Dear DHOD,

To save time I will answer below in italics:

Hi Peter

Thanks for getting the earnings out on time tonight. They are packed full of great info and I appreciate the detailed outlook section.

I would like to know if you can comment more on the backlog.

In Q3 2019 "PYROGENESIS ANNOUNCES Q3, 2019 RESULTS: REVENUES $2.1MM, GROSS MARGIN 45%, CURRENT BACKLOG $29.5MM"

The backlog was 29.5mm. In todays ER the backlog is mentioned in 2 places that it is now 30.27mm AS OF THIS WRITING meaning as of right now not as of the end of 2019.

Correct

So i'm wondering whats going on there that revenues didn't substantially increase in Q4 of 2019 and the backlog hasn't really changed but the NR does say the backlog is as of right now not as of the end of 2019.

Backlog is reported as of the date of issuance of financials.  That is a requirement we must adhere to. Backlog is signed contracts that have not been converted to revenues.

Remember that Revenues have nothing to do with Cash received by the Company.  Revenues are accounted for based on % complete accounting.  As they are recognized in revenues…backlog decreases.

So since revenues didnt substantially increase at the end of 2019, I interpret that to mean one of 2 things has to be happening:

1. The backlog hasn't changed and whatever is in it is still yet to be delivered on and we don't have a clear picture of when that pipeline will come to fruition. (Is it 6 months out, or 6 years out? We don't have any clear picture)

First, backlog is not pipeline.  Second, Backlog = Old backlog – revenues + new backlog.

OR

2. The backlog was added to significantly in 2020 but also a large amount was delivered on so far in 2020 for example with DROSRITE / boring and the end result was a net zero change but a lot of revenue is coming in 2020 in the Q1 interim on July 15th.

Again, don’t confuse revenue with cash coming in.

I really wish you could be more transparent on the backlog. For about a year now its been roughly 30 mil and hasn't really changed but we have no idea how much has been added to that pipeline and how much has been delivered on to get a sense of what’s been delivered on and when the rest will come. Revenues don't seem to show so far that much has come out of it in the last 6-8 months.

We are transparent and I take issue with you insinuating that we may not be as much as we can.  Anything more would not be permitted as I would have to give indications of Q1 and Q2 revenues before they are published.  I cannot reconcile current baglog with old backlog without doing that.

Backlog is an indication of contracted future revenues….which are accounted for by % complete method of accounting

But to be fair we have no idea whats happened exactly for the last 5.5 months other than revenues from DROSRITE have started arriving, the boring contracts, and an as yet unknown firm value on the modelling contract potential.

Again, don’t confuse revenues with cash coming in.

How much can you expand on the backlog details?

Thanks,

Hope that helps,

Peter