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Edmonton, Alberta, Canada (August 26, 2020) – 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 financial quarter ended June 30, 2020 (“Q22020”). Please refer to the interim unaudited condensed Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2020 filed on SEDAR at www.sedar.com for more information.
Financial summary for Q2 ended June 30, 2020
The following table summarizes the second quarter ended June 30, 2020, compared to June 30, 2019:
Q2 2020 Financial Highlights
- Total revenue for the quarter ended June 30, 2020 (“Q2 2020”)was $619,470, consisting of $586,627 of annual recurring revenue (“ARR”)and $32,643 of other revenue.
- OneSoft tracks revenues in three categories,as was described on pages 9-10 of the Company’s Management Discussion and Analysis (“MD&A”)for the fiscal year ended December 31, 2019:
- ARR includes revenue from SaaS Subscription, inline inspection (“ILI”) Log Ingestion, Microsoft Azure and Specialized Functionality Module fees associated with the Company’s Cognitive Integrity ManagementTM (“CIM”)SaaS solution.
- Other Revenue includes fees for production trials, services and one-time project fees, which do not typically reoccur.
- As noted in previous communiques, the Company anticipates that quarter-by-quarter revenue variances will continue at least through 2021. Currently,historic data ingested into CIM skews revenue during initial implementation phases, such as the $1.6 million revenue reported in Q1 2020 due to the onboarding of a new client’s historic data.
- Cash was $9.5 million and working capital was $7.7 million;
- The Company has no debt;
- The following table summarizes some of the key financial revenue metrics followed by Management, with comparisons to prior periods.
Operational Highlights for Q2 2020
Sales and Marketing
- The Company is managing a higher number of sales opportunities than ever before in its history, currently involving 16 concurrent sales projects, 5 production trials, and several companies that appear to be close to engaging in long term CIM usage agreements. Management anticipates that several new CIM clients will be contracted by the end of 2020, based on these sales activities. Prospective clients are located in the USA, Canada, Brazil, Argentina, Australia and the United Arab Emirates.
- In Q2, the Company revamped and systematized sales processes that are considered important to scale future sales and onboarding of new clients, including implementation of a sophisticated client relationship management system and engaging additional marketing, sales and lead generation personnel and resources.
- Post quarter-end, OneBridge Solutions Inc. was named a finalist in the Application Innovation 2020 Microsoft Partner of the Year Award from among 3,300 Microsoft global partners nominated for excellence in innovation and implementation of client solutions based on Microsoft technology.
The Company continues to develop new functionality to address the data collected by other techniques and inspection methods used by pipeline operators to address regulatory compliance for both piggable and non-piggable pipelines. We anticipate making key Direct Assessment (“DA”) components available for private preview use and feedback by the end of September 2020. DA integrity methodologies are used for both piggable and non-piggable pipelines, including those for which ILI data is not captured.
This new functionality represents an opportunity advancement for the Company and to increase CIM’s competitive moat for several reasons:
- The new functionality will allow operators to automate the correlation of several additional data sets with ILI data by leveraging CIM, which will improve business intelligence and decision-making capability for integrity management engineers.
- We anticipate that this new functionality will increase the number of CIM users, to eventually include certain personnel who conduct DA work on non-piggable pipelines.
- We believe that this new functionality will increase CIM utilization overall, as DA data sets are typically collected annually or even more frequently in certain cases, whereas ILI data is typically collected on a 5- or 7-year cadence in accordance with regulatory guidelines. More frequent data collection enables more frequent analysis of correlated data sets and thereby improves intelligence for CIM users and the predictive analytics process overall.
- The core functionality of CIM aligns ILI data over multiple data sets, agnostic to tool vendor or technology. The addition of this new DA functionality serves as a foundational model to accommodate additional data sets in the future and expands the evolution of a pipe-centric database which we anticipate will foster increased daily use of CIM by more personnel within our clients’ organizations.
OneBridge Innovation Lab
- The objective of OneBridge Innovation Lab (“Lab”), established in Q1 2020, is to seek and explore business development projects that can leverage the Company’s technology and solutions to potentially increase new total addressable markets (“TAMs”) and revenues. The Lab is structured to operate with a small team that works independently within the Company, with the intention of handing off successful prototype projects to the Company’s core teams for commercialization, thereby allowing the Company’s first mover advantage with machine learning and innovation to continue without disruption to core projects and business growth strategies that are currently underway.
- The Innovation Lab began investigating several projects in Q2 2020, including research and development of prototype products and joint ventures with synergistic third-party clients, prospective clients and other industry vendors. Some projects target additional markets within oil and gas and could crossover into CIM solutions for the municipal water and sewer market, a potentially larger market than oil and gas pipelines. Preliminary research conducted to this point indicates that the CIM platform may be well-suited to adapt to this new market and investigation is ongoing.
- We anticipate that Lab projects will not require material incremental cash resources, and that some funding may potentially be contributed by third parties who participate in certain projects. Management continues to solicit and investigate new projects and is pleased with the interest that has already been generated.
Q1 2020 was highly productive from a revenue recognition perspective, however, Q2 reflected lower revenue, influenced by Covid-19 related disruptions and the fact that Q1 included the ingestion of a large number of ILI logs into CIM from an initial implementation by a client. The extent of future potential business disruption due to Covid-19 and economic factors resulting from the pandemic and energy price volatility cannot be known with any degree of certainty. Management does not view current affairs as overly threatening to the Company’s longer-term business and outlook for success.
Most of our prospective clients have implemented procedures to work with remote employees and have embraced the use of on-line and video conferencing tools to conduct their business operations. Our remote employee and cloud-computing environments that we’ve used since 2015 have allowed us to continue to execute our technology, sales and marketing and business development plans with no disruption, excepting the delays in signing new clients for various reasons that are beyond our control.
Our sales and business development activities started to revert to a “new normal” midway through Q2 2020, after prospective clients transitioned their business activities to on-line models. Despite the current disruptions influenced by Covid-19, we believe that transitions by companies globally to on-line work environments may be a catalyst for driving future opportunities for the Company because of a new appreciation for cloud computing and digital strategies, with good probability that these efficiencies, which legacy technologies and practices lack, will be retained following the pandemic.
Based on current information regarding loading of ILI logs into CIM for the balance of 2020, we anticipate that Q3 could improve in terms of revenue recognition and further increase in Q4, providing that ILI inspections conducted by our clients are not materially delayed due to Covid-19 disruptions.
These disruptions may delay the closing of new CIM sales, affecting Management’s expectation to double revenue in 2020 over 2019, as was stated in previous communiques, because of the time lags in contracting new clients and subsequent loading of ILI data logs that drives revenue recognition. At this point in time and based on our current sales pipeline, Management believes that the Company will sign new CIM clients in 2020 and begin generating at least some of the revenue from new clients that was anticipated earlier in 2020. With respect to the OneBridge Innovation Lab, we are in process of researching several new business development initiatives that could increase TAM and are pursuing strategies that Management believes will enhance the Company’s future opportunities. Regarding corporate development, we will continue to improve Company awareness with the investment community and seek opportunities to increase value for shareholders.
Given the Company’s strong balance sheet with $9.5 million of cash, no debt, strong sales pipeline, potential Lab business development projects that are being progressed and cash use of $724,032 in operations through the first half of 2020, we believe the Company is well-funded to pursue our business plans and successfully navigate through the current disruptions, without requirement to raise additional capital.
ON BEHALF OF THE BOARD OF DIRECTORS
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 labor 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.
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