he is saying that in this area of the country, he's seeing lots of solar light towers along highways and parks, which are Clear Blue. So if we've considered -- have you considered a non-managed lighting product to compete with the broader market?

No. When you provide an ongoing service, it's kind of like getting naked, right? So think of yourself as someone -- an investment adviser comes along and he says to you, "I want to take over your stock portfolio and I'm going to deliver x percent," wonderful, wonderful. After he sells you and you're actually tracking how that portfolio is doing, the money is where he's actually showing the results. And for us, because we manage and operate on an ongoing basis, we know that those systems have a short end of life. They don't last, they don't work. We actually have a couple of customers who is like, yes, I know they're disposable. I throw them out and I buy new ones in 2 to 3 years. So the reason we don't offer a non-managed product is because for our market and our use case, we're focused on mission-critical infrastructure. And we're focused on making sure they work. Actually, we're talking right now to a Western company about doing a farming agricultural project where we would be powering the water system for cows through the wintertime. And I'm thinking to myself, well, if the power runs out, the cows are going to die first. So it's mission-critical. That's what it's all about. So that's why we don't do it because it's not going to work. A good example would be Intelsat quoted us the statistic that 30% of their deployments in Africa are not producing revenue because the power system failed. So they're not going with us because it's brand newness for the first time. They've been providing unmanaged power systems to their customers and 30% of them are failing within a year. That's why we don't do unmanaged.

Okay. So I have another question here about Eutelsat. A couple of folks are asking about this. They just like -- Russ is saying he thinks he heard saying $25 million Eutelsat in 3 years. Wondering if we can go over just the Eutelsat deal again. People are very interested in it.

Right. So we're very excited about it as well. So Eutelsat, as you can say here, is going to combine Clear Blue smart management technologies, so our smart energy forecasting, our Pico-Grid product, with their own power optimization capabilities. So energy forecasting will be all about I've installed the system and I'm going to be running for the next few days, I don't have power, and we're going to forecast whether or not the system is going to have enough energy to run. No, no, it's cloudy, rainy, whatever is going to happen, we're not going to have it. And we're going to be able to use smart controls to communicate with the satellite modem so that it modifies its power consumption, maybe it just doesn't transmit as much, maybe it goes to sleep more frequently. It does a number of things to allow it to deliver in a sustainable way. That delivers 2 key benefits. The first key benefit is that you have an ability to deliver better service, right? So when you're watching a movie and it's caching the data, you don't care when it's slow versus fast as long as it's smartly basically making sure it delivers to you what it needs to. Voice signal might get a little bit less good or more good. But on the other side, managing that smart power is what makes sure that the systems are dead in a year, right? So 30% of their systems are garbage and not working. And if we can now eliminate that 30% and 100% of their systems are working and delivering energy, it's going to have a huge impact. So they believe that partnering with us to bring the Smart Power is going to enable their product to be successful in that emerging market. We're going to be covering both their LEO product, which is the direct competitor against Starlink as well as their GEO product, which is the higher earth orbit piece. And our technology is built for something that will work well in Africa, both at a price point, cost point and installed basis. The forecast that they've given us is for deployment of 25,000 systems over the next 3 to 5 years. And some of the systems will be much bigger, but a lot of them will be a lot smaller. But [ I saw -- I've used ] an average of about 1,000 saying that the opportunity is about $25 million over 3 to 5 years. I do want to note, I can't even make this stuff up, but we had this partnership with ViaSat. And ViaSat last April was launching their new satellite, which was supposed to then support all of our products, et cetera, et cetera. And that satellite had a catastrophic failure. And so I think the market cap of ViaSat went from $30 billion to $2 billion in [indiscernible] status, blah, blah, blah, they're in recovery mode. They are now out of the business of ground equipment, which is why we lost that key sponsor for Pico last April. The good news is in the satellite industry, companies work together. They buy bandwidth from each other. So they're kind of in a coopetition model. And Eutelsat had been following all the work we've done. So we would not have this partnership moving forward if it wasn't for the partnership we have with ViaSat and if it wasn't for the R&D investment we've made over the last 3 or 4 years. So you could say, Clear Blue, why didn't you spend -- not spend this money over the last 2 or 3 years? And the answer was you're not going to get this kind of an opportunity unless you spend millions in investing in R&D, and that's what we did. That's the bet. We're not here to be a -- what do they call it a light -- they call it -- I don't like the word lifestyle business because most small business entrepreneurs have a lifestyle. But we're not here to make a little bit of money. We're here to be a $200 million revenue company that has a market cap of, I don't know, $750 million. That's what this is about, and that's the opportunities we're investing in.

Perfect. Okay. So this next one is surrounding the stock dilution. So just, yes, like what were -- did we consider the risk of shareholder kind of pushback and as the only investors that make profit are the more recent investors, just kind of what the thought process was behind that?

So the TSX mandated that we had to do it. It was not an option. We were required to do the share consolidation, and there was really no choice. So you could argue whether it's a good thing to do or not. I think that the cap table was going to be very bloated with too many shares at a small penny. Some companies can't buy shares under $0.10. And so it wasn't beneficial to anybody. And theoretically, other than people reacting to the consolidation with a little bit of a step back, which is pretty much normal, it shouldn't make any difference. So at its short end, we did it based upon what the TSX said. In terms of the 6:1 number, we took the guidelines from the TSX, but we also spoke to expert industry people. So the 6:1 was done with us speaking to people who -- not insiders, but we have a number of investors and like [indiscernible] as a partnership who represent a large pool of shareholders and have a lot of industry. And we went to them and said, what price should we do this round at? So the $0.03 and $0.05 full warrant wasn't dictated by us. It was recommended by the investor community. So we try to get those types of outside advice to do the best that we can. But this was a mandate of the TSX. No choice.

And then this next one is pertaining to the leadership on taking salary increases recently. However, based on performance seems the pay is excessive. Do you have a plan to reduce the executive salaries? I know you spoke to this already, but if you could just address that again.

Based on performance, the salary is executed. My [indiscernible] for last year is $35,000, and I didn't take a paycheck from September until now. And I sold my house and put every penny of money that is not in an RSP into the company, and I currently have $100,000 worth of expenses sitting on my credit card. So I'm not sure I understand why people think the pay is excessive. And that description that I just gave you applies to pretty much everybody in management. So I think we're hoping to pay ourselves $90,000 a year this year. And most of my conversations with my management team is, look, I get someone who call and say, look, in order to pay my mortgage and my monthly grocery bill, et cetera, et cetera, I need this. Could you at least cover that because my line of credit is growing. So management, I don't know why -- please follow up whoever sent that where you see that we've taken a significant amount of compensation. I'm not -- I don't see that. Maybe I'm wrong.

Awesome. And then this is the last one that we have for now -- sorry, one more coming from Russ as well. But this one is the fact that we're speaking to becoming, I think you just said, a $750 million company. So just what is the strategy to achieve that? And if we have some major milestones or timing?

So I think that, obviously, we want to grow the base in the market. So we need to sell more, get more traction in each of the products that we have. This business should be growing to $10 million, $20 million in revenue and opportunity by getting into the larger accounts. I think the lighting market could expand into Europe very well. I'd like to get -- open a sales office in Europe and go after Europe with our SENTI product. So expanding our sales team once we get that. It's important to remember that we're in North America and in Africa. We're in telecom and we're in lighting. There's many other IoT use cases from that perspective. Signing up rollouts like the partnership with Pico and those kinds of things and getting more of those integrated OEM partnerships where we're very sticky and it's an integrated product, is quite significant. And then I think the last piece, which I want to talk about here is bringing the financing partnerships to the table. So the Hotspot deal that we've announced, which will actually be our Nano-Grid product, that closes this year, like that's a -- in and of its own that the hotspot contract is quite significant. Would it be the largest contract we ever did? Yes. It would be the largest contract we've ever done. So it's multiple million dollars. And a big part of what we did was to bring financing to the table. So we are in the business of selling Energy as a Service and our financial model is to sell that Energy as a Service with a significant upfront onetime cost. Obviously, there's a big market opportunity to do more of an ongoing service fee with less upfront cost. And that is part of what our growth plan will be. And so expansion into Europe, expansion into Southeast Asia, expanding the footprint of the sales in the markets that we have as they grow and they mature, SENTI, Pico, the micro product, the mass conversion from diesel to solar, making sure we get 30% market share of that. And then moving from less onetime, you must go out and find the financing to us providing a finance package, probably with a subco that has the debt and equity financing in it so that it's not being carried by the shareholders here because project-based financing is not what you want to do for a tech start-up. You want to deal with that in a separate model, sister company or something like that. But all of those put together, this still has the potential even more so than ever before. Clear Blue, $100 million revenue in 3 to 5 years is totally a still realistic opportunity for us to go after. And the key is the inflection point. We haven't had the inflection point in the last 4 years. If you look at the sales funnel, the inflection point is in front of us very, very soon. Now we just got to deliver and prove it.

Okay. And this is the last one we have in the queue so far is can we replicate the relationship with -- have the Eutelsat with Starlink? Or have we kind of considered that opportunity?

No. Starlink is in a portfolio of companies that has a power company in it. It's related to Tesla and Tesla has its own energy services business. They have no interest in working with anybody outside as a vendor. And our investment and focus right now is to grow our relationships in Europe and Africa and other markets to be a strong and good player in North America, but that's not a partnership I would seek out.

Okay. I think that's all the questions that we have in the queue. So if anybody has any last-minute questions, please feel free to post them either in the chat or in the Q&A section of the meeting.

And please don't hesitate to reach out to me, [email protected]. I do try to text or speak to anyone that wants to get in touch with me any time. And I do want to say, first to Farrukh, who -- without him, we would not have finished this restructuring or even come up with it. We had some guidance that put us down in the other direction. Oh, there's one other thing I need to say to everybody and to the whole team of the company. But customers who paid us early, employees who went without paychecks, employees who said, take my -- pay me in shares from my expenses, suppliers who've taken deferred payment or converted some of the early monies that we still owe them from COVID into shares. And shareholders, every convertible debenture holder converted their debenture into shares on a voluntary basis, 100% support. So I'm a very, very lucky and honored person. I serve at the pleasure of the shareholder and the stakeholders, and I don't forget that any day. The one thing I will say is we had 2 independent directors, Mr. Steve Parry and Jane Kearns, who had been on our Board for many years, probably time to get some new blood on board anyways. They stepped down in October, November. Mostly -- well, it doesn't matter, they did. It was time for transition. We wanted to get through this phase, and we will now be looking to bring on at least 2 new independent Board members. In the meantime, please know that we went out into the marketplace and asked a few friends and advisers of the management team, one who was a VC that was a Board member that I've reported to in the past and who's been very tough on me through my career, but helped me to be a better person to come in as advisers and advise. So although the Board is right now just the 3 co-founders, so we're going to be fixing that as quickly as we can. But please know that we have sought everyone's advice to make sure that we are doing all the good things that we need to do through this process. So I thank everyone for their patience and support of Clear Blue and myself and the rest of the management team. Have a great day. Happy May 1, and I look forward to speaking to you at the end of May with the news, hopefully in between.