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Revenue More Than Quadruples Over Last Year; Balance Sheet is Strengthened
EDMONTON, AB / March 26, 2019 / OneSoft Solutions Inc. (the "Company" or "OSS") (TSX-V: OSS, OTCQB: OSSIF), a North American developer of cloud-based business solutions, provides a business update and announces its financial results for the ten months ended December 31, 2018. Please refer to the Audited Consolidated Financial Statements, Management's Discussion and Analysis ("MD&A") and the Annual Information Form for the ten months fiscal period ended December 31, 2018 ("FPE December 31, 2018") filed on SEDAR at www.sedar.com for more information. Unless otherwise stated, all dollar amounts are Canadian dollars.
Note to reader: Effective in 2018, the Company changed its financial year-end from February 28 to December 31. The change in year-end resulted in the Company filing a one-time, ten-month transition year financial statement covering the period of March 1, 2018 to December 31, 2018. Subsequent to the transition year, the Company's financial year will be the period January 1 to December 31.
(in $,000)'s, per share in $Ten months
December 2018Twelve months
$$%Revenue4,3281,005330.6Gross Profit4,143910355.0Comprehensive income (loss)295(2,880)110.2Weighted average common shares
outstanding - basic (000)'s100,72583,904Weighted average common shares
outstanding - diluted (000)'s105,12083,904Per share:Comprehensive income (loss) - basic0.00(0.03)100.0Comprehensive income (loss) - diluted0.00(0.03)100.0Cash and cash equivalents2,0153,661(44.9)Working capital2,4191,32682.5
"OneSoft's technology is gaining traction with clients, and our financial performance has significantly improved year-over-year," said Dwayne Kushniruk, CEO of OneSoft. "Subsequent to the year end we added 4 new clients, including a Super-major, two Fortune 500 companies and an independent operator, to increase our total pipeline data miles to approximately 51,000. This is expected to result in cash break even operations in 2019, based on the current business plan. We look forward to the continued growth of our business and sincerely thank all of our employees, clients and stakeholders for supporting our vision and objectives."
HIGHLIGHTS FOR THE TEN MONTHS ENDED DECEMBER 31, 2018
- Revenue more than quadrupled to $4,327,845 from $1,005,045.
- Gross profit increased to $4,142,662 from $910,390.
- Operating income increased to a profit of $340,686 from a loss of $2,773,943.
- Comprehensive income increased to a profit of $294,780 this period from a loss of $2,880,440 last year.
- Adjusted EBITDA2 increased to positive $876,022 this period from negative $1,795,196 last year. Adjusted EBITDA in FPE December 31, 2018 represented 20.2% of revenue.
- FPE December 31, 2018 represents the first period of profitable operations since the Company sold its desktop computing business units and reorganized the Company to refocus on R&D initiatives to pursue and leverage machine learning, data science and cloud computing opportunities.
- OneSoft ended December 2018 with working capital having improved to $2,419,367, from $1,322,932 as at February 28, 2018. The Company has no liabilities other than accounts payable, accrued liabilities and deferred revenue.
- All remaining outstanding warrants (4,200,333) were exercised, generating $567,050 of cash for the Company and employees exercised 600,000 options, generating an additional $101,000 of cash.
- The Company completed its Cognitive Integrity Management ("CIM") version 3.0 (formerly referred to as "Polaris") development sprint in FPE December 31, 2018, on time and on budget. This was an extensive effort wherein we migrated comprehensive on-premise software applications developed by Phillips 66 to manage their own pipeline infrastructure, and integrated components of our machine learning and data science technologies to create CIM 3.0 which now operates on Microsoft's Azure Cloud computing platform as a software-as-a-service ("SaaS") application. CIM 3.0 provides full "cradle to grave" functionality that oil and gas ("O&G") pipeline operators world-wide typically require to perform integrity and logistics management of their transmission pipeline infrastructure.
- The Company's CIM solutions and underlying technology made significant gains with respect to positive market acceptance within the industry and the value of CIM has now been validated by numerous clients, prospective clients and industry experts.
SUBSEQUENT TO PERIOD END
Subsequent to the fiscal period ended December 31, 2018 the Company made several announcements about its business progress, as follows:
- On March 25, 2019 the Company announced another Fortune 500 client addition, which increases pipeline data miles under multi-year contract for CIM SaaS services to approximately 51,000.
- On February 22, 2019, the Company announced that OneSoft Solutions had been named to the TSX Venture 50 list due to it being ranked the fourth highest top performer in the Technology sector on the TSX Venture Exchange in 2018. The 2019 TSX Venture 50 list is comprised of 10 companies from each of five industry sectors, with selection criteria based on equally weighted factors of market capitalization growth, share price appreciation and trading volume. OneSoft recorded market capitalization growth of 136% over the prior year, traded 29,408,991 shares during 2018, and the Company's share price increased 96% year over year.
- On February 20, 2018, 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. The Client is working with us to develop the most advanced cloud computing platform leveraging machine learning and data science for the integrity management of pipelines. The Client engaged in a Pilot Project using OneBridge CIM 2.0 in September 2017 and participated in the CIM 3.0 Private Preview program in 2018. The Client intends to initially operate CIM enterprise-wide in parallel with its internal systems, with a view of ultimately adopting CIM as its primary solution to manage its pipeline infrastructure later this year.
- On January 24, 2019, the Company published its Q3 financial report in accordance with the prior February 28 fiscal year end date, before the year end date was changed to December 31.
- On January 14, 2019, the Company published a business update, announcing completion of the Polaris development project.
- On January 7, 2019, the Company announced that two new clients, including one industry Super-major1, adopted CIM solutions for long term use. Management believes that this was a key milestone because of stringent vulnerability assessment testing conducted by the Super-major prior to choosing CIM and the credibility associated therewith, which may contribute to accelerated adoption of OneBridge solutions by other prospective customers in the future.
1 Super-majors are considered to be amongst the seven largest oil and gas pipeline companies world-wide.
OneSoft is at an important inflection point wherein the Company has commenced transitioning from its R&D focus to commercialization of its CIM solutions. Revenue growth will be commensurate with the pace of market adoption of the Company's solutions. We believe the user experiences and strong validations of our solutions by our early adopter clients are now resonating positively within the U.S.A. marketplace, which serves to boost confidence and encourage wider industry acceptance of our new machine learning technologies and processes to replace legacy systems.
As explained in the Company's FYE February 28, 2018 MD&A (page 9) published on SEDAR, the Oil and Gas ("O&G") pipeline industry has an estimated annual expenditure of more than USD $600 million by U.S.A operators, and USD $1.1 billion by operators globally, dedicated to pipeline data evaluation processes. These expenditures represent the "sweet spot" for OneSoft's CIM solution, which is a cloud computing platform optimized to perform advanced data analytics using advanced data science and machine learning technologies.
OneSoft's challenge is to disrupt the status quo with its new technology solutions and claim market share. To disrupt established legacy technology and processes with new technology solutions, we believe it is necessary to initially offer superior software and analytics capabilities to clients at a reduced cost. Our first clients were granted special pricing, because it was necessary to onboard them in order to solicit user experience and input into our solutions, and to achieve industry validation that confirms our solutions offer a higher value proposition than legacy systems. We anticipate that revenue opportunities for our solutions will continue to increase as more clients gain confidence regarding our solutions, and as we add new functionality modules and increase market share. OneSoft's objective is to increase our client and prospect base as quickly as possible, by continuing to pursue prospective clients in our current sales pipeline who collectively operate approximately 200,000 miles of pipeline infrastructure in the U.S.A., and work collaboratively with clients, Microsoft, WorleyParsons and other reseller partners to pursue sales opportunities in the U.S.A. and Canada and certain international markets.
Revenue metrics over the past two years indicate that recurring and repeating SaaS revenues equated to approximately $100 per mile per year of pipeline data ("data mile") processed. While we do not have enough data points to accurately project future data mile revenue metrics, we believe that historic figures can reasonably be assumed for general planning purposes and anticipate that revenue per data mile metrics may increase as our software functionality enhancements generate incremental revenue opportunities.
Fiscal 2019 Expectations
The Fiscal 2019 operational plan focuses on Evolving CIM Solution Functionality, contracting new clients and pursuing R&D to Commercialize Cognitive Learning. The R&D projects will be initiated once client participation and appropriate funding for required resources is determined.
We believe that our efforts to date have positioned the Company to evolve the CIM platform for future opportunities and commence significant revenue growth. We anticipate that recurring and repeating revenue associated with CIM clients will increase in Fiscal 2019, and that other revenue potentially derived from software trials will continue to be sporadic, in accordance with historic experience.
New R&D sprints commenced in Fiscal 2019 are expected to be ongoing beyond the Fiscal 2019 year-end, with incurrence of associated R&D costs, and that similarly to the CIM 3.0 project, part of the development costs may potentially be funded in some manner by early-adopter customers. Recognition of revenue associated with these development sprints, if any, is not likely to occur until Fiscal 2020.
In summary, the Company's strategies, business, technology and operational plans for Fiscal 2019 have all been crafted to increase shareholder value through achievement of two key objectives: (a) increasing our technological lead, which we believe is significant; and (b) increasing market share and revenues.
Management expects the Company will achieve a cash break even scenario in Fiscal 2019 based on the current business plan.
CALCULATION OF ADJUSTED EBITDA:
31,2018Three months ended
28,2018Ten months ended
28,2018Comprehensive income (loss)2,528,592(964,462)294,780(2,880,440)Add (subtract):Depreciation and amortization22,360(79,826)221,933385,304Stock based compensation35,379101,629386,510445,367Impairment of intangible assets-254,601-254,601Interest income(2,320)(28)(27,201)(28)Adjusted EBITDA2,584,011(688,086)876,022(1,795,196)
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.
OneSoft Solutions Presenting at the SNN Network Virtual Investor Conference on Monday, August 3, 2020
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