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Addition of New Customers Drives Revenue Growth of 109% Year over Year
Edmonton, Alberta, Canada (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 announceits financial results for the first quarter of fiscal 2019 that ended March 31,2019. Please refer to the interim unaudited condensed Consolidated FinancialStatements and Management’s Discussion and Analysis (“MD&A”) for the three months ended March 31, 2019 filed on SEDARat 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:
- Revenue of$592,302 for the quarter ended March 31, 2019 more than doubled the $283,202 reportedfor the comparative period. Five new customers have been added since February2018, and more pipeline assessments were loaded in the current period versusthe comparative one.
- Directcosts, consisting of royalties related to certain components of CIM 3.0, Azureplatform 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 highmargin software revenue and compared to 88% in the comparative period.
- Expenses net of cost capitalization increasedto $1,182,866 from $787,923 in the comparative period.
- The netcomprehensive loss of $967,391 increased slightly from $964,462 in the comparativeperiod.
- Cash atquarter 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 receivableand completion of the $9.2 million bought deal financing in April 2019increased cash to approximately $12.7 million.
Operational Highlights for Q1 Ended March 31, 2019
Highlights for Q1 include the following:
- OnJanuary7, 2019 the Company announced that twonew clients, including one industry Super-major1, adopted CIMsolutions for long term use. Management considers the addition of theSuper-major client to be a notable event, because of the stringentvulnerability assessment testing conducted by this client prior to choosing touse our solutions. We believe the credibility associated with engaging thisclient may assist to positively influence adoption of OneBridge solutions byother prospective customers in the future.
- OnFebruary20, 2019 the Company announced that asubsidiary of a large conglomerate that operates pipelines situated primarilyin the mid-west U.S.A. and Texas had adopted CIM for long term use.
- OnMarch25, 2019 the Company announced anotherFortune 500 client addition.
- Asa result of these recent sales the Company’s client list increased during Q1from two clients as at December 31, 2018 to six clients as at March 31, 2019, thatnow 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 gaspipeline infrastructure for which we anticipate data will be ultimately beloaded into CIM on a staged timing basis.
- OnFebruary22, 2019 the Company announced that it wasranked the fourth highest top performer in the Technology sector on the TSXVenture Exchange, comprising part of the 2019TSX Venture 50 list.
1Super-majors are considered to be amongst the seven largest oil and gaspipeline companies world-wide.
Subsequent to Quarter End:
Notable events subsequent to the Q1 fiscal period ended March 31, 2019 include the following:
- OnApril25, 2019 the Company closed a $9,200,000Bought Deal Financing pursuant to a Short Form Prospectus and issued 11,500,000common shares at $0.80 per share. Institutional investorparticipation accounted for approximately 75% of the financing. Please refer to the “Subsequent to Period End” section onpage five of the MD&A for this period filed on SEDAR for more information inthis regard.
- TheCompany formalized its roadmap for its accelerated technology development planand initiated efforts to commence the development sprints.
- Management is optimistic that the Company iswell positioned to successfully cross the “market adoption chasm” thatdisruptive new technologies typically experience in their quest to garnermarket 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 theevolution of CIM functionality, once client interest for participation andappropriate funding resources have been investigated and arranged. Followingthe recent capital raise completed in April, 2019, the Company is now takingsteps to accelerate its R&D efforts, essentially to (a) increase revenue potentialfrom current and prospective clients; and (b) increase the Company’stechnological lead over potential competitors.
- Management’sintention is to allocate resources to fund the development of new solutions andalgorithms to advance our technological lead and competitive moat, increasemarket potential and revenues, and enhance marketing and sales efforts and initiatives.Management believes that cash from the recent financing, coupled with revenuegeneration from CIM will be sufficient to fund the accelerated technologydevelopment strategy and grow the business as envisioned.
- Webelieve that OneSoft’s “first mover” advantage in having developed andcommercialized the first O&G pipeline integrity management solutions basedon cloud computing, machine learning and data science is highly beneficial.Management will now accelerate the development of additional new technology andsolutions that are accretive to CIM and will appeal to CIM clients andprospective customers. We believe our strategy to accelerate technologyadvancement, 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 aretargeted at oil and gas (“O&G”) pipelines for which in-lineinspection (“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 infrastructurerepresents only 660,000 miles, while approximately 2.1 million miles aremanaged under Direct Assessment. Our intention is to expand functionality ofour CIM platform to include Direct Assessment, which we anticipate willincrease our addressable market opportunity. We believe this opportunityextends internationally, as the U.S.A. only represents approximately 60% of O&Gpipelines installed world-wide.
Pleaserefer to the MD&A filed on SEDAR for further information and details.
AGSM Update and Grant of Stock Options
On May 22, 2019 the Company held its AnnualGeneral and Special Meeting (“AGSM”). All resolutions as set forth in theManagement Information Circular distributed to shareholders prior to themeeting were passed. Following the AGSM, 275,000 stock options were granted tothe Directors and Officers of the Company and 325,000 stock options weregranted to senior executives as part of compensation plans. All options grantedhave a strike price of $0.92 per share, vest 50% on each of the grant andanniversary dates and will expire in five years if not exercised.
ON BEHALF OF THE BOARD OF DIRECTORS
ONESOFT SOLUTIONS INC.
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Forward Looking Statements:
This news release contains forward-lookingstatements relating to the future operations and profitability of the Companyand other statements that are not historical facts. Forward-looking statementsare often identified by terms such as “may”, “should”, “anticipate”, “expects”,“believe”, “will”, “intends”, “plans” and similar expressions. Any statementsthat are contained in this news release that are not statements of historicalfact may be deemed to be forward-looking statements. Such forward-lookinginformation is provided to deliver information about management's currentexpectations and plans relating to the future. Investors are cautioned thatreliance on such information may not be appropriate for other purposes, such asmaking investment decisions.
In respect of the forward-lookinginformation and statements the Company has placed reliance on certainassumptions that it believes are reasonable at this time, includingexpectations and assumptions concerning, among other things: interest andforeign exchange rates; planned synergies, capital efficiencies andcost-savings; applicable tax laws; the sufficiency of budgeted capitalexpenditures in carrying out planned activities; the availability and cost oflabour and services; the efficacy of its software; our interpretation based onvarious industry information sources regarding the total miles of pipeline inthe USA and globally, which segments are piggable; our understanding ofmetrics, activities and costs regarding evaluation, inspection and maintenanceis in alignment with various industry information sources and costs ofperforming pipeline evaluation, inspection and maintenance in the USA arerepresentative of those in the rest of the world, are reasonably accurate; thesuccess of growth projects; future operating costs; that counterparties tomaterial agreements will continue to perform in a timely manner; that there areno unforeseen events preventing the performance of contracts; and that thereare no unforeseen material development or other costs related to current growthprojects or current operations. Accordingly, readers should not place unduereliance on the forward-looking information contained in this press release.Since forward-looking information addresses future events and conditions, suchinformation by its very nature involves inherent risks and uncertainties.Actual results could differ materially from those currently anticipated due tomany factors and risks. These include but are not limited to the risksassociated with the industries in which the Company operates in general suchas: costs and expenses; interest rate and exchange rate fluctuations; competition;ability to access sufficient capital from internal and external sources; andchanges in legislation, including but not limited to tax laws.
Readers are cautioned that the foregoinglist of factors is not exhaustive. Forward-looking statements contained in thisnews release are expressly qualified by this cautionary statement. Theforward-looking statements contained in this news release are made as of thedate of this news release, and the Company undertakes no obligation to updatepublicly or to revise any of the included forward-looking statements, whether becauseof new information, future events or otherwise, except as expressly required byCanadian securities law.
This news release does not constitute anoffer to sell or the solicitation of an offer to buy any securities within theUnited States. The securities to be offered have not been and will not beregistered under the U.S. Securities Act of 1933, as amended, or any statesecurities laws, and may not be offered or sold in the United States absentregistration or an applicable exemption from the registration requirements ofsuch Act or other laws.
The TSX Venture Exchange has not reviewedand does not accept responsibility for the adequacy or accuracy of thisrelease.
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