AGM 2025

May 22, 2025

Thank you for standing by. This is the conference operator. Welcome to the Swiss Water Decaffeinated Coffee Inc. Annual General Meeting of Shareholders conference call. As a reminder, all participants who have been joined to the call with their lines muted, and this conference is being recorded. During the meeting, there will be an opportunity for registered shareholders and duly appointed proxy holders who pre-registered to speak to items of business. To indicate that you would like to speak, press Star-One on your telephone keypad, and you will be introduced at the appropriate time. You're asked to hold any questions regarding the business operations until the Q&A session following the formal meeting. It is now my pleasure to turn the meeting over to Mr. Alan Wallace, chair of the annual general meeting. Mr. Wallace, the floor is yours. Thank you, Gaylene. Good afternoon, ladies and gentlemen. My name is Alan Wallace, and I am Swiss Water's appointed Chair of the board of directors. I've been appointed to chair today's meeting in accordance with the articles and the bylaws of the company. On behalf of the board of directors, I wish to welcome shareholders, employees, and guests to the 2025 annual general meeting of shareholders of Swiss Water Decaffeinated Coffee Inc. We are pleased that you are here today, and we look forward to reporting on our company's activities. It is now 2:02 P.M., and I would like to call the meeting to order. At the end of the meeting, management and I will be able to answer your questions for those of you who have pre-registered for today's meeting. This meeting is being held virtually via teleconference. We think it is necessary and helpful to set out a few guidelines for the orderly conduct of this meeting. First, for the purposes of the meeting today, voting on all matters will be conducted by telephone. If you are a registered shareholder of record or a duly appointed proxy holder and you wish to vote during the call, you must have pre-registered, and you must have joined the meeting using the dial-in numbers and PIN that were sent to you when you pre-registered. The public access call is listen only. For those of you who have pre-registered, voting by telephone will be your only opportunity to vote by ballot during the meeting, and you will only have a certain amount of time to do so when the polls are open. Secondly, questions in respect of a motion can only be asked by registered shareholders or duly appointed proxy holders who have pre-registered. When asking a question, please indicate your name, which entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder. Questions regarding procedural matters, which are directly related to the motions, will be addressed during the meeting. I will provide instructions on how and when to raise your questions. Questions not relating to procedural matters will be addressed at the end of the meeting. We begin today with the formal business of the annual general meeting of shareholders, after which we will open the floor for those of you who have pre-registered for any questions that you may have. I would like to introduce you to the executive officers, management of the company, and the scrutineer who are present here today. They are Iain Carswell, the company's Chief Financial Officer, Eve Bartnick, our Director of Financial Reporting and Treasury, and the Secretary of the Company, and Teresa Kwan of Computershare Investor Services Inc. I hereby appoint Eve Bartnick to act as a recording secretary and Teresa Kwan to act as the scrutineer for this meeting. Our Chief Executive Officer, Frank Dennis, is unable to attend today's meeting due to business travel in Asia, where we've had some recent success and hope to continue that. As Mr. Dennis is a duly appointed proxy holder, he has appointed Mr. Carswell to act on his behalf. The notice calling this meeting together with the related information circular and the proxy form was delivered to all registered shareholders of record as of April 14, 2025 and in accordance with applicable securities legislation to beneficial holders of shares. I have received from the secretary a statutory declaration attesting to the mailing, and I direct the secretary to attach the declaration to the minutes of this meeting. According to the company's bylaws, a quorum at a shareholders' meeting is met when at least two persons are present, where each is entitled to vote at the meeting and are holding or representing by proxy not less than 10% of the votes entitled to be cast at the meeting. I have been advised by the secretary that the scrutineer's report is complete and that a quorum is present. I therefore declare this meeting to be properly constituted for the transaction of the company's business. The minutes of last year's annual general meeting of shareholders of the company are available for inspection. Unless there is any objection, I will dispense with reading them. Please press star one on your telephone if you object. Again, this will be available only to registered shareholders and proxy holders who have pre-registered for today's meeting. Mr. Chairman, no one asked to speak. Thank you. Since there are no questions or objections regarding last year's minutes, could I have a motion to approve last year's minutes? Mr. Chairman, I so move. Mr. Chairman, I second the motion. Thank you. I will now move on to presenting the financial statements and the auditor's report thereon. I now place before the meeting the report to shareholders, including the consolidated financial statements of the company for the period ended December 31, 2024, and the independent auditor's report thereon. This material is contained in the annual report that was mailed to shareholders who requested financial reports and was also made available on SEDAR and the company's website. If you have any questions on the financial report, our CFO, Iain Carswell, is available to respond during the question and answer period, which will be after the formal meeting. As set forth in the notice of meeting and the accompanying proxy statement, there are two matters presented for shareholders' vote. One is the election of directors and two, the appointment of the auditors. After each matter is presented and the first and second motions are complete, I will ask registered shareholders and proxy holders to raise questions relative to the matter. Afterward, shareholders will then be able to vote on each of these matters using their telephone. During the meeting, I will provide preliminary voting results, and the final results will be posted on SEDAR and on our website. Moving now to the first proposal to be voted on, the election of the board of directors. In accordance with the articles and bylaws of the company, the directors have set the number of directors at seven. The board of directors has nominated the seven individuals named in the proxy statement to be elected to the board of directors for a term expiring at the close of the next annual general meeting of shareholders. They are Frank A. Dennis, Roland W. Veit, Robert B. Johnston, Nancy L. McKenzie, Donald J. Tringali, Eric Yanagi, and myself, Alan Wallace. Could I have a motion for the election of Mr. Dennis, Mr. Veit, Mr. Johnston, Ms. McKenzie, Mr. Tringali, Mr. Yanagi, and myself, Alan Wallace, to the board of directors? Mr. Chairman, I so move. Mr. Chairman, I second the motion. Thank you. At this time, I request that all other nominations for election to the board of directors be disclosed. Registered shareholders and proxy holders, if you wish to present other nominees for the board of directors, please press star then one, and the operator will open the line for you to speak. Mr. Chairman, there are no other nominee directors. Thank you. Since there are no other nominations, I declare the nominations for directors be closed and that the 7 persons nominated to be put forward for election as directors of the corporation. Operator, could you please provide instructions on voting on the motion? Certainly. One moment please while the vote is configured. Telephone voting is now open for a motion to elect directors. To vote in favor of the motion, please press star one. To vote against, please press star two. If you're voting multiple control numbers and do not want to vote the same for all, or if you need voting support, such as to vote in favor of some directors but not all, please press star four and your line will be flagged to speak with the scrutineer and place your vote at the end of the meeting. Once again, if you are in favor, press star one. To vote against, press star two. To speak with the scrutineer at the end of the meeting, press star four. Voting will close in five seconds. Voting has closed. The next item of business is the appointment of independent auditors of the company for the ensuing year and to authorize the directors of the company to fix the remuneration of the auditors. The board of directors of the company is recommending, subject to shareholder approval, the appointment of MNP LLP as the auditors of the company. Could I have a motion for the appointment of MNP LLP as the auditors of the company? Mr. Chairman, I so move. Mr. Chairman, I second the motion. Thank you. At this time, if there are objections or other nominations for the company's auditor, registered shareholders and proxy holders should press star then one on their telephone, and the operator will open the line for you to speak. Mr. Chairman, no one asked to speak. Thank you. Since there are no questions or objections or other nominations for the company's auditor, we'll move on to the vote. Operator, could you please provide instructions on voting on the motion? Certainly. One moment, please, while the voting is configured. Telephone voting is now open for the motion to appoint the auditor. To vote in favor of the motion, please press star one. To withhold your vote, please press star two. If you're voting multiple control numbers and do not want to vote the same for all, or if you need voting support, please press star four and your line will be flagged to speak with the scrutineer. Once again, if you're in favor, press star one. To withhold your vote, press star two, and to speak with the scrutineer at the end of the meeting, press star four. Voting will close in five seconds. Voting has closed. Mr. Chairman, the scrutineer has compiled their report on votes on all business matters. Thank you. The ballots have been counted and the votes tabulated by the scrutineer. The scrutineer is reporting the following preliminary results. There were 3,250,112 shares, or 34.05% of the total issued and outstanding shares present and voting in person or by proxy. Preliminary results are as follows. On the first proposal, each of the seven nominees have been elected as directors of the company to serve until the next annual meeting of shareholders or until their successors are elected or appointed. On the second proposal, the appointment of MNP LLP as the independent auditors of the company has been approved, and the board of directors of the company has been authorized to fix their remuneration. I direct that the results of the poll be included with the minutes of this meeting, and the results of the voting will be announced in a press release in accordance with the policies of the TSX and to be filed on SEDAR. All of the business for which this annual general meeting of shareholders was called has been completed. At this time, I request that all other business be brought to the floor. We terminate the meeting. Registered holders and proxy holders, if you wish to speak, please press Star, then one, and the operator will open the line for you to speak. Mr. Chairman, there is one person in the queue. Operator, could you allow them into the line and allow them to speak? Certainly. Jeffrey Gebert, your line is open. Hi, Mr. Wallace. The matters I wish to discuss don't pertain to the business of the meeting, but rather something that we can discuss in the Q&A after the conclusion of the meeting. Okay. We will conclude the meeting and then open your line back up. Okay. Eve, is there anyone else who wishes to discuss anything? Mr. Chairman, there is no one else who's wishing to speak. Okay. Thank you. Could I have a motion to terminate the meeting? Mr. Chairman, I so move. Mr. Chairman, I second the motion. Thank you. As there is no further business to come before the meeting, I declare the formal part of the meeting to be concluded. I would now like to open up the meeting to any questions that you may have, where I and Iain Carswell, the CFO of the company, will answer. I ask that all attendees who would like to ask a question, please ask their questions now. We will answer as many questions as time permits. When asking a question, please state your name, the entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder. Please limit your questions to topics relating to today's subject matter and limit your questions to three minutes. Your questions will be addressed in the order they are received. Operator, please open the line to Mr. Gebert in order to allow him to speak. Certainly. Mr. Gebert, your line is open. Thanks very much, operator. My name is Jeff Gebert. I'm a partner with McMillan LLP, a law firm, and we represent a minority shareholder of Swiss Water. We wish to ask a few questions regarding the transactions that were conducted with Mill Road Capital, including the grant of warrants that were issued several years ago and were subsequently amended in several tranches. We're concerned with the level of dilution that these warrants represent, as well as the context in which they were issued, including the fact that they were issued to a related party of Swiss Water. We're concerned with potential violations or noncompliance with Multilateral Instrument 61-101 governing special transactions and the protection of minority shareholders. We'd just like to get some context on why these warrants currently remain outstanding, including you know if there were any alternatives to the grant or the amendment of these warrants and any steps that were taken by the company to consider alternatives to the grant of these warrants. All right. Thank you, Mr. Gebert. There were quite a number of issues raised, so I'll try to answer the question as best and thoroughly as I can. I guess specifically, with regard to the question of the warrants, yeah, all the transactions associated with the warrants and in particular our debt and the covenants that we required waivers on are well documented in the filings that we have made both in 2021 and again for the transaction in 2022, where we reviewed what was done in detail. You can see that all that happened and how we addressed, I think each one of your issues, how we dealt with the fact that it was a related party and what we did, including setting up independent committees to work on this process with management. Indeed, with regard to your 61-101 question, again, we've addressed in the documentation how we met those requirements and in the two transactions, the one in 2021 and the one in 2022 as well. Again, on your question on the alternatives, again, we documented in the public domain the efforts that were made to review alternative transactions to what was ultimately done in those two transactions. Hopefully that is a little bit of overview, if you will. I will mention that the 2021 transaction on the creation of the warrants was approved by shareholders. According to securities legislation, the related party did not participate in that vote. 73% of non-related party shareholders approved that transaction. That's hopefully some of the background. As I say, all of the background has been laid out in our public filings, and maybe just leave it at that, and open it up back to you if there's anything in particular that you'd like to talk about in that description. Thanks, Alan. That's a very helpful response. I think the specific concern that we have is that the second transaction, the amendment that caused or that gave the extension to the warrant term, was not voted on by or approved by minority shareholders, despite in our view, an exemption from that requirement not being available. I was wondering if you had any comments about the analysis that went on behind the scenes on that transaction, whether you had discussions with counsel to discuss the availability of an exemption under 61-101 for the warrant term extension. Yeah. Again, as we documented, we did engage independent legal advisors and indeed independent financial advisors to the board and worked with them in great detail on these questions, on all questions related to the transaction, including the exemptions under 61-101 on a shareholder vote. Again, we documented that in the public filings. To answer your question specifically, yes, we engaged independent legal counsel, and I will also say that that independent legal counsel were in constant dialogue with the Canadian regulators, both the Toronto Stock Exchange as well as the Ontario Securities Commission, during this process to ensure that we were. You know, our interpretation of these exemptions were correct. Again, that is documented in our filings. The short answer to your question is yes, we engaged independent legal counsel and additionally sought input from our regulators throughout the process. appreciate the response. As you are well aware, the warrants remaining outstanding create significant, I think, overhang for the stock price. We were hoping to understand maybe if there was any interest on Mill Road's part to exercise the warrants, whether on a cash or cashless basis. What is the likelihood that the warrants will come off the balance sheet in the near future? Yeah, no, appreciate the question. You know, clearly as the board and as the company, we don't speak for individual shareholders as to what their intentions are or what their plans are on any decision they're making with regard to their securities. I think from the company's point of view and the board's point of view, we do try to ensure, for the benefit of all of our shareholders, we try to ensure that we're communicating with the market generally and providing as robust a market as we possibly can under the circumstances, which we will continue to do, again, for the benefit of all shareholders. You know, I would add that I think typically warrants don't, you know, I think they typically don't get exercised until the end. But again, that is just a typical comment, not any, not anything on any individual owner's intention. The short answer is we don't know and don't expect to know what their intentions are on that. We are working hard as a company and as a board to ensure that the Swiss Water story, the Swiss Water investment thesis is well-publicized and well understood by the market in general. Thanks, Alan. That's fair enough. It kind of brings me, and I hate to monopolize the time, but it kind of brings me to my next point about the election of Mr. Yanagi, being the managing director of Mill Road Capital. There was disclosure in the circular about him being considered by the board to be an independent director. Some might view his relationships in Mill Road, being a significant shareholder of Swiss Water to be a significant relationship. I was wondering if you could illuminate the circumstances under which the board considered Mr. Yanagi to be independent for purposes of securities laws. Yeah. As you know, each year we review that with all directors, that question of whether or not for securities laws they are deemed to be independent. We did that for every director including Mr. Yanagi. I think as you know, a shareholder interest does not in and of itself make a director not independent. I think some might say that it makes a better director if there is shareholder interest. Obviously, if it's too influential, then that's where it can cross the line. I think I would just say in summary, the Corporate Governance and Compensation Committee of the board as well as the board considered the issue with regard to all directors. Mr. Yanagi's relationship with Mill Road was not deemed to make him not independent. I would leave it at that, I think, unless there's something specific. No, I think that's all the questions I have for now. I'll yield the floor. I know I've taken up a lot of time, but and maybe we can continue this conversation offline. Yes. No, I would encourage it. Yeah, encourage any questions that the shareholder you represent or any other shareholders, if there are follow-on questions, I'm certainly available and I know the management is as well. They have a robust ongoing dialogue with their shareholder base, and I know we'll continue to do that. Thank you. Thank you for your questions and thank you for your. To the shareholder you represent, thank you for your continued support of the company. Maybe, operator, are there any other questions? Mr. Chairman, there's no one else left in the. All right. Well, before we conclude our meeting, let me take this opportunity to thank our management and employees for their significant accomplishments over the past year. There's been considerable success at our Delta production facility, while our customer relationships have grown as our facility has expanded. Thanks to the board members for their guidance throughout the year, and thanks to our shareholders for their confidence during a volatile coffee market. We remain confident in the strength of our company and our ability to serve our customers. I will now pass it back to Gaylene to conclude the meeting. Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.