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Good morning, everyone, and welcome to the conference call. I will now hand the call over to Wayne Andrews. Please go ahead.
Thank you, Joanna. Good morning, and welcome to the mCloud Technologies Fiscal 2022 Second Quarter Earnings Conference Call. Today, the company will discuss the unaudited results for the 3 months ended June 30, 2022. Presenting from mCloud is: Russ McMeekin, our Chief Executive Officer; and Chantal Schutz, our Chief Financial Officer.
Before we proceed further, please note that remarks made on this conference call may contain forward-looking statements about mCloud Technologies' current and future plans, expectations, intentions, results, levels of activity, performance goals or achievements or any other future events or developments.
Forward-looking statements are based on information currently available to management and on investments and assumptions based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results, levels of activity, performance, achievements, future events or developments to differ materially from those expressed or implied by the forward-looking statements.
As a result, mCloud Technologies cannot guarantee that any forward-looking statements will materialize and you're cautioned not to place undue reliance on any forward-looking statements.
Except as may be required by law, mCloud Technologies has no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. For additional information on these assumptions and risks, please consult cautionary statement regarding forward-looking information contained in the company's most recent MD&A available on SEDAR. At this time, I'll turn the call over to Russ McMeekin, Chief Executive Officer of mCloud. Go ahead, Russ.
Thank you, Wayne. I'm going to go through a quick update, I'll turn the call over to Chantal. She'll provide you a summary of the quarter. I will then go through a number of questions we received by e-mail before we turn it over to analysts for questions.
So let me give you a quick update. In Q2, we effectively had the month of May and June to work with. As such, we connected 2,921 assets and workers. So we're just about 67,000 connected assets and workers. During the quarter, we were pretty diligently working on a negotiation that gave us a USD 6 million a onetime fee with Agnity. This allows us to continue with our AssetCare worker in the box, connected worker in the box with all the technology IP and segmentation of customers that we've defined going forward, and they get to proceed with their traditional business.
And then later on in the call, I'll walk you through how we will get to 90,000 -- or tend to get to 90,000 connected assets and workers, I'll go through region by region to build that picture for you. I will now turn the call over to Chantal.
Thank you, Russ, and thank you, everyone, for joining us here today. We're pleased to see AssetCare Solutions revenue and AssetCare initialization revenue before any adjustments for Agnity showing measurable improvement over the first quarter results and indicating a return to more normal business conditions.
For the 3 months ended June 30, 2022, total revenues as reported included a $2.6 million noncash charge for balance sheet adjustments and the inclusion of about $2.4 million in AssetCare revenues. Considering the adjustment and impact, Q2 2022 revenues as reported were $2.3 million compared with $6.6 million for the same period in 2021. If we look at the quarter on what have been basis, without considering any of the impacts related to Agnity, our total revenues would have been approximately $7.2 million.
Our AssetCare initialization revenues would have been closer to $1.6 million, and our AssetCare Solutions revenue would have been approximately 5.6%. Additionally, I would like to point out that our previously labeled AssetCare overtime revenues have been renamed to AssetCare Solutions. AssetCare Solutions more accurately capture the full range of value that we deliver via connected assets, workers, 3D, analytics, reporting, visualization and more. It's become quite common for our customers to buy solution bundles on a SaaS contract term basis, and we see that becoming standard as our technologies work together to deliver value. As a result, this is how we'll be referring to these revenues going forward.
Our gross margins for the quarter were heavily impacted by Agnity as we were required to pass through $1.5 million of legacy in Agnity noncash expenses through our income statement in Q2. Operating EBITDA for the quarter was a loss of $8.5 million, expenses related to sales and marketing, wages, salaries and benefits, R&D and general and admin did remain relatively consistent. Going forward, we do, however, expect a reduction of around $1.5 million in expenses in the near-term quarters as we eliminate Agnity in our consolidation of financials going forward. Agnity and any adjustments aside, one last thing I want to highlight, we have seen an increase in customer activity and the listing of most COVID-19 restrictions, which, as Russ pointed out, on a connected asset and worker basis are resulting in a positive lift in our revenues and reaccelerating our growth as we go forward from here. That's all for me this morning. So Russ, I'd like to turn the call back to you.
Thanks, Chantal. Let me continue with the updates. So as I mentioned, I was going to track us -- or summarize how we track to 90,000 connected assets and workers. So in the MENA region, we're expecting about a little over 6,500 assets in the workers, that's about 28%. North America, that's heavily weighted in the U.S. about 10 -- a little over 10,000 connected assets of added between now and year-end, 15% or a little over 3,000 workers and assets in U.K. EU.
That's a combination of buildings and wind turbines and then last but not the least, the Asia Pacific region, just a little over 2,500 or 12% connected assets and workers. And as we progress the year, I expect that actually the MENA region, Saudi Arabia could actually have some upside to that, you'll see later. We don't intend to just wait till year-end and let you know how the quarter played out from a connected worker perspective. We expect between now and year-end, a couple very large announcements as well as probably showcases at the customer sites, where you can get firsthand view either recorded or through some live broadcast that we will do later this year. Wayne, who's on the call, will be invited to that, and we'll be able to put that as part of our narrative going forward of how AssetCare is used by a very large and very complicated problems in the world later on this year.
So let me now talk about each region. In Canada, we're seeing -- we're here -- Chantal and I are here today in Alberta. We're definitely seeing back to work. We had a Calgary Stampede event with customers. It was definitely everybody coming back to normal. People were very excited to be back to work. So I think Canada -- I know Canada will then continue to grow from here on in, get back to business and good things will occur. Our customers are quite intrigued by a number of our technologies. They're definitely intrigued with what we're doing in Saudi Arabia with Aramco. They're definitely intrigued with what we've been doing in the U.S. with wellheads in terms of optimizing well. So there's a number of things we've been doing globally that apply here in Alberta, and we intend to use our presence here in Canada to show them all the stuff we've been doing globally. In the United States, we talked about the auto dealers. We're definitely on track for 45-plus dealers by year-end. However, we did have some permitting problems in the State of New York. I think this is part of getting a new segment started with utilities and with the municipal governments in the state of New York.
So -- and we expect all those kinks to be worked out by September. We have a dedicated, very smart team on that, and we expect those kinks to be worked out by September. On the oil and gas front, in terms of connected wells, we have our first set of wells scanned getting ready to go up and live or probably are live now, including workers. You probably saw last week the Congress passed a pretty punitive plan around methane and how oil and gas will be expected to report and track methane, that created a lot of activity. So there's actually people from the U.S. up here this week in Alberta. We have a meeting this afternoon on how we're going to go about using AssetCare for these out-of-sight, out-of-mind assets and how we're going to report and track these so that private equity owners of assets don't have to have an army of people maybe sitting these assets, which is a big driver of a lot of these upstream oil and gas connected assets that we do or wells that we do. Moving over to Saudi Arabia. We started our first 2 Aramco sites. One is a refinery, the other one is gas plant on both sides of the country. We have started 3 non-Aramco sites. And I expect -- and I was in Saudi last week, I expect between now and year-end to be -- that's to be our largest weekly activity.
There's one small holiday. I think it's a national holiday in Saudi on September 23. December is a non-holiday month for them. So the back-end loading of the year is very deliberate as it relates to Saudi Arabia, as that's an absolute busy time of the year. Weather is perfect for doing the kinds of things we do. And so Saudi is a very hot topic, and you'll hear a lot more as the year progresses. Asia Pacific, we started against signing some very large oil and gas deals all over the place. So in Southeast Asia, in Australia, so that's definitely back in rocking where we had seen virtually nothing for the last year. The U.K. and the EU, we announced the large for Mercedes campus. That's not the only campus we'll be doing, and that's not the only Mercedes sites we will be doing. It's their flagship site. Also, we've started working and connecting wind turbines with one of the most iconic operators in Europe with the most iconic OEM provider and #1 provider of wind turbines in the world. So we expect going forward, wind and wind technology to be a significant part of our conversations and will be a part of our connected assets going forward. Our CTO -- our Co-Founder and the CTO of this large OEM met last week in Europe, and we have very clear defined plans there that we'll be rolling out to the market. So now let me turn it over to some questions that we received by e-mail, and I think it's a good process going forward by all means, please send questions and those that we can answer, we will. But let me start with the first question.
Where do we stand with the S-1 and specifically the F-1 that we filed with the SEC? And how that will apply to the repayment of the convertible debt?
As we were getting really close to financial reporting today, we needed to update our financial statements. We started last night categorizing those. Those will be updated to the F-1 here shortly. Once this call is done, Chantal and her team and the legal team will get back on this. And absolutely, the use of proceeds here is to repay the convertible note, plus accrued interest up to the date of close. So every day that we don't close this past the date, there's an accrued interest that's being calculated and that will be paid in full once we close. So we'll be back on that as soon as this call is done. And Chantal and team will be on with the SEC to make sure anything that they need from us they have so we can get this F-1 cleared.
The next question. Question number 2 is can I update you related to the $80 million TCV that we saw before is the number we provided before and how we are -- are we tracking towards this. As I mentioned in previous calls, if you look at USA, with EV, there's more years. So the EVs -- I mean, the TCV is a bit skewed. Similarly, with Middle East, some of the contracts have very long periods in them. But putting that aside, if we just look -- and again, it's not apples-to-apples, but we just look today, that $83 million of TCV of which the Middle East will grow disproportionately. But for now, Middle East is 22% of the $83 million, Asia Pacific is 18%; U.K. EU 14% and North America is 45%. So that the asset, backlog and plan and the TCV backlog aligns, obviously, pretty well, but there are in the U.S., some contracts are greater than 15 years and in the Middle East, some are greater than 5%. Question number three, can you provide further details and economics regarding their carbon royalty at EV charging? So I've used an example here of $7,000 per month and I've used a 15-year contract term. First of all, the upfront capital plus OpEx plus third party plus licensing, so the all-in expenses. So it's clear that it's not just hardware, it's everything. It's about $400,000, $500,000 in this example. So at the end of the first year, if you're collecting $7,000 per month plus paying a 10% interest for the capital. about the 6-month marker, you'll get half of the full system value, which is what the rebates are for that includes OpEx, licensing and hardware. And we share that half with carbon royalty. So you have a negative at the end of the first year, $306,000 after spending $500,000 and collecting. So in that residual 48 months, you still -- you have about the equivalent cash flows of the negative $306,000 still to collect, but it's a 15-year contract. So after that, it's effectively other than interest costs and OpEx, all cash flow. So it's a pretty good business, and that's not the end of the rebate. All I'm giving you here is the low-hanging rebates we get from state and federal, which are straight rebates for solar and EV. There are other things we will do with carbon royalty that will add cash flows. Also in the $7,000 per month, all of our contracts have annual inflator for the monthly fee. So if you extrapolate that out 15 years, that's also highly accretive. So yes, it is negative for a period, but the forward-looking cash flows more than cover the profile of a dealership. What I'm giving you here is an average-sized dealer. What we're finding is there are some very large dealers but not many that are much smaller than what I just gave you. Next question on the same topic is do you plan on having $250 million of debt related to the EV segment? The answer is absolutely not. We expect when we get beyond 50 or so of these dealers connected, we're able -- and we actually have many inbound requests to look at our basket of deals so that they can look at it from an accelerated depreciation and amortization. If you look at the tax rules in the U.S. around taking these kinds of contracts, and applying a depreciation and accelerated depreciation and amortization is very attractive to many and probably very attractive to ourselves. So we do not intend to keep this on our balance sheet for the long term. There will be multiple ways we will look at this going forward. But for now, we need to get the 50-plus dealers up and running, working with carbon royalty, showing how we collect credits, showing how we do the whole model from beginning to end and then we can get more exotic with structures. Question number four is how are we doing in China? I'd say every time we ask for a Chinese update, it's nothing but stop, pause and bad news.
So I did mention at one point that if things got back to normal, likely we would see the shopping mall and other activities pick up. One of our partners has received a visa to go to China, I think this month or September -- in September to go assess things to see where things are at.
He'll have to go through the mandatory quarantining and all the pain of things you got to do to go to China. I'll have a better update after that. But for now, I would say China is a wait-and-see. Number 5 question. Can you update us on IAQ customers and how that will become a multiplier effect? So we're going to start publishing white papers on the results we are getting here in Canada. But if it wasn't for the results in Canada, we would not have the Mercedes campus, which has a plethora of IAQ throughout the campus with the QR code. So it's not just Canada with the multiplier effect for Canada, which we intend to do, I see our salespeople who are here in Calgary today. They're planning on taking these results and going to customers and saying, this is what a before of an actual facility looks like and we'll sell based on results versus what could be and will be what it is. But I will say, we wouldn't have Mercedes if it wasn't for the fact that we can point to these results. And our marketing team will put out white papers where they can, obviously, not divulging the who we're doing this with, but the actual data. So we'll be seeing that in the coming months. Number 6 is how are we doing in Saudi Arabia? Did you connect any assets in Q2? The answer is the 0 in Q2 in that number. In Q3, I already mentioned, we started connecting assets. I already addressed that. Also one thing that we need to -- I wanted to bring it to your attention is, from a connected worker perspective, the Kingdom wants to build their own using our Multiware Platform and our connected worker licensing and technology that we received or that we obtain out of Agnity, they want to build a rugged version in the Kingdom in the thousands. So once that is built in the Kingdom will go from not only connected assets, but also thousands of connected workers, that is going through its process right now. The contract manufacturers defined. Aramco loves that contract manufacturer. They use them for a number of other ruggedized devices. But that's in addition to connected assets, the approach we'll be taking for connected worker. The other question is how does Erbsoft fit into this? Erbsoft is very much involved in everything. You need a partner in Saudi Arabia. The professor who is the founder of Erbsoft a very close friend. Also, we're working very closely together on the NEOM project. As you probably saw, you can't turn on the TV these days about NEOM. That wind project is one we're very active with -- at NEOM probably be a couple of years before it's built. But Erbsoft is one of the civil engineering and architectural advisers to the NEOM group. NEOM is also a cosponsor with us in the Mercedes activity. So we have a lot of ongoing activity with NEOM, Erbsoft in Saudi Arabia.
The question also is around Nimble. The embedded technology we have in the connected wells comes -- the engine, the AI engine comes from Nimble. So they are an embedded AI engine that we use. It's not the only AI engine we use, but it's a very good AI engine that we use. That's been prepaid. So we're free to do what we want. So it's very similar to what we have with Agnity, and that is we have what we need to go do what we need to do. So Nimble is an AI engine provider and one that we're quite pleased with. That's Question number 6.
Question number 7 is you bought Autopro back in 2019, you paid about -- it had about $35 million of revenue and now it's effectively no more revenue.
Well, first of all, we didn't buy Autopro to do projects revenue. We bought Autopro to get customers to move to AssetCare, and there's no doubt with the COVID stuff that occurred that slowed down quite a bit. That being said, we absolutely intend to replace the -- all the project revenues with AssetCare revenues, and that's -- unfortunately, the projects went away a lot quicker, but it's being replaced with AssetCare. Also, if it wasn't for Autopro, a lot of the know-how we have to connect wells, which is all being done out of here, comes from the domain knowledge from Autopro. Similarly, EV is real-time optimization in control. That optimization and control people who are world-class here in Alberta are the people we use on the EV optimization and control to do EV time of day optimization. Similarly, the early projects in Saudi Arabia, a lot of the domain knowledge comes from what was known as Autopro. And also, the Mercedes building is a big controls problem because there's a lot of -- on the industrial side of Mercedes, a lot of things. The control side of the things come from what was known as Autopro. So we don't refer to our team as Autopro. We did have $35 million of revenue at some point from them in the traditional oil and gas business, but that's been refocused on very strategic things. So we're very pleased with that transaction. There aren't many things we wouldn't be doing today if it wasn't for that. Next question was around utilities. What have you been doing with utilities? You announced stuff around utilities. Again, the EV deals in both New York State and in California, are tightly coupled with those utilities. So Con Edison is absolutely who we work with very closely. A lot of the early thinking and innovation of how we're approaching came from the early demand response thinking we had with Con Edison. So I would argue without Con Edison utility relationship, there probably wouldn't be as advance of an EV strategy in New York and similarly with PG&E in California, so its original intent was to sell programs to retail operations. It's now morphed or evolved into optimization of car dealerships, which is a major peak issue, but it's the same people, same organization, same everything, just evolve to a bigger purpose.
Question number 9 was how are we doing with Fidus? Where did that go? Fidus has actually won a major contract with a large -- one of the largest retail operators in the United States, and they're working on the supply chain challenges there. So they're doing supply chain optimization and supply chain software. The plan there is once that's done and we can start tackling energy problems, but they're pretty small, extremely smart team, and they're focused on the major contract that they won. We definitely promoted our joint solutions together, but the first scope is definitely supply chain, and that's what they're working on. And then last but not least, Question number 10, you mentioned in a previous PR about futures of gas and the device that was rolled out in Alberta. Is it even working? The answer is at low noise levels here in Alberta, absolutely. At high noise level, we need to make modifications. Aramco has asked that they be the early adopter and work with us to take on the high noise problems of the connected device. So we're going to be -- we are working with them in the Kingdom. That same contract manufacturer that will create the connected worker will also likely create the rugged connected methane measurement device that will also have the noise cancellation technologies we need to address the higher noise environments, which are within the confines of large facilities. But we are definitely on top of that. That is definitely a game changer. And with these new methane policies, I think that you can assume that, that will play a very, very important role going forward. So sorry for the long list of questions, but I thought they were important ones and good ones. So now I'll turn it back to the operator for any other questions.
[Operator Instructions] First question comes from Martin Toner at ATB Capital Markets.
Congrats on the connected devices number. One I'll talk about that first. It sounds like the pace last quarter was sort of like $1,500 a month. And I recall you saying last conference call that you were kind of expecting like $1,000 a month. So it sounds like there's been some acceleration. And based on your other comments, it sounds like that acceleration you expect to continue for the balance of the year. Can you confirm those things and then talk about what August has been like?
Okay. So I wouldn't say it's linear. So I think it was more like $1,000, $2,000 or $1,000 and $1,700 if you want to try to use that. So that's the scale. So I think that both with the curve, your mathematicians if you use that floor, the curve is probably reasonable curve for someone who is making a lot of noise. So it will be in the mid thousands in this quarter and then double digits of $1,000. So it's definitely back-end loaded if that's what you're trying to get at. And it will -- and we're going to rely on Saudi Arabia's capabilities. We're going to rely on the U.K. capabilities, and we're going to rely on Perth and Singapore capabilities to increase the pace as every period goes by.
Fantastic. The background noise might have been mute, I was laughing when you called me a mathematician. The -- when I'm speaking of math, when I look at the sequential change in your solutions revenue and I compare it to the 2,900 additional assets, it looks like those assets are coming at a pretty healthy per month rate like 200, 300, is that correct? And should we kind of -- is that what we -- should we expect a higher per month subscription number for the new assets you add for the rest of the year?
The answer is it depends, right? Because the connected worker you already know could we published the price is lower than that, right? So it depends on mix, right? So there's less and less of the $50 stuff for buildings. So that's a fact. But there's also $100 stuff month of connected workers.
So to expect $200 a month as an average is, I think on the high end. But can the blended rate improve, the answer is yes, because we're not doing as many of the low stand-alone little retail buildings, which tends to be a lower monthly fee?
Perfect. Can you kind of explain the economics of the Agnity deal? I'm just wondering, you've got some -- you got $500 million in cash in. Is there any loss in revenue on an ongoing basis associated with that? And what else can you tell us about just the economics?
Yes. So it's USD 6 million. If you net out what we would use to add from that revenues, I think we've always said of maintenance revenue is about $4 million annualized. So going forward, I think it's safe to assume $2 million of maintenance revenues no longer in our numbers. So I don't know what's in your model, right? So I have no idea. You may not have had it in the first place. So whatever -- if you have it in, then the answer is you should take $2 million out. If you didn't have it in, you don't have to change anything. And we got USD 6 million, not $5 million.
Got it. And that's $2 million annually?
It's $4 million annually, but it's midyear, right? So if you -- I don't know what your model is, right? So if your model has Agnity in there, everyone -- some people have in their model of $4 million annualized for net from Agnity for maintenance is a recurring multiyear maintenance thing that we collected, we need to take out $2 million if you had it in. If you never had it in the first place, you don't need to pick anything up.
Understood. Okay. Great. Last question. How comfortable are you with the balance sheet, I guess, like over the next over the quarter and then into when you're reporting it?
Well, that's why we got to get off this call, get the F-1 files and continue with the balance sheet. Everything is about the balance sheet after this call. So ask me next month.
[Operator Instructions] Next question comes from Jack Vander Aarde at Maxim Group.
Yes. Just a couple of questions. A follow-up to what I think Chantal was describing. Without the Agnity revenue adjustment, did I hear revenue would have been $7.2 million -- and then the [indiscernible] was $4.9 million. Just some clarity there. And then the risk of this happening in the future is removed now. This isn't going to be a recurring risk even more either. Is that correct as well?
So can you repeat the second part? And then what I'll do is get Chantal to very precisely reread the numbers so you can document those. But what was the second part of your question, Jack, so I can hear -- I didn't get the second part. I heard the word risk, that is it.
Yes. The second part is just -- it sounds like this is not going to be a recurring risk in the sector. It sounds like you did the bullet on this time around and there's no need to worry about this again.
As it relates to Agnity, it will actually be a gain in the third quarter, right? The difference between the total value minus the write-down is not a precise science, there'll be a recognized gain, nonrecurring gain in the third quarter, other income or wherever the category is. But Chantal, can you really read to -- I just got a note some people they missed the beginning of the call, so not everyone necessarily heard your narrative. So can you walk through the -- how the 7.2% minus the minus, if you don't mind?
Sure. So we're still working on the accounting for Q3 as well. So just keep that in mind. So for the 3-month period ended June 30, our total revenues, as reported included a $2.6 million noncash charge for balance sheet adjustments that was specific to Agnity and the exclusion of about $2.4 million in our AssetCare revenues as we work through the deal. So considering the adjustments and the impacts, Q2 revenues as reported were $2.3 million compared to $6.6 million. And then if we were to look at that at the quarter on what would have been basis, without considering any of the impacts related to Agnity, our total revenues would have been about $7.2 million. AssetCare initializations would have been closer to $1.6 million, and AssetCare Solutions would have been approximately $5.6 million.
Okay. Yes. That's helpful. And further...
It's on a slide that when you go and dial in, you'll see a slide, you put a nice summary slide and it shows the differences and so on. So when you go and dial in and you see the package that we've put up, you'll see -- what she's just read is on -- is in one slide. So you'll make it easy.
Okay. Understood. And then just so I'm aware, even despite all that, we assume there was no impact regarding any of these factors. The quarter was obviously softer, I think, than I was expecting. Was it really just further delays in terms of the backlog of connected assets being connected, is that really what it boils down to?
Yes. At the call, I said April was a bust, right? It was not -- the last call I said April was going to be not much. So basically, it was -- it was May and June, right? So I don't know what's in your number, I don't know what you have, but May and June was what we worked off of.
Understood okay. And then, Russ, looking forward, it's good to see you mentioned the 90,000 second half target. So that implies like almost 23,000 assets in the back half of this year. Can you maybe give you that up between your expectations for the third quarter versus the fourth quarter? Is it going to be more loaded in the fourth quarter, we're halfway through this quarter.
Yes. Yes. Yes. it's going to definitely be loaded towards the fourth quarter and I went through those numbers. I'm not sure if you were on the call, but I went through region by region, the numbers -- but how do they stagger precisely as of September 31, it's a bit tougher one. But between now and year-end is the number I gave you, what cuts off at September 30 versus December 30 is bit tougher, but I gave you those precise -- I gave you the numbers by regions.
Okay. Got you. I didn't hear that. I just missed the specifics, so I'll read the transcript again. And then just last question is in Saudi Arabia, are you actively generated -- generating AssetCare revenue there? Can you just remind me if there's any revenue there and if the assets are connected there, versus your expectations for the back half? Because I know you have a heavy -- that's going to be one of your most active regions. But just where things stood in this June quarter. Was there anything connected?
I didn't hear the beginning of his question. What was the beginning of your question? I heard the back end of what you're trying to get at, but you faded out at the beginning.
Yes. I just wanted to see if there's any assets that were connected already in the June quarter in Saudi Arabia, and if you actively generated revenue in Saudi Arabia in the June quarter.
We're definitely scanning in the June quarter for sure. But is it actually technically per accounting rules being connected, I would say no.
Okay. So that would be all incremental upside, I guess, in Saudi Arabia in the back half of the year.
That I'm not sure we call it upside. It's what -- it's as I described, when you go to the transcript, it's per what I described region by region. I was very deliberate about Saudi Arabia. It's in that Saudi Arabia number that I gave.
Next question comes from Brian Kinstlinger of Alliance Global Partners.
Chantal, I just had 1 or 2 follow-ups to make sure I understand. The revenue that's reflective going forward. When you give us the CAD 7.2 million of revenue, does that include that CAD 1 million of maintenance that will no longer ...
No, no.
It doesn't. Okay. And then if you mentioned that $1.5 million of expenses, I believe -- I think you said that were Agnity are going to come out. Where does that come out of? And how quickly is that going to happen?
Happens right away and go ahead, happens right away, right? So go ahead, do you want to read through the categories?
Yes. So it's going to come out of, obviously, cost of goods sold as well as some of the OpEx lines.
There are no further questions. You may proceed.
Okay. Well, thank you very much, everyone. Look forward to the next call. Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.