Mr. Matt Gowanlock reports

CLEANTEK INDUSTRIES INC. ANNOUNCES FOURTH QUARTER 2023 RESULTS

Cleantek Industries Inc. will release its fourth quarter and annual 2023 financial and operational results. Cleantek is an innovative provider of patented, clean technology solutions focused on reducing both cost and carbon intensity in the waste water management and industrial lighting sectors across North America.

Cleantek chief executive officer and president Matt Gowanlock commented: "The completion of the long-term financing in December, with significantly reduced monthly principal and interest payments, provides the company with improved financial flexibility and ability to fund future growth. This, combined with the settlement of long-standing legal disputes, allows the company to fully focus on its core business objectives and near-term strategy, positioning the company well for 2024."

Highlights for the fourth quarter 2023 (all amounts in thousands of Canadian dollars unless otherwise indicated):

• Cleantek generated revenue of $3,188 for Q4 2023, a decrease of $279 or 8 per cent from Q4 2022. On an annual basis, Cleantek generated revenues of $13,989, an increase of $873 or 7 per cent from 2022. The decrease in revenue for Q4 compared with same period last year is largely due to decreased utilization, while the increased revenue on a year-to-date basis compared with the prior year is due to increased fleet size and higher rental rates combined with a sale of a Halo lighting system.
• Cleantek's gross profit of $1,716 or 54 per cent of revenue for Q4 2023 was lower than the gross profit of $2,232 and 64 per cent of revenue in Q4 2022 due to the inclusion of a $259 U.S. federal wage subsidy received in Q4 2022. Cleantek's gross profit of $8,385 or 60 per cent of revenue for the year ended 2023 was in line with target gross profit and greater than gross profit of $7,792 and 59 per cent of revenue for 2022.
• Cleantek's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $559 for Q4 2023, a decrease of $714 when compared with Q4 2022, primarily due to the decreased gross profit.
• On an annual basis, adjusted EBITDA was $4,050, a decrease of $320 from 2022, primarily due to the receipt of a $259 U.S. federal wage subsidy in Q4 2022.
• On Dec. 27, 2023, the company entered into a new long-term debt financing facilities arrangement, replacing the company's existing short-term credit facility. While the new long-term facilities do not provide the company with a significant amount of immediate new liquidity, they do provide the company with a long-term partnership, reduced monthly principal and interest payments, and added financial flexibility over the life of the facilities.
• In December, 2023, the company reached a settlement agreement on the litigation disputes with former Cleantek executives for wrongful dismissals in 2019, which has eliminated litigation spending going forward. Legal costs incurred in 2023 for these litigations totalled $550 and an additional $550 was accrued for settlement. Details can be found in the litigation and claims section within the MD&A (management's discussion and analysis).

Expansion and outlook

Cleantek's strategy focuses on delivering innovative and cost-effective solutions that reduce the carbon intensity, as well as the capital and operating costs of industrial operations. By focusing on expanding the market awareness and adoption of its sustainable lighting solutions and waste water treatment assets, Cleantek continues to experience increased utilization of these high-margin product lines.

In 2023, the company launched two new growth initiatives, including SecureTek, Cleantek's line of remote security services, as well as the company's newest addition to the ZeroE line of waste water treatment products, the mobile waste-gas-fired GZeroE. Both growth initiatives will utilize the company's existing asset base and require minimal capital investment for what the company believes could be substantial growth opportunities in adjacent industry verticals:

• International expansion: Expanding on the company's recent success with the first Halo sale in a geographic area historically not serviced by Cleantek, Cleantek completed a proof-of-concept trial with the Kingdom of Saudi Arabia for its Halo line and is exploring a number of promising opportunities diversifying Cleantek's geographic focus and customer base, including exploring opportunities across the Middle East for rental and/or product sales.
• SecureTek: Cleantek's line of remote security services, being offered as a stand-alone system or integrated with its sustainable lighting products, is expected to drive higher utilization of existing assets and creating an exciting new recurring revenue stream for the company. Utilizing its existing infrastructure, SecureTek is an accretive service offering and a great opportunity to expand the company's reach into the construction, mining, storage, agriculture and other commercial markets, with minimal new capital investment.
• Mobile GZeroE: Adding to the fleet of ZeroE technology is the company's new waste-gas-powered, waste water treatment and dehydration system or GZeroE. GZeroE utilizes waste-gas as its primary energy source, allowing for deployment of the ZeroE system into areas without a waste-heat source while providing substantial ESG (environmental, social and governance) and cost benefits. The first system was launched in March, 2024, to one of a growing number of clientele and has received excellent feedback. The manufacture of additional units will be determined based off customer demand and feedback.

The company's near-term strategy will continue to focus on: maximizing utilization rates of its current fleet of sustainable lighting solutions and mobile ZeroE waste water treatment assets; expanding and growing the company's fleet of sustainable lighting solutions and mobile ZeroE waste water treatment assets to satisfy increased demand in the oil and gas, mid-stream, mining, industrial, and construction markets; leveraging Cleantek's technology to capture additional market share through organic growth of the ZeroE waste water treatment and vaporization services, including the new mobile GZeroE, as well as the new product and service offering in SecureTek; focusing on growth, generating positive return for shareholders and improving the company's financial position now that long-term financing is in place and long-standing legal disputes have been settled; and evaluating new technology, products and services to increase the company's offering to its current client base.

The company is uniquely positioned with the prospect to capture expansion in both ZeroE waste water vaporization and sustainable lighting markets. Cleantek expects that waste water and vaporization opportunities in the oil and gas, municipal grey water, and industrial waste water industries, and a growing awareness regarding the disadvantages and risks of downhole injection will continue to increase the demand for Cleantek's ZeroE products.

Operational update

Cleantek's fourth quarter 2023 revenue was $3,188, a decrease of $279 from same period last year and $13,989 for the year ended Dec. 31, 2023, an increase of $873 from the prior year.

Selected financial and operation information is outlined in this news release and should be read in conjunction with Cleantek's audited consolidated financial statements and MD&A for the years ended Dec. 31, 2023, and Dec. 31, 2022, which are available on SEDAR+.

About Cleantek Industries Inc.

Cleantek is a clean energy technology company focused on ESG accretive technology solutions with operations across North America. Cleantek has developed and commercialized its patented waste water dehydration technology, the ZeroE, which it rents to its customers for use at gas processing facilities and on drilling rigs focused on hydro-sustainability. Cleantek's ZeroE technology separates waste water into: (i) clean water, which is evaporated and returned to the natural hydrological cycle; and (ii) concentrated brine, which is disposed of using traditional means. The ZeroE technology is powered by the waste-heat generated from the engine exhaust of gas plants and drilling rigs. Complementing Cleantek's ZeroE technology is the suit of low-carbon LED (light-emitting diode) lighting systems containing the company's patented solar hybrid lighting systems and Halo crown-mounted lighting systems.

Non-IFRS (international financial reporting standards) measurements

Cleantek uses certain financial measures to quantify its results that are not prescribed by IFRS. EBITDA, adjusted EBITDA, working capital and non-current debt are not recognized measures under IFRS and may not be comparable with measures reported by other companies. Cleantek believes that, in addition to measures prepared in accordance with IFRS, the non-IFRS measurements provide useful information to evaluate the company's performance and ability to generate cash, profitability and meet financial commitments.

These non-IFRS measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

EBITDA and adjusted EBITDA

Management considers EBITDA and adjusted EBITDA key metrics in analyzing operational performance and the company's ability to generate cash flow. EBITDA is measured as net income (loss) before interest, tax, depreciation and amortization as differences in accounting treatments may distort the company's core business results. Adjusted EBITDA is measured as EBITDA adjusted for certain non-cash items, including share-based compensation, impact of unrealized foreign exchange gains and losses, as well as unusual items not representative of continuing business performance, such as litigation expense and settlements.

An attached table provides a reconciliation of the non-IFRS measures, EBITDA and adjusted EBITDA, to the applicable IFRS measurements for Cleantek.

Working capital

Working capital (or also referred to as net current assets/liabilities) for Cleantek is calculated as current assets less current liabilities per the statement of financial position. An attached table provides a reconciliation of working capital, a non-IFRS measure, to the applicable IFRS measurements for the company.

Non-current debt

Management considers non-current debt in analyzing the company's capital structure. Cleantek's capital structure consists of working capital, non-current debt and shareholders' equity. Non-current debt measures the long-term borrowings of the company. Non-current debt for Cleantek is calculated as the non-current portions of long-term debt and lease liabilities. An attached table provides a reconciliation of non-current debt, a non-IFRS measure, to the applicable IFRS measurements for the company.

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