Addition of New Customers Drives Revenue Growth of 109% Year over Year
EDMONTON, AB / ACCESSWIRE / May 23, 2019 / OneSoft Solutions Inc. (the 'Company' or 'OneSoft') (TSX-V: OSS, OTCQB: OSSIF), a North American developer of cloud-based business solutions, is pleased to announce its financial results for the first quarter of fiscal 2019 that ended March 31, 2019. Please refer to the interim unaudited condensed Consolidated Financial Statements and Management's Discussion and Analysis ('MD&A') for the three months ended March 31, 2019 filed on SEDAR at www.sedar.com for more information.
Effective in 2018, the Company changed its financial year-end from February 28 to December 31. The information presented in this News Release is for the three-months ended March 31, 2019 and the 3-month financial period ended February 28, 2018 (the 'comparative period'). 'Fiscal 2019' is the period January 1 to December 31, 2019.
FINANCIAL SUMMARY FOR Q1 ENDED MARCH 31, 2019
The following chart summarizes the first quarter ended March 31, 2019, compared to February 28, 2018:
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- Revenue of $592,302 for the quarter ended March 31, 2019 more than doubled the $283,202 reported for the comparative period. Five new customers have been added since February 2018, and more pipeline assessments were loaded in the current period versus the comparative one.
- Direct costs, consisting of royalties related to certain components of CIM 3.0, Azure platform costs and staff labour assisting customers with the use of CIM, increased commensurately to $79,865 (13.5% of revenue) this year from $33,417 (11.8% of revenue) in the comparative period.
- Gross margin remained strong at 86% due to high margin software revenue and compared to 88% in the comparative period.
- Expenses net of cost capitalization increased to $1,182,866 from $787,923 in the comparative period.
- The net comprehensive loss of $967,391 increased slightly from $964,462 in the comparative period.
- Cash at quarter end increased to $2,635,007, from $2,015,428 as at December 31, 2018. Cash from operating activities was $635,086 in the three months ended March 31, 2019 versus $1,613,693 in the comparative period.
- Subsequent to the quarter, collection of a large account receivable and completion of the $9.2 million bought deal financing in April 2019 increased cash to approximately $12.7 million.
OPERATIONAL HIGHLIGHTS FOR Q1 ENDED MARCH 31, 2019
Highlights for Q1 include the following:
- On January 7, 2019 the Company announced that two new clients, including one industry Super-major1, adopted CIM solutions for long term use. Management considers the addition of the Super-major client to be a notable event, because of the stringent vulnerability assessment testing conducted by this client prior to choosing to use our solutions. We believe the credibility associated with engaging this client may assist to positively influence adoption of OneBridge solutions by other prospective customers in the future.
- On February 20, 2019 the Company announced that a subsidiary of a large conglomerate that operates pipelines situated primarily in the mid-west U.S.A. and Texas had adopted CIM for long term use.
- On March 25, 2019 the Company announced another Fortune 500 client addition.
- As a result of these recent sales the Company's client list increased during Q1 from two clients as at December 31, 2018 to six clients as at March 31, 2019, that now include one independent pipeline operator, four Fortune 500 companies, and one industry Super-major1. These clients collectively operate approximately 51,000 miles of oil and gas pipeline infrastructure for which we anticipate data will be ultimately be loaded into CIM on a staged timing basis.
- On February 22, 2019 the Company announced that it was ranked the fourth highest top performer in the Technology sector on the TSX Venture Exchange, comprising part of the 2019 TSX Venture 50 list.
1 Super-majors are considered to be amongst the seven largest oil and gas pipeline companies world-wide.
SUBSEQUENT TO QUARTER END
Notable events subsequent to the Q1 fiscal period ended March 31, 2019 include the following:
- On April 25, 2019 the Company closed a $9,200,000 Bought Deal Financing pursuant to a Short Form Prospectus and issued 11,500,000 common shares at $0.80 per share. Institutional investor participation accounted for approximately 75% of the financing. Please refer to the 'Subsequent to Period End' section on page five of the MD&A for this period filed on SEDAR for more information in this regard.
- The Company formalized its roadmap for its accelerated technology development plan and initiated efforts to commence the development sprints.
- OneSoft is now transitioning from R&D to revenue generation from Cognitive Integrity Management ('CIM'), its first commercial software-as-a-service solution. Revenue from CIM is expected to increase over time, dependent upon (a) the pace at which current clients load and process data for their pipelines; and (b) commensurate with the pace of adoption of CIM by prospective new clients. Management is optimistic that the Company is well positioned to successfully cross the 'market adoption chasm' that disruptive new technologies typically experience in their quest to garner market share (refer to Company's FYE February 28, 2018 MD&A, page 10 for further explanation).
- As was disclosed in the prior MD&A (for the period ended December 31, 2018) the Company stated its intention to accelerate R&D efforts beyond the evolution of CIM functionality, once client interest for participation and appropriate funding resources have been investigated and arranged. Following the recent capital raise completed in April, 2019, the Company is now taking steps to accelerate its R&D efforts, essentially to (a) increase revenue potential from current and prospective clients; and (b) increase the Company's technological lead over potential competitors.
- Management's intention is to allocate resources to fund the development of new solutions and algorithms to advance our technological lead and competitive moat, increase market potential and revenues, and enhance marketing and sales efforts and initiatives. Management believes that cash from the recent financing, coupled with revenue generation from CIM will be sufficient to fund the accelerated technology development strategy and grow the business as envisioned.
- We believe that OneSoft's 'first mover' advantage in having developed and commercialized the first O&G pipeline integrity management solutions based on cloud computing, machine learning and data science is highly beneficial. Management will now accelerate the development of additional new technology and solutions that are accretive to CIM and will appeal to CIM clients and prospective customers. We believe our strategy to accelerate technology advancement, now feasible because of the capital raise completed in April 2019, will ultimately contribute to increased value for shareholders.
- Whereas the Company's current solutions are targeted at oil and gas ('O&G') pipelines for which in-line inspection ('ILI') data is able to be collected (the 'Piggable' pipelines), the majority of O&G pipelines are managed today using 'Direct Assessment' processes. The Piggable portion of U.S.A. O&G pipeline infrastructure represents only 660,000 miles, while approximately 2.1 million miles are managed under Direct Assessment. Our intention is to expand functionality of our CIM platform to include Direct Assessment, which we anticipate will increase our addressable market opportunity. We believe this opportunity extends internationally, as the U.S.A. only represents approximately 60% of O&G pipelines installed world-wide.
Please refer to the MD&A filed on SEDAR for further information and details.
AGSM UPDATE AND GRANT OF STOCK OPTIONS
One May 22, 2019 the Company held its Annual General and Special Meeting ('AGSM'). All resolutions as set forth in the Management Information Circular distributed to shareholders prior to the meeting were passed. Following the AGSM, 275,000 stock options were granted to the Directors and Officers of the Company and 325,000 stock options were granted to senior executives as part of compensation plans. All options granted have a strike price of $0.92 per share, vest 50% on each of the grant and anniversary dates and will expire in five years if not exercised.
ON BEHALF OF THE BOARD OF DIRECTORS
ONESOFT SOLUTIONS INC.
For more information, please contact
Dwayne Kushniruk, CEO
Sean Peasgood, Investor Relations
This news release contains forward-looking statements relating to the future operations and profitability of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as 'may', 'should', 'anticipate', 'expects', 'believe', 'will', 'intends', 'plans' and similar expressions. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking information is provided to deliver information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.
In respect of the forward-looking information and statements the Company has placed reliance on certain assumptions that it believes are reasonable at this time, including expectations and assumptions concerning, among other things: interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; the efficacy of its software; our interpretation based on various industry information sources regarding the total miles of pipeline in the USA and globally, which segments are piggable; our understanding of metrics, activities and costs regarding evaluation, inspection and maintenance is in alignment with various industry information sources and costs of performing pipeline evaluation, inspection and maintenance in the USA are representative of those in the rest of the world, are reasonably accurate; the success of growth projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material development or other costs related to current growth projects or current operations. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to many factors and risks. These include but are not limited to the risks associated with the industries in which the Company operates in general such as: costs and expenses; interest rate and exchange rate fluctuations; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws.
Readers are cautioned that the foregoing list of factors is not exhaustive. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether because of new information, future events or otherwise, except as expressly required by Canadian securities law.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
SOURCE: OneSoft Solutions Inc.
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