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Clearford Announces Results for the Second Quarter of Fiscal 2018 and Continued Expansion of its Business through Acquisition of Private Utility Assets

Ottawa, Ontario – (August 1, 2018) – Clearford Water Systems Inc. (“Clearford” or the “Company”), (TSX-V: CLI), today released results for its three months and six months ended June 30, 2018. The unaudited consolidated financial statements are presented in accordance with IFRS (all figures in Canadian dollars).

The Company continues to execute on its strategic business plan originally disclosed on June 22, 2017, whereby the Company announced pursuing strategic acquisitions to support the Company’s growth. The new business model provides a path for the Company to become an operating utility with equipment supply capability for effective technologies capable of delivering water and wastewater infrastructure at a lower life-cycle cost. During the quarter, the Company continued the expansion of its business through the acquisition of Long Beach Waterworks, a private water utility that provides water services directly to consumers. The Company will continue to review opportunities such as this in Ontario to acquire water and wastewater assets that generate positive earnings and cashflows.

Revenue for the quarter was $1,632,545 compared with $972,731 for the prior year’s quarter. Operating loss before net financing costs was $1,343,200 for the quarter compared with $520,580 for the prior year’s quarter. Net financing costs for the quarter were $1,315,577 compared with $823,975 for the prior year’s quarter, with net loss for the year of $2,658,757 or $0.02 per share compared with $1,344,555 or $0.02 per share for the prior year’s quarter. The revenue increase related primarily to Clearford Waterworks, the operations and maintenance division acquired in November 2017 as part of the Koester Canada Inc. acquisition. Included in the operating and net loss for the three and six-months periods were unrealized foreign exchange losses of approximately $5,700 and $656,331 compared to unrealized foreign exchange gains in the prior year’s three and six-months periods of $166,075 and $218,654 respectively.

For the six months ended June 30, 2018, revenue was $3,301,426 compared with $1,809,499 in the prior year and operating loss was $3,120,146 compared to $1,162,682 in the prior year. Net financing costs were $2,253,103 compared to $1,565,680 in the prior year. The net loss for the six-month period was $5,373,249 or $0.05 per share compared to $2,728,362 or $0.03 per share in the prior year period.

UV Pure segmented sales for the three and six months ended June 30th, 2018 were $811,170 and $1,505,923 compared to $938,357 and $1,730,011 in the prior year.

Costs of sales increased to $1,053,125 during the quarter compared to $498,148 in the prior year’s quarter due to the start of two Clearford One® project implementations in India, and the addition of Koester Canada Inc. for the full quarter. Additionally, cost of sales was higher at UV Pure due to lower sales and product mix.

Sales and marketing costs decreased during the second quarter to $331,068 from $339,355 in the prior year’s quarter primarily due to the departure of staff allocated to sales in UV Pure, who were not replaced until after the end of the quarter. Sales and marketing costs increased to $706,858 from $674,977 in the prior year’s six-month periods, respectively, reflecting additional travel between the Company’s Ontario locations and rebranding efforts relating to the Koester Canada Inc. acquisition.

Costs of engineering, and research and development decreased to $169,917 and $382,746 from $207,195 and $411,444 in the prior year’s three- and six-months periods, respectively, reflecting a decrease in spending on the Clearford One system and staff reductions in the first half of the fiscal year.

General and administration costs increased to $1,279,839 and 2,481,153 from $659,155 and $1,149,759 in the prior year’s quarters, respectively, primarily reflecting additional costs associated with the Koester Canada Inc. acquisition, legal and corporate overheads, and accounting and legal costs. General and administrative costs decreased in the six-month period ended June 30th to $1,149,759 from $1,256,259 primarily related to the reduced spending on external consultants.

Kevin Loiselle, President and CEO of Clearford, expressed enthusiasm for the future of Clearford: “We continue to build the foundation of our new business plan with the augmentation of recurring revenue with the expansion, through both new sales and by acquisition, of cash generating utility assets. With the enlargement of our production facility in Hamilton now complete, our treatment plant fabrication business segment is in position to address the backlog in sales generated over the last two quarters.” He said, “Our projects in India for McCain’s and Hilti continue to demonstrate the potential of the Clearford One system in India and should lead to additional and larger projects in the future.” He continued, “We expect in 2018 we will complete a foundation for our business that should deliver sustain revenue and earnings growth into the future.”

Mr. Loiselle also added: “The next generation of UV Pure® products based on Crossfire Technology®, currently undergoing industry certification and validation testing, are expected to be released to market in the latter half of fiscal year 2018. This will allow UV Pure to continue to increase its market share in this $1 billion dollar market.”

Clearford ended the June 30, 2018 quarter with unrestricted cash of $830,883 compared with $1,217,373 on December 31, 2017. The Company’s quarterly unaudited 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 over 80 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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