Clear Blue Technologies International Inc. (“Clear Blue” or the
“Company”) (TSXV: CBLU) (FRANKFURT: 0YA), the Smart Off-Grid™
company, today reported its financial results for the fiscal
quarter ended September 30, 2019.
Key Financial Results (all figures in Canadian
dollars)
- Revenue for the three months (Q3) ended Sept. 30, 2019 was
$670,159, an increase of 5% over Q3 2018 revenue of $636,944.
- Gross profit was $264,334 for the three-month period ended
Sept. 30, 2019, a decline of 24% compared to gross profit of
$346,984 during the same period in 2018. Gross margin percentage
declined to 39% in the quarter as compared to 54% in Q3 2018.
- Trailing Four Quarter revenue for the period ended Sept. 30,
2019 was $2,699,182, a decrease of 39% over revenue of $4,435,330
in the TFQ period ended Sept. 30, 2018.
- On a TFQ basis, gross margin was $715,912, a decrease of 1%
from $721,678 during the previous equivalent TFQ period.
TFQ gross margin percentage was 27%, compared to 16% in the
previous equivalent TFQ period.
- Net loss of $(6,513) for the three months ended September 30,
2019 compared to a net loss of ($1,391,783) for the comparable
quarter of 2018. This represents the first near-breakeven quarter
in the Company’s history and reflects both positive SRED accruals
booked in the quarter and reduced business development and
marketing expense.
- Net loss of $(7,826,361) for the TFQ ended September 30, 2019
compared to $(4,390,742) for the previous equivalent TFQ period.
$3,550,997 of the September 30, 2019 loss relates to one-time RTO
costs.
- Energy as a Service recurring revenue increased by 25% to
$39,022 for the three months ended Sept. 30, 2018 compared to
$31,330 in the comparable period in 2018.
Subsequent Events
The period following the quarter end on Sept.
30, 2019 was notable for the Company with the following
outcomes:
- Subsequent to quarter end, on November 12, 2019, one major
global telecom operator announced the award of large Rollout
contracts to multiple Clear Blue partners. Clear Blue is currently
in the late stages of the sales process for the power portion of
this project.
- Closing on streetlighting order with a purchase price of
approximately $1.2 million. This is the first million-dollar order
in the Company’s history.
- During Q3/Q4, four new POCs and two new First Install telecom
order was closed bringing the totals to 12 POCs and 5 FIs in
progress exceeding prior guidance.
- Subsequent to quarter end, the Company’s auditor resigned. The
Company is currently interviewing new auditors that will meet Clear
Blue’s long-term needs.
Chief Executive Officer Remarks
Clear Blue CEO Miriam Tuerk commented: "Our
third quarter combined with subsequent events demonstrate a
stronger second half of the year, with the potential for
improvement on both gross margin percentage and net loss. We are
seeing strong customer response in our telecom business segment.
Management believes that these are signals that our technology has
growing customer support, and the accompanying financials are
evidence the Company can be scaled with modest incremental
operating expense and capital.
“As detailed in our Management’s Discussion and
Analysis, typical telecom projects consist of three phases; an
initial Proof of Concept or POC, larger First Installs or FIs and
finally Rollouts. As in Q2, because Rollouts are large, visible
public projects where we bid with multiple partners and have
potentially transformative impact on our revenues, we have provided
guidance on the scale and timing of potential opportunities. While
there can be no certainty we will win one of these Rollout projects
we are encouraged by solid progress on all twelve POC and five FI
projects and our first million dollar order. These projects already
exceed our previous guidance on year end telecom project
totals.”
Q3 2019 Revenue and Gross Margin
Revenue for the three months ended Sept. 30,
2019 was $670,159, an increase of 5% over Q3 2018 revenue of
$636,944. TFQ revenue for the period ended Sept. 30, 2019 was
$2,699,182, a decrease of 39% over revenue of $4,435,330 in the TFQ
period ended Sept. 30, 2018. These results are on trend with the
historical record of increased sales in the second half of the year
relative to the first half.
Gross profit was $264,334 for the period ended
Sept. 30, 2019, a decline of 24% compared to the same period in
2018. Gross margin percentage decreased from 54% in Q3 2018 to 39%
in Q3 2019. On a TFQ basis, gross margin was $715,912, a decrease
of 1% over TFQ gross margin of $721,678 for the previous equivalent
TFQ period. Gross margin percentage increased from 16% in the TFQ
ended September 30, 2018 to 27% in the TFQ period ended September
30, 2019.
Q3 2019 Operating Expenses
Operating expenses decreased $1,423,322 for the
three-month period ended September 30, 2019 compared to the same
period in 2018. Differences relate to the final costs of the RTO
concluded in Q3 2018, accrual of SRED grants for 2018 and the first
nine months of 2019 of $792,476 and reduced operating expenses.
Q3 2019 Net loss and comprehensive loss
Net loss of ($6,513) in Q3 2019 compares to a
net loss of ($1,391,783) in Q3 2018. TFQ net loss of the period
ended Sept. 30, 2019 was $(7,826,361) compared to $(4,390,742) for
the TFQ ended September 30, 2018. Net loss for the TFQ ended
September 30, 2019 consisted of $(4,275,364) operating losses and
$(3,550,997) of one time mostly non-cash RTO related expenses.
Convertible Debenture Financing
On October 22, 2019, the Company completed a
convertible debenture financing for aggregate gross proceeds of
$811,000. Each debenture entitles the holder to acquire one unit of
the Company at price of $0.20 per unit, with each unit being
comprised of one common share and one-half of one common share
purchase warrant of the Company (with each whole warrant
exercisable at a price of $0.35 per common share). The debentures
have a 36-month maturity date and carry a 10% coupon paid
semi-annually.
Outlook
Clear Blue competes in a marketplace where most
competitors focus on large, on-grid systems or on one-time sales of
hardware products. The Company’s focus is on the wireless off-grid
market and the Company’s business model incorporates an ongoing
Energy as a Service where customers receive long term assurance of
reliable power and the Company is paid additional revenue over time
for that reliability. As a result, Clear Blue maintains its first
mover advantage through the experience generated from more than
4,000 units deployed in 37 countries and more than 2 million days
of operating data generated by managing these facilities from our
Toronto headquarters. This data and our operational track record
are significant competitive advantages in every potential sale.
We believe that improving gross margin
percentages and operating expense results are positive signs the
business is maturing and that the business can be scaled. Further
improvements in both gross margin percentage and net loss are
expected to scale with increased revenue. Within this trend,
quarter on quarter revenue variability is expected to be a
continuing characteristic of our business. Management continues to
mitigate this variability through geographic and market segment
diversification.
We are encouraged by the largest single order
achieved to date of $1.2 million to provide solar off-grid lighting
to an area of key infrastructure to a customer in the Middle East
and Africa region. This will ship in Q419 and reflects growing
adoption of this technology.
While our Lighting segment continues to show
strong growth, the largest opportunities for transformative revenue
expansion lie in the telecom segment of our business, in emerging
markets, where the growing trend to wireless off-grid telecom
development is set to bring connectivity to an estimated billion
people. The addition of four POC projects and two more FI projects,
in Q3/Q4, along with the closing of our first million-dollar order
are indicative that our product is winning additional customers
throughout global markets. While there can be no assurance of a
successful Rollout project in 2020, we believe that the positive
results in all active telecom projects is progress toward a
successful Rollout project win in 2020.
Pursuant to the omnibus equity incentive plan of
the Company, Clear Blue has granted in the aggregate 24,000
restricted share units to Steven Parry, a director of the Company.
12,000 of the restricted share units will vest on November 29, 2019
and 12,000 restricted share units will vest on January 2, 2020.
Conference Call
The Company will host a conference call to
discuss its latest financial results at 11:00 AM Eastern Time
(Canada/U.S.) on Tuesday, 26th November, 2019. Those
interested can register
at https://zoom.us/webinar/register/WN_2kumupP4SBG6mQLI0uJGeA
About Clear Blue Technologies International
Clear Blue Technologies International, the Smart
Off-Grid™ company, was founded on a vision of delivering clean,
managed, “wireless power” to meet the global need for reliable,
low-cost, solar and hybrid power for lighting, telecom, security,
Internet of Things devices, and other mission-critical systems.
Today, Clear Blue has thousands of systems under management across
35 countries, including the U.S. and Canada. Clear Blue is publicly
traded on the TSX Venture Exchange under the symbol CBLU.
Legal Disclaimer
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Forward-Looking Statement
This press release contains certain
"forward-looking information" within the meaning of applicable
Canadian securities legislation and may also contain statements
that may constitute "forward-looking statements" within the meaning
of the safe harbor provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking information and
forward-looking statements are not representative of historical
facts or information or current condition, but instead represent
only the Resulting Issuer’s beliefs regarding future events, plans
or objectives, many of which, by their nature, are inherently
uncertain and outside of Clear Blue's control. Generally, such
forward-looking information or forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or may contain statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"will continue", "will occur" or "will be achieved". The
forward-looking information contained herein may include, but is
not limited to, information concerning the prospective operating
results and performance of the Company, including the potential for
a successful Rollout project win in 2020.
By identifying such information and statements
in this manner, the Resulting Issuer is alerting the reader that
such information and statements are subject to known and unknown
risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the
Resulting Issuer to be materially different from those expressed or
implied by such information and statements.
An investment in securities of the Resulting
Issuer is speculative and subject to several risks including,
without limitation, the risks discussed under the heading "Risk
Factors" in the Resulting Issuer's listing application dated July
12, 2018. Although the Resulting Issuer has attempted to identify
important factors that could cause actual results to differ
materially from those contained in the forward-looking information
and forward-looking statements, there may be other factors that
cause results not to be as anticipated, estimated or intended.
In connection with the forward-looking
information and forward-looking statements contained in this press
release, the Resulting Issuer has made certain assumptions.
Although the Resulting Issuer believes that the assumptions and
factors used in preparing, and the expectations contained in, the
forward-looking information and statements are reasonable, undue
reliance should not be placed on such information and statements,
and no assurance or guarantee can be given that such
forward-looking information and statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information and
statements. The forward-looking information and forward-looking
statements contained in this press release are made as of the date
of this press release, and the Resulting Issuer does not undertake
to update any forward-looking information and/or forward-looking
statements that are contained or referenced herein, except in
accordance with applicable securities laws. All subsequent written
and oral forward- looking information and statements attributable
to the Resulting Issuer or persons acting on its behalf is
expressly qualified in its entirety by this notice.
Media Contact:
Becky NyeDirectorMontieth & Company155 E
44th Street, New York, NY
10017bnye@montiethco.com+1 646.864.3517
Investor Relations:
Miriam TuerkCo-Founder and CEO+1 (855) 733-0119
x200investors@clearbluetechnologies.comhttp://www.clearbluetechnologies.com/en/investors
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