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

Good morning, everyone. This meeting is being recorded and will be posted on our website afterwards. I want to welcome everyone to the 2025 Q1 earnings call. My name is Miriam Tuerk. I am very honored, and I serve at the pleasure of all of our stakeholders and shareholders to be Co-Founder and CEO of Clear Blue Technologies. I am joined today by Farrukh Anwar, who is our CFO; and Jonathan van der Veen, who is our Marketing Director and who is going to help to curate the call. As always, we would like to be able to tell you what the future holds 100%. We'd all be billionaires if that was the case. We do our best. We try to give you the best outlook we can, but please take into consideration forward-looking advice as a standard for a publicly traded company. I'm going to go through Clear Blue 2.0, why we're talking about Clear Blue 2.0 and what that all means. We're going to go over a discussion of our Q1 2025 results and then talk about the outlook that we see in front of us. After that, we will go through any questions that you post. So please post your questions to the Q&A. And at the end, Jonathan will rapid fire them to Farrukh and I, and we'll do our best to give you all the answers and information that we can. So why are we talking about Clear Blue 2.0. Well, if you are a current shareholder in Clear Blue, you have been aware of the fact that the company started to hit its growth trajectory just before COVID hit. And so COVID year 2020 was supposed to be the year that we took off, and we saw a very, very strong trajectory. And between 2020 and today, and the end of 2024, we hit a number of bumps along the road. We worked very hard to make sure we took the lemons that we were encountering and turned them into lemonade. And -- but we were forced to make some hard decisions and do some financial restructuring, which has now been completed. So there are strong assets and things growing out of that period, and now is the time to basically put that all behind us, move forward and deliver on the trajectory of growth that the stakeholders in this company believe in. Participating and supporting Clear Blue is not for the faint of heart. If you are a shareholder, you know that you have to have long-term patience. This is not a quick pump and dump story, and the results take time. If you are a customer and an employee or a supplier, an investor, a lender, you have to be supportive of the company. The reason why you have done that is because the future opportunity for us is a $1 billion marketplace. And we have made sure that we have a set of products and markets that give us some diversification and diversification is a big theme now. You'll see it all over the Canadian government in terms of our export markets and where we go. Clear Blue already did that and had the foresight to make sure that we weren't just going after the North American market with 70% of our revenue in the U.S. So we have 3 clear trajectories. Number one is smart solar lighting. Now solar street lights have been around for quite a long time. And it's an okay market, but it's not been a high-growth market. There aren't a lot of players out there that have seen -- in fact, I know of none that have seen high growth. We've done some strong competitive analysis to make sure we understand where we are. And Clear Blue is a leader in that market, but the business is pretty small. Is that going to change? Well, we can't forecast the future. But if you look at cell phone technology, wireless communications and other things, Internet adoption, eventually, it becomes the de facto standard. And when it becomes the de facto standard, it moves from the peripheral companies and people deploying the technology to the mainstream guys. So who are the main stream people who install and operate the millions of street lights there are in the marketplace? It's departments of transportation, and telecom -- sorry, departments of transportation and energy companies. So going mainstream is about tackling that market, and we think we're positioned to be #1 with those players in that market. When it comes to zero diesel, almost every single telecom tower, and there are millions of them because there are billions of people, over 1 billion people in Africa, is powered by a generator that runs on gas, diesel. And that dog does not hunt anymore. It doesn't hunt not because of the green aspect of it. I mean that's part of it. But the reason it doesn't hunt is because you -- the business model will not work. Diesel generated operated telecom infrastructure loses money. And so there's a huge move to get off of diesel. And the company that is focused on energy performance and getting maximum solar energy and minimizing and taking to zero diesel is the company that's going to be the strategic partner to those telecom operators, and that's who we want to be and what we are focused on. So whereas other companies in our space might be power equipment suppliers and software delivery people, we are energy, service, management and performance focused. The last, and I have to say, Mr. Trump has provided some -- put some fire underneath this is the world's infrastructure is going satellite for Internet services. I'm speaking to you from a cabin in Northern Canada. The mosquitoes are out, ferociously, I must tell you in the last 24 hours. And I am speaking to you over Starlink Internet service that is better than the fiber I would have in the city. Getting Internet to every single village, town, person in the world is of huge demand and growth. It's no longer a question of if or even when it is now. And the Europeans are investing significantly around Eutelsat and around this market, and we are a partner of Eutelsat. So that is our third plank. So as we go solar lighting mainstream, you're going to see 2 key things. One, Department of Transportation, energy utility companies, those are the key high-growth, high-volume where you're going to sell tens of thousands. And then the second part of it is product evolution, where you -- it's got to be simple, it's got to be easy, it can't be technically complicated. So we've done a lot in that, and we are getting -- we invested in a new sales model, some additional salespeople, new go-to-market, we built a partnership with Cooper, who is a leader in this market. Cooper is now recommending us to their major energy utility, DOT customers as the company to work with for solar street light. And in Q1, we shipped a nice group of projects, Ajax, Hamilton, Queenston Heights, O'Chiese Nation, City of Bath in the states, those all shipped in Q1. And Duke Energy and SAS Power, again, I wasn't talking about utilities 2 years ago, and now we're talking to many of them. They both had systems go live with us, first projects and pilots to validate the technology and evaluate where we're going. When it comes to the road to zero diesel, as you know, we've expanded our product line by adding Micro. Micro is the technology that on the hardware side, was developed outside of Gothenburg, Sweden. So the Volvo quality is in this product. It's a Cadillac in terms of the hardware and the engineering that's gone into that product from a hardware perspective. We have now implemented our software and our cloud services, but it gives us that diesel hybrid capability. So prior to Micro, we were doing solar only, which is our nano business, still a really good business with strong profit margins. But Micro is what gets us into the diesel. In Q1, we had critical deployments in South Sudan with the Micro product with iSAT, who is a key strategic partner of us, and we expect to see more and more business from iSAT going forward. It's a very strong integrated partnership where they see us as key to their future going forward, and we feel the same way. On the satellite side, Eutelsat is a key focus. It is not our only focus. Everything we are doing around this product is to go after an entire market. We have other satellite vendors in IoT, small volumes of projects and things going on that were dabbling. But obviously, you want one big customer to kind of lead the charge. And for us, that is Eutelsat. We started off working with ViaSat. We had a relationship with them. They were going to be the company. Last year in April, they had a catastrophic failure with their satellite technology, and what was supposed to be a large massive rollout became zero. Thankfully, the satellite industry, other than Starlink, has a bit of a coopetition model, and the Eutelsat people and the ViaSat people know each other. And so Eutelsat is really ramping up a significant focus around both their LEO, Low Earth Orbit technology. If you watch their stock, you will see that it had a huge jump in Q1 because the Europeans are going to be backing Eutelsat, are backing Eutelsat with their OneWeb Low Earth Orbit technology to provide an alternative to Starlink globally. And we are working with them on a very, very tight product integration between our product and theirs that has a projected $25 million of revenue for Clear Blue in the next 3 years. So in terms of Q1's progress, there's a joint product development initiative that's going on. Eutelsat's fiscal year is July 1. So everything is in kind of kickoff mode, but we did a lot of planning and ramp-up in Q1, a couple of pilot sites being tested. So that's our Clear Blue 2.0. I'm going to turn it over now mostly to Farrukh to talk about our Q1 results. I would say that Q1 was a solid quarter. We're not making guidance forecast at this point. It's not appropriate given the current market trends and certainly not for the stage that we're at. But obviously, we have internal targets, and we met our targets for Q1 for what we see from a trajectory perspective. So from a Clear Blue perspective, we're happy with the results of Q1, given where we started at the end of Q4. And if we can just repeat our ability to meet plan like we did in Q1, then our outlook will prove that 2025 delivers what we needed to deliver. So I'm going to turn it over to Farrukh, and then I will talk a little bit about what we do see from an outlook perspective in the future.

Awesome. Thank you so much, Miriam. So yes, as Miriam stated, you can see that Q1 revenue totaled around $1 million, representing almost a 30% increase over Q1 2024. However, on a trailing 4-quarter basis, revenue declined to $3 million, down 50% year-over-year. This is largely reflecting the residual impact of the financial restructuring measures undertaken in 2024. Management anticipates a return to historical seasonality with the majority of revenue expected in the second half of the year, and this would be consistent with past trends. If you can look at the graph on the top, you can see our last 2 quarters are significant, and so we expect that trend to continue going on forward. Miriam, next slide, please. So if we look at our -- if you parse our revenue and you look at our revenue on a segment basis, so we can see the North American lighting segment is showing strong growth. This is driven by adoption from utilities and transportation department, as Miriam spoke earlier about -- all right. So this growth is further supported by SENTI all-in-one solar lights, which is delivering a compelling value proposition in terms of ease of deployment and reliability. The telecommunications vertical remained -- it came down slightly, but it remained relatively flat in Q1 2025, though the pipeline remains robust and multiple deals expected to close in the second half of 2025. Management believes both verticals will continue to be a strong growth contributor, revenue contributor, with the lighting leading near-term momentum and telecom contributing more meaningfully over the medium term. Next slide, please, Miriam. So we can also see an increase in aluminum street light -- aluminum solar light due to increased awareness of our product and solar grid parity in Canada and the U.S. The decrease in Nano-Grid is attributable to timing of customer deployments. Nano-Grid customers had delayed rollouts due to funding delays. And as we work closely with these customers, we are seeing that their funding has resumed and rollouts will follow soon. While normal sales cycle is typically 18 months, as you can see, Micro has already seen a significant growth, and it has become a significant contributor in our results, especially in -- we expect this trend to continue in 2025. So Micro is expected to be a very large component of the company's revenue, and we are quite bullish about its potential. Next slide, please, Miriam. If we look at our Illumient's and EaaS recurring revenue. So the recurring revenue is the revenue that the company earns from its Energy as a Service and Illumient's ongoing management service and cloud software. Every single system Clear Blue has ever sold includes an ongoing services component. Clear Blue manages and operates the power systems on an ongoing basis for our customers. Recurring revenue includes all revenues from existing installed systems that are under ongoing management by Clear Blue. Customers will sometimes undertake to expand the capacity of the sites as telecom traffic grows, and these onetime transactions are included in Clear Blue's recurring revenue. In Q1, we can see that our recurring revenue was $164,000, which was down year-over-year, and trailing 4 quarter recurring revenue was also down at $622,000, a decline. This decline is mainly due to this onetime transactions. In the comparative period, there were some large onetime transactions where the customers expanded their sites. And so this is just timing, and we expect in the future that recurring revenue is expected to increase every quarter as Clear Blue sells more units with a subscription model and the company's base of the telecom installations grow. Telecom systems tend to grow their capacity and power consumptions, which also increases the recurring revenue for Clear Blue. Miriam, do you want to talk about our bookings?

Sure. Our bookings are down slightly from the end of the year. It's not -- it's just a bit of lumpy timing in terms of orders coming in. We had a book of orders at the end of the year that we were shipping in Q1 and Q2 and into Q3. But new orders this fiscal year, people do their capital budgets, their planning, et cetera, et cetera. So we don't expect that this will -- is an indicator that our revenue is going to be down going forward. We think exactly the opposite. I will still remind you that this number is much higher than it was a year ago. Back to you, Farrukh.

Miriam, the next slide. Yes, thank you so much. So if you look at the margin trends over recent years, Clear Blue has consistently improved its profitability profile. Despite inflationary pressures and rising input costs, the customer has -- the company has demonstrated an ability to either innovate on cost reductions or pass a portion of the cost increases to customers. Thanks to its strong value proposition, the company has built around its software and service. So management notes that while the current margins are healthy, future quarters may see temporary pressures on new product lines like Micro and Pico, SENTI scale. These products initially carry lower margin but expected to normalize as volumes grow and supply chain efficiencies are realized. So our Q1 gross profit was $551,000, which is a 63% increase over Q1 2024. Gross margins expanded to 52% from 42%, driven by a favorable mix of higher-margin service contracts and operational efficiencies. The increase has also benefited from several software-only Energy-as-a-Service solutions sold in the telecom segment, which carries significant high margins than hardware. Compared to the trailing 4 quarters, gross margin also improved to 52%, up from 46%. Next slide please, Miriam. So if you look at our operating expenses, so Q1 operating expenses fell to $952,000 as -- which is the $329,000 year-over-year reduction, driven by cost controls in R&D, professional fees and salaries. On a trailing 4-quarter basis, operation -- OpEx expense -- OpEx also decreased by around $996,000, which mostly -- with most of the savings from headcount optimization and reducing bad debt expense. Increase in business development and marketing spend reflected strategic investments in growth. Next slide, Miriam. So if we look at our EBITDA, so our Q1 EBITDA was $242,650, a strong recovery from a negative EBITDA of $500,000 in Q1 2024. After excluding a noncash and onetime items, adjusted EBITDA came to a negative $386,000, representing a 46% year-over-year improvement from a negative $712,000 in the prior year. The improvement reflects early gains from operational restructuring, disciplined cost controls and more profitable sales mix. The EBITDA figures include a $632,000 onetime gain from our debt restructuring, which is excluded in our adjusted EBITDA to reflect the core operating performance. Overall, the trend reflects positive momentum towards adjusted EBITDA breakeven, especially as recurring revenue scale and fixed cost leverage improves. Net loss for Q1 narrowed significantly to $19,000 from $1.17 million in Q1 2024, which is a significant improvement. Miriam, next slide. So now we can see that our positive EBITDA, cost controls and other things that we did, and you can see the improvement. It's because we were finally able to complete our financial restructuring. And when we did our financial restructuring, we can see that we were heavily supported by all stakeholders. So our customers, our shareholders and lenders, the government partners, suppliers, employees, everybody contributed, and we were able to achieve our financial restructuring that we set to -- that we started in November of last year. So the different aspects of our restructuring were cost reductions and operational efficiencies. So expense reduction, we did expense reductions, conversion of our debt helped us save around $1 million in interest, headcount reduction, cloud service migration and open -- to open source from the current ones that we're using. So the total annual cash savings were approximately -- we are expecting approximately around $4 million in the annual savings based on this cost reduction measures that we did. We also completed our debt and equity restructuring. So we started off with our convertible debentures and interest of almost $7.2 million that we converted into equity and warrants. Then our shareholder loan, our external debt, all of those were converted into shares and warrants as well. And then Flow Capital, our royalty partners, they converted into equity as well. So furthermore in Q1, we were able to convert our banking facility with a comprehensive package with RE Royalties, our partner now. And so we were able to convert a $250,000 into a term loan, $313,000 into royalties at 0.075% and then $250,000 of that bank facility was converted directly into equity, plus we raised another $125,000 as a short-term bridge as part of this deal. Furthermore, we were able to do -- complete our loan extensions and interest reductions with BDC coming on board in Q1. At the end of Q1, we were able to extend our BDC loan as well for 2 years. So that helped us in wrapping up our financial restructuring as well. And the other thing that we did was, this was subsequent to quarter end. We did a share consolidation, which is a 6:1 reverse split, and we did a private placement at the end of the year as well. So based on all of those things, we were -- we finally can say that a significant restructuring that we started at the end of the year has finally been completed, and we will reap the benefits of this in 2025 and going on forward. Miriam, if you go on to the next slide. So we -- subsequently, we completed our 6:1 share consolidation. And after that, you can see the effect of that on our shares. Our shares have gone down to 77 million, our share options at 1.3 million. The average strike price is around -- weighted average strike price is around $0.85 -- is $0.85. And for our warrants, you can see our average strike price is around $0.36. So this is how our cap table looks like at the end of April. Thank you, Miriam, over to you.

Thank you, Farrukh. Okay. How to give an outlook without giving you an outlook. I don't want to make promises that we cannot meet. And I think that from my perspective, from Board's perspective and from the input that we've got, our view is that we need to make plan every quarter for 3 or 4 quarters. And by the time we get to October, November of this year, where we've delivered a solid Q1, a solid Q2, a really good Q3 and an outlook on a really good Q4, and we have indeed delivered the plan that we have for 2025, I think that's step one and the most important priority in the company. At this point in time, there is nothing that we see that will stop us for making that, but it's May. And I would like to be able to announce our results looking backwards as opposed to forward outlook to make sure that we've actually delivered on it. I believe that's what's going to happen, but we're going to keep our head down and deliver it. So our objective and outlook is that we are planning on delivering a strong year with good top line growth, for sure, good bottom line EBITDA. Target is to make it EBITDA positive, and that will validate that Clear Blue 2.0 from a go-forward perspective will go -- will move forward. In order to do that, we have the 3 components we need. We have 3 strong diversified planks with what will be 80% of our revenue outside of the U.S. U.S. is still a nice market, we love the market, but we want to be diversified in our business. Clear Blue has already been built that way. We don't have to pivot in order to achieve that objective. We always felt it was important to have multiple product portfolios markets to make us a resilient growing business. So those 3 trajectories, as I've talked about quite a bit, solar lighting in North America, road to zero diesel and then satellite internet. So that's our outlook and our plan. Really appreciate everyone's support. I do have to say thank you to everyone. We had strong support from everyone. And part of that strong support is also tough questions and tough answers and good discussions. So we have surrounded ourselves with a portfolio of people who are going to do the things and tell us the things we need to hear in order to be successful. Jonathan, are there any questions?

Yes. We've got a couple in the chat here. We'll start off with one from [ Russ. ] So he's saying, at $7 million in top line revenues for 2025 will the EBITDA be positive? I'll let you answer that one. There's a couple in this one.

So we had, for many years, had a plan where our EBITDA positive number was in the $12 million to $13 million range. Always thinking that within the next 12 months, we would achieve that. We, as Farrukh has said, reduced our annual operating expenses significantly. So yes, below $10 million, in the $7.5 million, $8 million range, we believe that we are a positive EBITDA, positive cash flow business at that model in that plan.

Awesome. And then kind of a continuation of that one. So because we just have the $1 million in gross revenues Q1 2025, kind of what is the plan to getting to that $7 million over the next 3 quarters?

So if you look back, and it's hard to see because of the lumpiness, sometimes there's always a lump. But generally, just going back here, you will see that the back 2 quarters are higher than the first 2 quarters. The back 2 quarters are higher than the first 2 quarters. Yes, there was this one order, but the back 2 quarters were higher. Then we had the downturn, the back 2 quarters were higher financial restructuring. Our historical trend is that -- and we just look at how busy we are, how much we're shipping, that the back 2 quarters, the back half is significantly larger than the front half. And so if I take any one of these numbers where we see back half growth, we anticipate that to be the same. So the numbers we achieved in Q1 were what we had targeted, and we do anticipate that they are going to go up quarter-over-quarter over the next few quarters if we are able to make plan. Currently, our outlook for Q2 and Q3. I'm going to put the 2 of them together and say, Q2 and Q3 collectively will achieve that plan. At this point in time, shipping time lines, there's a bunch of stuff in June that might slip to July, but -- and it's hard to be able to provide that forecast. But our Q2, Q3 is looking very solidly positive to meet our plan, and the back end of the year should be able to deliver what it delivers. So we don't see anything at this point in time that would not allow us to deliver revenue at a higher end, which would show significant growth over last year with a positive EBITDA or near breakeven positive -- slightly positive EBITDA for the year.

Then on a trailing 4-quarter basis, this is speaking to the decrease in recurring revenues. I think we answered in the slides, but if we could just go over that maybe one more time.

Yes. So the asset the company has on an ongoing basis is the fact that there's a site and we're managing and operating that site. And as those sites have a 5-, 10-, 15-, 20-year life, we're operating and managing those sites on a 5-year to a 15-year life. Some of those contracts are very flat. Every month, it's the same amount of money from a recurring perspective. But in telecom business, I kind of like that business because they keep growing. So when a customer comes to us and says, well, this existing installation, we're adding 4G or we've increased our revenue significantly. So we're increasing our capacity. They will have a capacity expansion. So once you get a license to operate that site, the growth of that site is part of your ongoing revenue that you're harvesting from that installed base. And we call that part of our recurring revenue. So because of onetime expansion of systems is included in this number, you will see a lumpiness in it. So when it -- and that's why you really need to -- I have to get my graphing people to kind of give you a trajectory, what you need to do is to take this and kind of look at the upward general trend, not the up and down aspect of it. So we're going up and to the right in our growth, and that's what we're tracking and quarterly will be a little bit lumpy, but it is going up into the right.

Awesome. Okay. We have one from Fred here. So is there any discussion with the government regarding Clear Blue's opportunities in making Canada an energy superpower based on the government's recent announcements?

Not yet. Certainly, from an R&D perspective, we have always had a strong relationship with IRAP in NRC. I should also comment to everyone because this is a question someone has asked in the past. We are expecting our next installment for what used to be called STDC and is now the Green Fund in NRC IRAP before the end of the quarter. So we've met our milestones, we've met our technical deliverables, we've been reviewed, everything is good to go. We're just waiting for the final approval and release from them, and that will be $1.3 million of cash that we are expecting in June. So the technical aspects of what we do are strategic. We've seen a pivot in the government on diversification. So some of the small grant funding, some of the investments that they're making around trade shows, we get support from them around those things. Very clear message. Show me your diversification strategy, and those companies who have the opportunity from a global trade diversified will be getting support. So there's a keen support for us and a keen support for our technology from an R&D export trade perspective. From an internal infrastructure perspective, I think we're all waiting to see how quickly we can deploy on large infrastructure projects, and Clear Blue is obviously going to be working very hard to support that. Our partnership with SAS Power has been huge for us. SAS Power came to us a year ago and said, we want to shut down these power lines in Northern Saskatchewan because they run for 50 or a 100 miles just to power a telecom site and they cause forest fires. Obviously, with what's going on now, Eutelsat, as an example, came back to us after the massive power outage in Spain that happened a month ago, and is escalating their need and expanding their intentions around having reliable off-grid power. So the ring of fire expanding for infrastructure, supporting rural businesses in Northern Alberta, Saskatchewan, Manitoba, is a big part of our business. We have done the O'Chiese Nation project in Alberta, and we hopefully will have more phases of that. So we are working on a number of indigenous First Nations projects and support there. But I mean, that's all got to flesh out in the next little while. Canada could do more, let's put it that way.

Awesome. Then we have another one from Fred. So what is the sales pipeline with a high probability of win for remainder of 2025 and 2026? And kind of we can combine these 2, we mentioned Duke and SAS Power in our slides. So maybe we can answer those 2 together.

So I went back -- I had someone say to me, well, like last of September, October, you thought you were going to do this and what happened? We are being ruthless in trying to adjust our forecast for high probability sales funnel based upon our historical experience. And it's not -- I haven't been that way for a long time, but I can tell you that when someone says I'm going to get an order, if someone in Ontario says to me, "Miriam, we're good to go. You're going to get a purchase order and a deposit in 2 weeks." I know that 90%, 95% of the time, that's true. The very first time someone said that to me in Africa, I didn't know that -- that's a completely different discussion. So we're trying to make sure that our funnel is good. Our funnel is very strong. If we got -- if I just took our funnel and the waiting for it, we would do well over $10 million in revenue this year. The thing that is difficult to gauge is the timing of these projects. I'll give you an example. I had one project where it was -- it's not in our core plan, it's not in our focus this year, but -- it's not in our core plan for this year, but it is a very large opportunity. And we think it's going to happen. We thought it might hit in Q4, and that would have been over $10 million revenue for the company. Everything is moving forward and all of a sudden, the -- in -- the guarantee, so the financial payment guarantee party said, you've got to go get an equity investment. Well, we all know raising money takes 6 to 12 months. So that project, which was like draft contracts, detailed engineering, all of a sudden went back. So we've done everything possible to make sure that we are not diluting ourselves and that we can make our revenue and our plan. And currently, our high prob funnel would be sitting at around $15 million for 2025 and at least another $15 million for 2026. Scrub that down, scrub that down, scrub that down, assume it moves out and we still feel like we're going to have a good year. That by the time we get to October and November, I will be able to look at you and say, we said this was Clear Blue 2.0, that we're on a new trajectory, and we now have 3 quarters behind us that shows that we're on that trajectory. Everything I can see at this point tells me we are going to be able to do that.

Awesome. Would we be able to go into details about Duke and SAS Power a bit more...

Sure.

The partnership looks like?

So SAS Power, we did our first projects last year, and we have another project that we believe we're going to be doing this year. Are -- there's been a lot of education in working together on things. And I think where we're at is, assuming -- they want to see how a Saskatchewan season affects street lights -- solar street lights because anybody who's been in Saskatchewan, and it's -- I'm not kidding, you'll go from minus 20 to plus 35 in a week. That is not good for power systems. So I think there's just slowly moving forward as these things are validated and done, we have another project this week. So SAS Power is a customer who I would put in that we are going to be doing more business in the future. Duke Energy has seen many companies come by with supposedly wonderful things work and then not work. So they're a little bit more experienced. Duke Energy is Southeastern in the United States. So we're talking Florida, Georgia and those kinds of places, and there's multiple energy companies. And so they have basically said, "I need something robust. I need something utility grade". It's got to be utility grade. And there's lots of vendors out there that are not utility grade. We are utility grade, and the remote management and control is critical. So we've been working on a couple of pilot projects with them. And obviously, they have a real input of what they want to see from a product. So we're doing joint product finalization, tweaking things. And by that, I mean like they want through hole bolts instead of strapping and things like that. And as long as the pilot does well over the next few months, we believe that we will start to see projects with Duke next year. We're having a webinar on the utility and transportation industry and what's required next week. We are seeing a lot of interest from that market because they've all seen their customers, which are the municipalities are buying solar street lights all over the place. And so they've recognized in the same way that at some point, and I was there when it happened, Bell Canada recognized that Bell Mobility wasn't just this other division, it was the core business of the company. The utilities are recognizing that solar, off-grid power infrastructure has got to be a core business that they're doing. And so Duke is going down that path. Nothing is assured yet. But what got us to the table was the fact that Cooper, who is their lighting partner, recommended us and said, we believe that Clear Blue is the one to work with. And it's important to understand that in the case of Cooper, we had done this Nevada DOT project. So Cooper has -- we've done 2 of their interchanges. So Cooper has on the ground references and feedback of what we've been delivering for the last 6, 7 years. These systems work, they work reliably. This is actually in Nevada, and it's in the north of the top of the mountain so it gets really cold and then it gets really hot. Again, very extreme temperatures that we know how to operate in. And so Cooper's recommendation to Duke Energy got us in there in a strong way. But we're still waiting to hear how that goes.

Great. We have a question from Brandon. Just shifting gears to the financial statements. So how are we thinking about the remaining debt on the balance sheet?

Farrukh, do you want to make a comment on that?

Yes, for sure. So if you look at the debt, so when we look at debt, we basically look at debt servicing, right? So the biggest debt that we have is FedDev and FedDev is interest-free over -- repayable in the next 10 years. Very low installments for the next year. I think for this year, it's only $1,000 a month, and next year, it's $2,000 a month. So that's the biggest like it's a $4 million debt that we have. That's that. Then we've got BDC. BDC is our partner as well. They own -- they've invested in the company as well. And so the BDC is basically -- and they've restructured their loan at the end of Q1. They -- it was previously repayable in 2026, now we've got more -- we've got -- we extended to another 2 years. And that too with graduated increase in principal repayments and it's basically floating interest rate. So the interest rates are going down, so that's helping us with our debt servicing as well. And then there's the small loan from SOFII, which is around $500,000. So that's that. And then now we've got this RE Royalty loan, which we've converted from our -- Scotiabank, which was our banking partner. So now that's a smaller loan, it's $250,000, and that is repayable. Our intention is -- our idea is to convert that into -- once we improve our EBITDA, which we are doing right now, we would be in a position to go to another bank and get a traditional banking support. And that would be converted -- the $250,000 is going to be converted into a business line or something like that, which we expect to do in the next couple of months, start that process. So I think looking at our debt, it's manageable and it's not due anytime soon. We've got a healthy leverage. So if you look at companies, there needs to be a good leverage. And right now, after restructuring, I think we were the right-sized leveraged company.

I think it's important to understand that while we had to -- when we raised money, we had -- we stopped -- at the time of COVID, the market stopped being willing to do pure equity. So we did convertible debentures. They were always intended to convert. They converted in December. But we didn't want to convert 100% of our debt because that would not have been equity friendly. I think the key thing is the BDC, who is our biggest lender, is also now our biggest shareholder. And we had friendly debt. So they are working with us, but we, as a management team, want to pay down our debt and bring it down each year in a reasonable basis and make sure we've got a good trajectory so that when you're looking at the value of the company. So we've got it to a point where it's a good size. There is some payment that's being made, but we've got -- and I think mostly all the vendors looked and said, okay, let's make sure we structure something for 2025 and 2026 to get through that. And at the end of that point, you really should be able to have some free cash flow to pay it down. So we got good terms for all of 2025 and 2026. Not 0 because you don't want to just make it worse. We got to pay it down, and we are going to be actively doing things now that we finish all the structure, everybody is going to be getting payments. But they're at the table supporting us as long as they can see progress in every way, which is what we're focused on.

Perfect. Thank you. Okay. We have one from [ Bob ] here. So this is directed at the telecom side of the business. So what is the guestimate on operating cost reduction on the solar diesel hybrid systems and the IRR payback versus the cost of the equipment that you find at a typical tower site?

Implementation of solar has generally got an IRR payback of 1 to 2 years. Oftentimes, it's 10, 11 months. So the IRR is extremely compelling. The biggest challenge is a lot of people, and this is kind of wave one of what's happened in the market, is they go off and they take all their diesel sites and they just add a bunch of solar panels, and they think a miracle occurs and all of a sudden they're good. A telecom site is got to be the ugliest solar installation you could possibly think of because it's got a tower in the middle of it, which is shading. So we're working with a number of partners who are saying, "Look, we've been working on -- so you can think about this side here on the right-hand side. These 2 brown poles here are supporting the solar panels that are over top of this site. This orange thing is the telecom tower". And so it's towering over those solar panels. So what we see happens is that most of the customers do the solar refresh, and then 3, 6 months in, find out that they've not improved their diesel operations at all. And so bringing Illumient -- and when we acquired Micro, great technology, no energy management tools, forecasting -- energy forecasting, energy management, troubleshooting remediation. So the road to zero diesel is about actually once it's installed, making sure that you're actually delivering on that diesel value proposition and getting rid of it. And that's not so easy. So most customers think that they can do it quickly. We have one very large customer who did a massive program, spent a lot of money on a green project and got 0. So we are working with those partners to demonstrate -- if some of you will remember that in the solar world, 4 or 5 years ago, we produced a study -- Facebook did this independent study that showed that we got 40% more power out of the same size system as anybody else. So you take the same number of batteries, the same number of solar and you put it on a site versus a Clear Blue site that had the smart management, we delivered 40% more power. We are now working to take that value proposition and implement it with diesel. And so we're not at zero diesel, we're on the road to zero diesel. And that's a key part of our R&D investment and our operational value prop.

Great. Can we have a more general one now here? So what is driving the increased demand for Clear Blue smart lighting in North America?

Two things. One, new products, new fit, form and function. So we brought out our SENTI product, which -- these are 3 SENTIs. Very easy to install compared to over here where you need a separate solar panel, you need a separate battery, you need a bunch of wiring, all of that's in what's called an all-in-one. So part of it was product. We also brought out a next generation of Illumient. And so the cost price point improved significantly. And then I think the second thing that is driving the adoption is our existing installed base is proof and validation that stuff works. I have a very exciting project that I cannot wait to announce. Hopefully, we'll be announcing it in early Q3. That is a really nice first phase rollout with a large city. And we had done one small project with them in 2018. And last year, when we started working with them, we took that 2018 system and said, here's 5 years of performance. We've made it through 5 winters and 5 summers, your batteries are working just fine. Everything is good. And they had other technologies which did not do that. So proving out that this is a long-term viable -- these systems here on the left and the right-hand side, they should be there for 20 years. The fact that we had 5 years of history was huge to be able to make sure that we were going forward. That's what's fueling it, and that's what's causing people to say, now that there's utility grade levels of product performance and lifespan proven with the management tools of Clear Blue, we can go, and we're moving.

We have another one from Fred here. So asking have we considered approaching the Canadian government in any capacity to utilize Clear Blue in various departments like Transport Canada, federal parks, federal buildings, armed forces, kind of, et cetera.

We have, I think, an armed forces project. Parks and things like that, we've done in the provincial and the municipal level. Very hard to get into the federal government, and they're not the fastest moving. First of all, they're not the largest users, most, like Departments of Transportation are provincial, not federal, right? So anything that's highway based is provincial. But Canada doesn't eat its own dog food when it comes to new technology, we tend to be a little bit slower moving on that. So we are monitoring it. We are pursuing those opportunities, but I don't see a significant amount of business coming out of the federal government. Some of their infrastructure projects that they help the industry do, I could see that, but I don't see federal that much.

Awesome. I have another one from Bob as well. So for the initial and pilot lighting sales into the U.S., what were the impacts of the tariffs on that?

Well, I thought -- so it's been very chaotic. The first thing we did was we shipped everything we could before the Trump tariffs came in. We got, I think, 10 or 12 shipments in, 1 got caught where we got an unexpected tariff. The tariff impact for Clear Blue, the Canadian portion were under CUSMA, it's -- like that's not the big issue. The big issue is you can't get batteries or solar panels anywhere but from China. If you think you're getting the solar panels from Vietnam, you're actually buying them from China, getting the move to Vietnam and then coming in. Like the source of everything starts in China, especially around batteries. Why? Because 20, 30, 40 years ago, all of the big lead acid battery manufacturers, there were a bankruptcy after bankruptcy after bankruptcy because of the environmental damage done related to battery manufacturing and the fact that these guys had to do the cleanup of the environment. And when they had to do the cleanup of the environment, they went bankrupt because they can't spend $200 million cleaning up a dirty construction industrial sites. So that's why batteries are done in China because of that. So we're going to get impacted the same as everybody else. The problem is uncertainty. I have one really large deal we're trying to close. And the question is what's -- I've got multiple deals, but one large one, what's the tariff? And as of last week, we kind of said, okay, this is what we think it is. It's 10% for this, 0 for this, and we put in this number here, and here's what we've assumed. Well, okay, now, am I 0? Or am I 10% or what? So I just decided last night, the only thing I can do is say to customers, here's the number, we'll take the risk. If we do better, we'll give you a rebate. That's where we're at. So the chaos and uncertainty is definitely going to cause issues. It's not fun. But it's not -- it won't impact our ability to do plan, should not impact our ability to do plan this year. Try to take that into consideration.

Okay. We have another one from Fred here. So he was wondering if Eutelsat is funding any of Clear Blue's development costs relating to the satellite products?

So yes and no. The European Space Agency and the Canadian Space Agency have an R&D development fund, which Eutelsat is going to be tapping into, which they plan to give us some money. So we are expecting some onetime engineering fees from Eutelsat, but they're going to come through Eutelsat from the European and Canadian Space Agency. The potential is $0.5 million over the next 12 months for us.

Great. Okay. This one is more financial again. So Bob was wondering what the dollar amount of tax loss carryforward were to shelter future income from tax is looking like, or if...

Farrukh?

I can take that. So we can take this in 2 parts, right? So the first thing is the noncapital losses that we've got available for future users, and that is around $26 million around. So those are the noncapital losses carry forward. And then we've got research and development tax credits, which is around an additional $8.6 million. So we've got these 2 losses and credits carryforward. And we've got around until 2033 through 2040 to take the benefit of these.

Okay. This is the last one that we've got in the queue right now. So just wondering if we can get a quick overview of what the corporate advantage like our moat over other solar energy providers. Wondering if it's just a solar panel attached to a light or if there's more technology involved?

So it's a really good question. And we've been talking about that quite a bit in the company. I think that in the beginning when Clear Blue started out, everybody kind of went, "Well, do I really need management like really, that's nice to have, but do I really need it? And we've now gotten to the point where everybody is saying like, "I got to have it." And so we are frequently in a competitive situation like this one city that I'm hoping to be able to announce a nice deal. They start off looking at 12 products, they narrowed it down to 3 because 9 of them didn't have any remote management. And they said, look, I've just got to have remote management. So the good news is the customer base has moved to a point now where they know they need remote management. What comes with that though is the competition starts to catch up. So we are now seeing other companies being able to talk a little bit about what they have. The story I love to tell is my largest customer in Africa last year at MWC came to me and he said, "I just came from Huawei's booth and they showed me all the remote management and monitoring. It looks really cool. But I looked at them and said, Clear Blue had that 4 years ago." So prior to that, Huawei had nothing. Now they have stuff. So the market is being validated because the customers are saying, "I must have this." And the competitors are starting to come to the table because the market is big enough. We now have competition with the management capability. So you say to yourself, well, what's the difference between Clear Blue and those other guys. And I'll use the solar lighting as an example. If you are going to install a few systems, then -- and you want some remote management, there are more options than just Clear Blue out there. Not many and not as good, but they're coming. If you are Duke Energy and you're looking at deploying thousands of these systems across your territory, you need a utility-grade system that has the network operation center management tools at scale. So whenever somebody comes to me and says, "Well, look, this other company can do it." They will take one light and one system or one site and say, "Look, I've got this app here on my phone, and it's telling me what I'm doing." That's no problem. But if you are a Duke Energy and you're going to do tens of thousands, that's where Clear Blue's Illumient's and what we're building at scale and the ongoing energy service management. So you look at what's happening with Eutelsat. They can't go out and just buy a bunch of stuff and install it because miniature electricity systems, which is what these are, they're basically a micro power utility in a box, need management. And Eutelsat operates and manages their satellite network and service. And so like, for example, the Wi-Fi routers and the satellite modems that they buy aren't the one that I can go buy. They buy the ones that are remotely manageable and controllable in all of that capability. We have that power capability to give that remote management. And in the case of Eutelsat, their African team had deployed many, many systems, and they've got 30% of their sites down after 6 months of deployment of stuff because the power is not working. So what's different about us? The utility grade management operations capability. As I said, when I talked about this road to zero diesel. People go out, they buy a bunch of solar panels. They put it all together, they get it there, they hook it up, and they think it's just -- especially the guys who are solar firms, right? So you get any of these large EPCs who've done these massive solar farms, they set them up, they sit in the field, they're perfect and they connect them to the grid, and they go away and they just get an annuity check. That's not what happens on these sites. So it's that ability to manage from a NOC perspective, a Network Operations Center, the ongoing management and to do that at scale as a utility, that is our key differentiation.

Awesome. And it looks like -- oh, okay, we have one more question just came in from Christian. So wondering if we can provide any more information on the Duke Energy contract?

Duke Energy contract right now is a single pilot proof of concept that is in evaluation. It was installed and went live in Q1, and we expect to hear the results of that pilot test later this year. There's no contract yet.

Great. Okay. It looks like all the questions we have here, unless anybody has any last-minute ones that they'd like to get in? Yes. All right. We've got one from Fred here. So he's saying that we mentioned the goal of achieving a market cap of $750 million within 3 to 5 years and just wondering how we are planning to achieve that?

We're going to make plan in 2025. We're going to come out of this year with trailing 4 quarters of a trajectory that is historical. And we're going to build off of that with strong growth next year. And by the time we get into the end of this year and early next year, we will show that we are on a new trajectory path and building momentum. And as we grow that path and people understand that this company is on the way to $100 million, $200 million, then the market and the stock market will follow. But right now, step one, is make plan, make plan, make plan, show 4 strong top line revenue growth and bottom -- positive bottom EBITDA results for the next 4 quarters to build the base to grow off. And then we will take the trajectory from there.

Perfect. Thank you. I think -- yes, that is -- that's all we have in questions.

Okay. Well, thank you very much. I really appreciate everyone's support and assistance. We have been working. And I do want to say the amount of time and energy and effort by the management team and Farrukh, most specifically as our CFO, to go through what we have done has been herculean. We did an employee survey last week. And the team is solid, the team is upbeat, the team is positive. And it was quite interesting to see how much they believe in and support the future opportunity of the company. We have not had a lot of turnover, which just tells you in the [indiscernible] of the company where they talk to customers every day, we've got a really good, solid business and product. We just need to grow and get the impact of what's happened over the last 2 or 3 years behind us, which is what we've done. Thank you so much. Appreciate it. You can reach out to me anytime. My name is Miriam Tuerk. I'm very honored to be Co-Founder and CEO of Clear Blue Technologies.

Thank you, Miriam. Thank you, everyone.

Thank you, everybody.