CIM Revenue More Than Doubles Year-over-Year; Balance Sheet Remains Very Strong
EDMONTON, AB / ACCESSWIRE / March 26, 2020 / OneSoft Solutions Inc. (the "Company" or "OSS") (TSXV:OSS)(OTCQB:OSSIF), a North American developer of cloud-based business solutions, provides a business update and announces its financial results for the year ended December 31, 2019. Please refer to the Audited Consolidated Financial Statements, Management's Discussion and Analysis ("MD&A") and the Annual Information Form for the year ended December 31, 2019 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 is January 1 to December 31.
FINANCIAL RESULTS
(in $,000)'s, per share in $ | Year ended December | Ten months ended | Increase / |
$ | $ | % | |
Revenue | 2,712 | 4,328 | (37.3) |
Gross Profit | 2,010 | 4,143 | (51.5) |
Comprehensive (loss) income | (3,585) | 295 | 1,316.3 |
Weighted average common shares | 108,974 | 100,725 | |
Weighted average common shares | 108,974 | 105,120 | |
Per share: | |||
Comprehensive income (loss) - basic | (0.03) | 0.00 | |
Comprehensive income (loss) - diluted | (0.03) | 0.00 | |
Cash and short-term investments | 10,512 | 2,015 | 421.6 |
Working capital | 8,221 | 2,419 | 239.8 |
"2019 was a pivotal year for OneSoft, from several perspectives," said Dwayne Kushniruk, CEO of OneSoft. "Recurring revenue more than doubled this year, we on-boarded four new clients, enhanced our IP, and strengthened our balance sheet significantly. Client satisfaction with our solutions is high, sales processes with potential new customers are actively underway and our sales funnel continues to grow. We have aggregated what we believe to be the industry's widest and most integrated pool of integrity data coupled with vendor and technology-agnostic inline inspection results. This allows clients to leverage their historic asset and inline inspection data to make better data-driven decisions and potentially save millions of dollars in operational costs. We believe OneSoft is well-positioned, with first mover advantage and a strong competitive moat based on machine learning, data science and cloud computing on Microsoft's Azure platform, to continue to increase our lead in assisting industry players with digital transformation."
Mr. Kushniruk continued, "With the recent disruption of business caused by Covid-19, we are now witnessing some advantages of digital transformation for the industry. Interactions with our clients that have included CIM in their digital strategies confirm that they have been able to seamlessly shift to remote operations, allowing employees to access their systems and data in a secure manner while working from the safety of their homes. We look forward to the continued growth of our business in 2020 and sincerely thank all of our employees, clients and stakeholders for supporting our vision and objectives."
HIGHLIGHTS OF FISCAL 2019
Highlights for Fiscal 2019 include the following:
1 Super-majors are considered to be the seven largest oil and gas pipeline companies world-wide.
HIGHLIGHTS SUBSEQUENT TO YEAR-END FISCAL 2019
The Company presented a "Repair Fraction" white paper at the Pipeline Pigging and Integrity Management ("PPIM") conference held in Houston, Texas in February, 2020, the oil and gas pipeline industry's primary global forum devoted exclusively to pigging for maintenance, inspection and integrity evaluation and repair. The Company was invited to present its first quantifiable study outlining the value proposition of clients using CIM, which demonstrates that the Repair Fraction of excavations for pipeline repairs identified by CIM can be greatly improved over determinations made by legacy solutions, thereby resulting in significant potential cost savings for pipeline operators.
BUSINESS OUTLOOK
Management believes that Fiscal 2019 was a successful year for OneSoft, from both operational and corporate perspectives. We doubled annual recurring revenues from 2018 (10 months) to 2019 (12 months), tripled our client base, developed new software functionality that increased our credibility and footprint in our market and developed tools to scale and automate the on-boarding of future clients. We also strengthened our balance sheet through a capital raise, enabling the Company to capitalize on its first mover advantage and increase our competitive moat. The combination of $10.5 million of cash and short-term investments on hand at Fiscal 2019 year end, no debt, $8.2 million in working capital, increasing and sticky annual recurring revenues and a strong sales pipeline collectively serve to support the Company's growing future opportunities and reduces risk for shareholders as the business matures.
Based on the comprehensive validation processes conducted by high-profile clients who on-boarded in 2019; communications with prospective customers who are currently investigating or engaged in proof of concept trials; and numerous interactions with other industry professionals and vendors, we believe that awareness and credibility of our Company and CIM platform are continuing to gain momentum within the U.S. oil and gas pipeline industry. Management is focusing efforts to meet Fiscal 2020 objectives as follows.
From a revenue and sales perspective:
From a research and development ("R&D") perspective:
From a corporate perspective:
Potential Business Disruption Due to Volatile Oil Price and Covid-19 Virus
Although it is difficult to predict future scenarios that OneSoft may need to contend with in Fiscal 2020 as a result of the depressed oil price and Covid-19 virus epidemic, we believe the Company is well-positioned to deal with unusual business disruption that started to unfold in early 2020.
The extent of potential business disruption in Fiscal 2020 cannot be known with any degree of certainty. At this point in time, and given the information we have today, Management anticipates that business fallout from these factors will be disruptive for at least part of 2020, but not overly threatening to the Company's longer-term business and outlook. We intend to closely monitor the situation and adjust as necessary as events unfold.
Fiscal 2020 Outlook
Given the Company's priorities to focus on adding new clients, increasing data ingestion and analyses to augment our learnings database and accelerating new product development to increase our competitive moat and future opportunities, we expect to incur operational losses in 2020. Following the ramp-up of resource allocations to pursue these growth initiatives in 2019 the Company's cash consumption in operations before the effect of changes in working capital accounts was $2,535,359, or an average of $633,840 per quarter. This cash consumption was offset by the generation of $2,711,126 cash from working capital accounts, of which $991,324 arose from deferred revenue as customers prepaid next year's subscription to use CIM. Management believes they can, in part, finance a portion of the 2020 operational cash consumption in a similar manner.
Management's current expectation, based on our sales pipeline, is to double revenue in Fiscal 2020 over the prior year, providing purchase decisions are not postponed due to unforeseen industry budget curtailments resulting from the commodity price volatility and Covid-19 disruptions. If such disruption were to occur, we believe the worst-case scenario will be a delay in achieving our objectives until more normal business conditions prevail. We also believe that such disruption would likely delay development funding for potential competing solutions, so potential risk to our competitive moat would not be significant during this period of disruption. In any event, we will continue to enhance our solutions and build stronger value for our Company and investors, and given the Company's $10.5 million cash and short-term investments balance and current cash burn rate, we believe the Company is well-funded to pursue our business and strategies.
ON BEHALF OF THE BOARD OF DIRECTORS
ONESOFT SOLUTIONS INC.
Douglas Thomson
Chair
For more information, please contact
Dwayne Kushniruk, CEO
[email protected]
780-437-4950
Sean Peasgood, Investor Relations
[email protected]
647-494-7710
Forward-looking Statements
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: the effects of the COVID -19 world pandemic and related effects on the North American global economy, crude oil price fluctuations, 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.