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Clearford Announces Results for the fiscal year ended December 31, 2017 and Status Update on its Business Model

Ottawa, Ontario – (April 30, 2018) – Clearford Water Systems Inc. (“Clearford” or the “Company”), (TSXV: CLI), today released results for its three months and fiscal year ended December 31, 2017. The audited consolidated financial statements are presented in accordance with IFRS (all figures in Canadian dollars).

In April 2017 Clearford adopted a new business model that would enable the company to benefit from the full value of its product offering and move toward selling water as a service and creating a utility like water company. Clearford’s objective is to build up an ownership base of operating facilities that sells water as a service. “This is an innovative approach to the provision of water infrastructure and positions Clearford at the vanguard of the decentralized water and wastewater industry,” said Clearford CEO Kevin Loiselle. “Delivering water and wastewater as services, instead of just providing the infrastructure, is a disruptive tactic that generates regular long-term revenue streams,” he continued. “It also offers the opportunity to present new technology in a conservative industry that requires innovation to deal with funding shortfalls and environmental challenges,” continued Mr. Loiselle. “We believe that our customers are looking for a commitment from their suppliers to ensure that new technologies and approaches being delivered on their projects work according to the design specifications. We believe that our commitment to operate the facilities we design and build on a long-term basis will provide them with the level of commitment they are looking for,” Mr. Loiselle concluded. The first step of the plan was to acquire profitable companies that provide Clearford with complementary technology for the components included in the Clearford One® solution such as water and wastewater treatment plant fabrication and the capacity to operate these systems.

The first step of the plan was executed with the acquisition of Koester Canada and its two operating divisions, Team Aquatic and Koester in November 2017. Koester fabricates package Membrane Biological Reactor (MBR) wastewater treatment plants. Team Aquatic operates over 86 water and wastewater treatment plants throughout Ontario.  Combined with Clearford’s wastewater collection and water distribution systems, the new operations and plant manufacturing capability completes the Clearford One system offering as per the plan.

The addition of financial strength through the Pay for Performance (P4P®) financing model creates the opportunity for Clearford to become the owner/operator of its systems, essentially offering water as a service and in the process creating a utility like water company based on the advantages of the Clearford One system. The financing under the P4P program is currently available to fund projects with qualified municipalities and developers.

The MBR technology provides Clearford with ownership of the ClearRecover® component of its Clearford One wastewater system. The addition of the package plant capabilities along with the operations and maintenance capabilities now allows the Company to offer full services along with its financing package to municipalities in Ontario and the New York State.

In addition to the acquisition of Clearford Koester, the Company continued to market and sell the Clearford One system in India where it signed two contracts in late 2017 for delivery in the first half of fiscal 2018 and to continue to profitably grow its subsidiary UV Pure Technologies Inc. (UV Pure®).

In February 2018, the Company announced an MOU with Sustainable Water Investments Inc. (“SWI”) whereby SWI will provide up to $100 million of funding to provide financing to developers or municipalities installing the Clearford One system. As part of this Agreement, SWI provided a new US$1.1 million 10-year term loan to support current projects in the process of being completed.

Clearford Koester was acquired for $6.25 million which included $5.435 million in cash and the issuance of 7,240,892 common shares from treasury. For the 11-month period ended November 29, 2017, the date the transaction closed, Clearford Koester had approximately $5.5 million in revenue and earnings of $750,000 on an unaudited basis. Had the Company owned Clearford Koester since January 1, 2017, the Company would have recognized revenue of approximately $9,569,000, a net operating loss of approximately $1,343,000 and a net loss of approximately $5,016,000 after financing costs for the year ended December 31, 2017 on an unaudited basis.

UV Pure sales increased to $3,352,306 from $3,037,760 in the previous year and recorded net income of $164,439 versus a net loss of $102,909 in the prior year. The income relates primarily to increased sales and margins dollars on better pricing for both sales and costs. The Company continued to develop its 3rd generation product which is expected to be released in phases starting in the third quarter of the 2018 fiscal year. UV Pure had earnings before interest, taxes and depreciation of $287,000 for the year compared to $24,549 in the prior year. The increase relates primarily to an increase in sales, a decrease in cost of sales and sales and marketing resources as UV Pure prepares for the launch its 3rd generation products.

Kevin Loiselle, President and CEO of Clearford, said: “We are pleased with our progress in the past fiscal year. While we will reduce our operational footprint in South America to focus on integrating the newly acquired operations with Clearford and UV Pure and increase our focus on Clearford One sales in North America while at the same time completing the 3rd generation UV disinfection units developed by UV Pure and bringing them to market. We feel that the basis for strong sales growth is now in place for the North American Market, particularly the Ontario and Northern states with the full Clearford One System, UV disinfection systems and the ongoing P4P offerings. India will continue to be a market we focus on with the signing of the two new contracts at the end of fiscal 2017. We have also seen some interest in MBR technology from customers in India.

Revenue for the year was $3,894,260 compared with $3,789,442 for the prior year. Operating loss before net financing costs were $2,343,884 for the year compared with $3,311,762 for the prior year. Net financing costs for the year were $3,342,637 compared with $2,713,644 for the prior year, with net loss for the year of $5,687,047 or $0.06 per share compared with $6,029,883 or $0.07 for the prior year. The weighted average number of shares outstanding at the end of the year was 88,812,338 vs. 87,542,391 in the prior year. Clearford now has 102,027,729 issued and outstanding common shares following the close of the Clearford Koester transaction. The above numbers include one month of Clearford Koester and its subsidiary Clearford Waterworks in the year end results.

Costs of sales decreased to $1,978,953 during the year from $2,296,212 in the prior year due to completion of the lower margin Clearford One projects and the increase in sales by UV Pure during the fiscal year with better margin profiles and pricing of both products and components used in manufacturing.

Sales and marketing costs decreased to $1,366,209 from $1,500,336 in the prior year reflecting additional sales efforts for Clearford One in Ontario resulting in less international travel and a decrease in consulting related activities.

Costs of engineering and research and development decreased during the year to $799,403 from $862,172 reflecting a decrease in spending on tradeshows and lower stock compensation expense, partially offset by increased employee compensation costs.

General and administration costs increased to $2,625,111 from $2,469,007 primarily reflecting transaction costs incurred for the acquisition of Clearford Koester and the additional costs for one month relating to the Clearford Koester operations in the consolidated financial statements.

Clearford ended the December 31, 2017 quarter with unrestricted cash of $1,217,373 compared with $411,444 on December 31, 2016. The Company’s annual audited consolidated financial statements and MD&A are available at www.SEDAR.com.

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.

About Clearford Water Systems Inc.
Clearford Water Systems is a provider of unified water management solutions for the design, deployment, finance and operation of water infrastructure systems. The Company’s technology-based water solutions include Clearford One® wastewater infrastructure systems, Clearford M‑brane™ packaged treatment solutions, and a full range of UV Pure® water disinfection products. Clearford is the winner of the Frost & Sullivan 2017 Enabling Technology Leadership Award for Global Decentralized Water & Wastewater Treatment. For more information, visit www.clearford.com.

About Clearford Koester Canada Inc.
Clearford Koester Canada Inc. is a manufacturer of packaged water and wastewater treatment systems for municipal, commercial and industrial applications. The company designs and builds custom modular and containerized treatment systems that integrate advanced technologies like membrane filters, ultraviolet disinfection, and smart instrumentation and control systems for highly efficient treatment solutions that address any site constraints and water quality challenges. The company’s M-brane™ membrane bioreactor (MBR) treatment plant has been installed at sites in Ontario and New York State.

About Clearford Waterworks Inc.
Clearford Waterworks Inc. is a full-service provider of water and wastewater systems management including in-field operations and maintenance, emergency operations, regulatory compliance support, technical assistance and troubleshooting, and asset management services. The company operates 86 treatment plants, water distribution and wastewater collection systems in Ontario for private developments, golf courses, camps and campgrounds.

About UV Pure Technologies Inc.
UV Pure Technologies is a manufacturer of advanced ultraviolet water disinfection systems for residential, commercial, industrial, public, and municipal applications. The company’s patented Crossfire Technology® is an innovative water disinfection solution with over 18,000 installations worldwide. UV Pure® has earned an Artemis Top 50 Clean Tech Company award, Going Green Global Top 200 award, two Frost & Sullivan Best Practices Awards, and a Canadian Drinking Water Association award for innovation. For more information, visit www.uvpure.com.

Forward Looking Statements
This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management.  Forward-looking statements are not historical facts but represent management’s current expectation of future events and can be identified by words such as “believe”, “expects”, “will”, “intends”, “plans”, “projects”, “anticipates”, “estimates”, “continues” and similar expressions.  Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, Clearford will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities law, the Company assumes no obligation to update or revise any forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: industry cyclicality; the ability to secure third party agreements; successful integration of Clearford’s system with third party technology; competition; reduction in demand for products; collection from customers; relationships with suppliers; product liability; intellectual property; reliance on key personnel; environmental; interest rates; uninsured and underinsured losses; operating hazards; risks of future legal proceedings; income tax matters; credit facilities; availability and terms of financing; distribution of securities; restrictions on potential growth; effect of market interest rates on price of securities; and potential dilution.

For more information contact:

Kevin Loiselle, President & CEO
Clearford Water Systems Inc.
Phone: (613) 599-6474 ext. 303
www.clearford.com

About Clearford Water Systems Inc.
Clearford Water Systems Inc. (TSX-V: CLI) is a provider of unified water management solutions for the design, build, finance, operation and maintenance of water and wastewater infrastructure systems. The Company’s technology-based water solutions include Clearford One® wastewater infrastructure systems, Clearford M-brane™ packaged treatment solutions, and a full range of UV Pure® water disinfection products. Clearford is the winner of the Frost & Sullivan 2017 Enabling Technology Leadership Award for Global Decentralized Water & Wastewater Treatment. For more information on Clearford Water Systems, please visit www.clearford.com.

Forward Looking Statements
This news release contains certain statements that constitute forward-looking statements as they relate to the Company and its management. Forward-looking statements are not historical facts but represent management’s current expectation of future events, and can be identified by words such as “believe”, “expects”, “will”, “intends”, “plans”, “projects”, “anticipates”, “estimates”, “continues” and similar expressions. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that they will prove to be correct.

By their nature, forward-looking statements include assumptions and are subject to inherent risks and uncertainties that could cause actual future results, conditions, actions or events to differ materially from those in the forward-looking statements. If and when forward-looking statements are set out in this news release, Clearford will also set out the material risk factors or assumptions used to develop the forward-looking statements. Except as expressly required by applicable securities law, the Company assumes no obligation to update or revise any forward looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: industry cyclicality; the ability to secure third party agreements; successful integration of Clearford’s system with third party technology; competition; reduction in demand for products; collection from customers; relationships with suppliers; product liability; intellectual property; reliance on key personnel; environmental; interest rates; uninsured and underinsured losses; operating hazards; risks of future legal proceedings; income tax matters; credit facilities; availability and terms of financing; distribution of securities; restrictions on potential growth; effect of market interest rates on price of securities; and potential dilution.

For more information contact:
Kevin Loiselle, President & CEO
Clearford Water Systems Inc.
Phone: 613 599 6474 ext. 303
www.clearford.com

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