Provides Business Outlook and AGSM Update and Grant of Stock Options
Edmonton, Alberta, Canada (July 26, 2018) – 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 quarter ended May 31, 2018 (“Q1, Fiscal 2019”). Unless otherwise stated, all dollar amounts are Canadian dollars. Please refer to the interim unaudited Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three months ended May 31, 2018 filed on SEDAR at www.sedar.com for more information.
“The Company is well poised to achieve its primary objectives of completing the commercial release of Polaris and increasing revenues in Fiscal 2019,” said Dwayne Kushniruk, OneSoft’s CEO. “Management believes that revenue from the current sales opportunities, coupled with cash of $3.5 million on-hand, is sufficient to achieve these objectives, with no requirement to raise additional capital.”
FINANCIAL SUMMARY FOR Q1 ENDED MAY 31, 2018
The following chart summarizes the first quarter ended May 31, 2018, compared to May 31, 2017:
- Revenue for the quarter increased 31.2% year-over-year from $223,093 to $292,783. The Company’s commercial customers processed more miles and inspection logs in our Cognitive Integrity ManagementTM (“CIM”) SaaS-based Machine Learning solution. During the quarter, the Company also recognized the revenue from one Pilot Program.
- Gross profit improved from $206,255 to $279,620, due to the increase in revenue.
- Expenses were $1,013,763, up from $721,100 a year ago. The increase was due to higher salaries associated with the development of Polaris and increased sales and marketing activity, offset by lower G&A expenses as one-time expenses in the year ago quarter for listing on the OTCQB and pertaining to intellectual property did not repeat.
- The increase in expenses caused the comprehensive loss to increase from $500,745 in Q1 last year to $766,809 this quarter.
OPERATIONAL HIGHLIGHTS FOR Q1 ENDED MAY 31, 2018
- Revenue continued to increase from previous quarters, as a result of current clients adding more pipeline infrastructure into CIM and new clients using CIM.
- The Company continued its Pilot Program initiative during the quarter, which allows prospective customers to evaluate CIM in a compressed timeline using their own data for a small segment of their pipeline. While pilots can be completed within days by OneBridge, they typically last weeks or months due to the multitudes of people at customer sites that are required to investigate, assess and adjudicate the impact CIM will have on their current systems and processes.
- In March 2018, OneBridge entered into a reseller arrangement with WorleyParsons [ASX:WOR], one of the largest, international engineering services firms in the oil and gas industry. WorleyParsons will offer OneBridge’s solutions to its pipeline clients based on their strategy to utilize OneBridge solutions to drive demand for high value engineering services that they provide for their clients.
- OneBridge continued our collaborative marketing and sales efforts with Microsoft, who is motivated by CIM’s demonstrated ability to drive consumption of (and revenue from) Microsoft Azure and other cloud products and services. In May 2018, OneBridge showcased CIM to Europe and Middle East Oil and Gas executives at a conference hosted by Microsoft in Brussels, Belgium.
- On March 15, 2018 the Company reported that all outstanding warrants had been exercised, generating $567,050, improving the Company’s share structure. Exercised employee stock options also added $30,000 to working capital in the quarter.
SUBSEQUENT TO QUARTER END
- June 4, 2018: OneSoft enters agreements with three Fortune 500 pipeline operators for Polaris private previews.
- June 25, 2018: Another Fortune 500 company starts a CIM Pilot.
- July 6, 2018: OneBridge nominated by WorleyParsons and selected as a Finalist for the 2018 ASTech Foundation award, with support from Phillips 66 [PSX:NYSE] and Microsoft [MSFT:NASDAQ].
- July 9, 2018: Canadian division of a U.S. pipeline Company engages in CIM Pilot Project.
OneSoft is transitioning from a research and development phase to revenue generation, which we believe will accelerate as the Company’s new technology and solutions gain traction in our marketplace.
We have estimated the industry costs associated with oil and gas pipeline integrity management to be USD $7.4 billion annually in the United States and USD $11.9 billion annually on a global basis, of which approximately 9%, 22% and 69% of these total figures are expended on Evaluation, Inspection and Maintenance, respectively. We believe that Data Science and Machine Learning technologies, like our CIM and Polaris solutions, may be able to disrupt a significant portion of the Evaluation, some portion of the Inspection, and potentially some portion of the Maintenance components of the legacy processes currently being used in the industry.
Statistics published by the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) report that the average cost per pipeline incident involving a release of oil or gas product into the environment in the USA was approximately $456,000 per incident (1). Our preliminary analysis of costs associated with data evaluation and predictive analytics indicates that the use of CIM resulted in an average of 52% and 81% savings of those costs for two of our clients. Additionally, significant cost avoidance has been identified in one client case because 31 serious threats were detected by CIM that were not discovered by their legacy processes, thereby potentially saving this client USD $25 million (USD $800,000 per incident) in property, environmental and remedial costs, had these threats resulted in failures and releases. The cost savings arising from the use of CIM versus legacy systems is very significant, as corroborated by our clients, and creates highly compelling motivations for prospective customers to consider and adopt our solutions.
(1) PHMSA, All Pipeline Incidents, Total costs, 3-year Average: Retrieved from: https://hip.phmsa.dot.gov/analyticsSOAP/saw.dll?Portalpages
We believe our own internal initiatives and our solid business relationships with three large, high profile companies – Microsoft, Phillips 66, and WorleyParsons – will greatly assist us to evolve our technology and grow revenues:
- Leveraging Microsoft’s ongoing collaborative marketing and sales initiatives in the USA, Canada, Europe, Middle East and Africa provides significant reach to potential customers globally, which would be very difficult and costly to replicate without Microsoft’s marketing and sales support.
- Phillips 66 is evangelizing the high value proposition of our technology and solutions amongst its peers, which is generating interest from similar potential customers.
- WorleyParsons is initiating marketing and sales activities for our solutions in Canada, Australia, New Zealand and other selected international markets.
Our own internal marketing and sales activities continue to create awareness of our solutions and accelerate interest by prospective customers in our Pilot Programs to assess the value proposition of our solutions. We anticipate that pilots will continue to operate in various stages of progression with numerous potential customers throughout Fiscal 2019, which are expected to generate nominal revenue to recover direct costs. Management remains optimistic that most pilot projects will eventually convert to long term commercial use of our solutions, some of which are expected to occur in Fiscal 2019. We also anticipate some revenue growth from our existing clients in Fiscal 2019, as they increase use of our solutions by ingesting additional pipeline segment data into CIM and transitioning new divisions and operating partners to replace legacy processes with CIM and Polaris.
Additionally, the Polaris program is highly important to the Company, and we expect Polaris’ commercial release to occur in Q3 of Fiscal 2019. All three private preview participants are enthusiastic about adopting the solution for ongoing commercial use, tentatively commencing in September 2018. We anticipate the completion of Polaris and acceptance of it by Phillips 66 will result in the transfer of a significant portion of the Company’s deferred revenue to earned revenue, and thereafter commence to generate Polaris revenue late in calendar 2018.
AGSM UPDATE AND GRANT OF STOCK OPTIONS
On July 24, 2018 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, including disinterested shareholder approval of the amended escrow share release schedule. Accordingly, these shares will be released from escrow on September 24, 2018. 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 $0.44 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.
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