OneSoft Solutions Inc. Reports Financial and Operational Results for Q3 2020 and Provides Business Outlook
OneSoft Solutions, a developer of cloud-based business solutions, reported Q3 2020 financial results with a revenue of $795,000, surpassing last year's $770,000. However, net losses increased to $999,000 from $664,000 in Q3 2019. Cash and investments totaled $8.2 million, and working capital was $6.8 million, with no debt. The company aims for a 50% year-over-year revenue increase despite pandemic-related delays. New sales leads and Production Trials are active, with expansion prospects in multiple global markets.
- Revenue increased by $24,899 compared to Q3 2019 and $175,528 compared to Q2 2020.
- Cash and short-term investments amount to $8.2 million with no debt.
- Active sales activities and Production Trials in multiple regions, indicating growing interest.
- Net loss increased to $999,000 from $664,000 year-over-year.
- Adjustments in sales expectations due to pandemic delays, reducing growth projections.
EDMONTON, AB / ACCESSWIRE / November 25, 2020 / OneSoft Solutions Inc. (the "Company" or "OneSoft") (TSXV:OSS)(OTCQB:OSSIF), a North American developer of cloud-based business solutions, is pleased to announce its financial results for the financial quarter ended September 30, 2020 ("Q3 2020"). Please refer to the interim unaudited condensed Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2020 filed on SEDAR at www.sedar.com for more information.
FINANCIAL SUMMARY FOR Q3 ENDED SEPTEMBER 30, 2020
The following table summarizes the quarter ended September 30, 2020, compared to September 30, 2019:
| Three months ended | Nine months ended | |||||||||||||||
(in C$,000, per share in C$) | Sept 30, 2020 | Sept 30, 2019 | Sept 30, 2020 | Sept 30, 2019 | ||||||||||||
| $ | $ | $ | $ | |||||||||||||
Revenue | 795 | 770 | 3,090 | 2,072 | ||||||||||||
Gross profit | 589 | 582 | 2,359 | 1,628 | ||||||||||||
Net loss | (999 | ) | (664 | ) | (2,317 | ) | (2,481 | ) | ||||||||
Exchange gain (loss) on translation of foreign operations | 3 | (5 | ) | (18 | ) | 13 | ||||||||||
Comprehensive loss | (996 | ) | (669 | ) | (2,335 | ) | (2,468 | ) | ||||||||
Weighted average common shares outstanding - basic and fully diluted (000)'s | 114,975 | 112,539 | 114,246 | 107,727 | ||||||||||||
Net loss per share | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | ||||||||
Adjusted EBITDA | (815 | ) | (475 | ) | (1,614 | ) | (1,690 | ) | ||||||||
Q3 2020 FINANCIAL METRICS
- Revenue for the quarter ended September 30, 2020 ("Q3 2020") was
$24,899 higher than in the same quarter last year (Q3 2019) and$175,528 higher than the quarter ended June 30, 2020, as more new inspection logs were ingested into and analyzed by our Cognitive Integrity ManagementTM ("CIM") software-as-a-service ("SaaS") solution. - The Company reported a Comprehensive loss of
$995,525 for the current quarter, compared to a Comprehensive loss of$668,904 for the comparable period in the prior year. The increase is essentially due to having added personnel to accelerate research and development of new software functionality to increase the Company's value proposition and competitive advantage. The Comprehensive loss includes$206,868 non-cash expense ($224,575 in Q3 2019) consisting of amortization, depreciation and stock compensation expense. - At September 30, 2020, cash and short-term investments totaled
$8.2 million ($10.5 million at December 31, 2019), working capital was$6.8 million ($8.2 million at December 31, 2019), and the Company has no debt. Assuming customers renew and pay their 2021 contracts with no negative changes and assuming no major changes in its current business strategies and cash consumption, the Company believes it has sufficient cash on hand to fund its business and growth strategies as envisioned.
OPERATIONAL HIGHLIGHTS
- Generation of new sales leads, and sales activities were very active in Q3 2020, involving prospective customers in the U.S.A., South and Central America, and Australia. Our sales process is complex, as the disruption of legacy processes requires multiple approvals throughout the client organizations and protracts finalization of contracts. We commenced several new Production Trial projects in the quarter, which we anticipate will result in new commercial contracts for CIM use in the future. The Company continued to develop new functionality to incorporate data collected by various integrity and inspection methods for both piggable and non-piggable pipelines. We released the first of these new functions for private preview use on September 8, 2020, creating the ability to analyze and align additional data sets used in Direct Assessment ("DA") pipeline integrity methodologies. DA analysis is used for non-piggable pipelines, which represents the larger portion of pipelines in the U.S.A. DA functionality is expected to increase CIM utilization, and thereby future revenue growth.
- Included in the Q3 2020 revenue was
$43,292 from the completion of CIM test use cases involving customers' own data, including one completed in Australia, versus $nil in each of the prior 2 quarters. - The Company continued to investigate several OneBridge Innovation Lab projects during the quarter, including research and development of prototype products and joint ventures with clients and synergistic industry participants. Management anticipates that some of these efforts may materialize in the near-term.
- In response to feedback from some prospective customers and reseller partners, the Company commenced development of an additional "pay as you go" pricing ("PAYG") model in Q3 that will be deployed in Q4. The PAYG model is priced higher than multi-year SaaS user agreements and includes a clickthrough user agreement rather than a signed contractual agreement. The PAYG pricing model is scalable for use for an individual integrity management project or for enterprise-wide use for all pipeline assets, making it advantageous for certain prospective customers who prefer to ease into CIM use to further validate CIM's capability beyond what they learn in Production Trial scenarios, including in some cases to assess CIM functionality for the most problematic pipeline segments.
- On October 14, 2020, OneBridge Solutions Inc. announced that another North American-based pipeline operator, with unique operating circumstances, entered into a multi-year agreement to adopt CIM to manage its pipeline system. While most CIM usage to date has involved underground pipeline systems, this Client operates a pipeline designed to withstand harsh climatic environments, with segments of insulated pipeline mounted on above-ground pylons. This design creates unique operating challenges in aligning inline inspection data, which do not arise in conventional underground pipelines.
BUSINESS OUTLOOK
Global interest in our SaaS solutions continues to increase, with sales activities currently underway in the U.S.A., Canada, Australia, United Arab Emirates, Brazil, and Argentina. Numerous CIM Production Trials are in various stages of completion, which we anticipate will result in completed sales in future periods. Various business develop initiatives are also underway, with the objectives of recruiting CIM resellers and identifying new potential markets and revenue sources based on our solutions.
Given that the pandemic delayed sales, OneSoft will not achieve
We are pleased with the progress being made to advance our technology and solutions and remain confident that our competitive moat continues to increase. Based on certain business development projects conducted in Q3, we have confirmed our belief that certain CIM functionality desired by customers has not been replicated by other leading industry vendors who chose to update their existing legacy systems, rather than design and develop, as we have, a born-in-the-cloud solution using machine learning, data science and cloud computing. Recent projects we have completed with some industry experts provide compelling data that support the high value proposition of using CIM versus other vendor solutions, details of which will be disclosed in upcoming industry white papers.
Given the Company's strong balance sheet with
ON BEHALF OF THE BOARD OF DIRECTORS
ONESOFT SOLUTIONS INC.
Douglas Thomson
Chair
For more information, please contact
Dwayne Kushniruk, CEO | Sean Peasgood, Investor Relations |
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 impact of Covid-19 on the business operations of the Company and its current and prospective customers, 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 is reasonably accurate; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; that there are no unforeseen material development or other costs related to current growth projects or current operations; the success of growth projects; future operating costs; interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; the sufficiency of budgeted capital expenditures in carrying out planned activities; and no changes in applicable tax laws. 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.
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