EDMONTON, ALBERTA–(Marketwired – June 1, 2017) – OneSoft Solutions Inc. (the “Company” or “OSS”) (TSX VENTURE:OSS)(OTCQB:OSSIF), a North American developer of cloud-based software solutions provides a business update and announces its financial results for the fourth quarter and year ended February 28, 2017. Please refer to the Audited Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) filed on SEDAR for more information.
VISION, STRATEGY AND BUSINESS UPDATE
OneSoft’s vision, through its wholly owned subsidiary, OneBridge Solutions Inc. (“OneBridge”), is to replace legacy, desk top software applications that are historically cumbersome to deploy and costly to operate, to a more cost efficient software as a service (“SaaS”) business model utilizing cutting edge new technologies that operate on Microsoft’s Cloud platform and services. We believe that our proprietary Machine Learning algorithms provide significantly greater capability and functionality, and may represent a higher value proposition for oil and gas pipeline operators than legacy desktop systems that currently serve the industry provide today.
We believe our solutions may assist the pipeline operator to predict pipeline failures and thereby save lives, protect the environment, reduce operational costs and address regulatory compliance requirements. OneBridge utilizes a single geo-spatial database that accommodates pipe-centric, structured and unstructured big data, with capability to address the key functions that pipeline companies require to manage, operate and maintain their pipeline assets. OneBridge’s products are: Cognitive Integrity Management (“CIM”); and Safety Management Systems and Compliance Analytics (“SMS/CA”); all of which will be deployed as SaaS solutions that leverage Data Science, Azure Machine Learning, HoloLens, Microsoft BI and other components of the Microsoft Cloud platform and services.
OneSoft’s technology strategy is closely aligned with Microsoft, as OneSoft’s management (“Management”) believes Microsoft’s Cloud platform will be the global cloud platform of choice for business customers in the future. OneSoft has incorporated components of Microsoft’s cloud technology and services into its CIM products to create what we believe is cutting-edge software. We use Machine Learning (“ML”), a form of artificial computing intelligence to analyze the vast quantities of data (“big data”) recorded in inline inspection data sets created by pipeline inspection gauges (“pigs”) inspecting hazardous oil and gas pipelines during the past two decades. Our plan is to continue to develop and enhance our proprietary ML algorithms to have the capability to assess other data sets that might correlate with pipeline deterioration such as pipe coating failure, soil types, seismic, moisture and other environmental information to determine the patterns that contribute to the deterioration and ultimate failure of hazardous pipelines. We anticipate that we will continue to evolve our solution in accordance with our technology roadmap which incorporates our pipeline data management expertise, certain components of Microsoft’s cloud platform and services, and customer input and feedback regarding product features and functionality they desire to manage their pipeline assets as smart infrastructure.
Our proprietary ML algorithms are key and unique intellectual properties (“IP”) embodied in our software solutions and they continued to be enhanced and optimized following the commercial release of CIM to the marketplace in January 2017. Our product development efforts were supplemented through a collaborative working arrangement with a Canadian University who assigned two of its engineering Ph.D. candidates to research, develop and improve algorithms for our IP, under our direction. The University received funding grants from the Natural Sciences and Engineering Research Council of Canada and from Microsoft for this project, which commenced November 1, 2016 and continued through April 30, 2017. We also worked with a professor and his Ph.D. student candidate from a U.S. University during the year to progress our algorithms. These projects have been helpful to us and OneBridge will retain full and sole ownership or access to the intellectual property developed in these programs. During the year, we also addressed numerous requests made by our private preview customers and added new functionality and capability to our software solution.
The Company is now transitioning from its R&D phase, during which time only limited revenue associated with early adopter use of our solutions was earned, to a revenue generation phase which we anticipate will accelerate revenues as we attract and engage new customers. Please refer to the Management Discussion and Analysis report (MD&A) for more details in this regard.
Marketing and sales initiatives for CIM commenced following the commercial release of the CIM solution in January 2017. This followed a four-month technology development sprint during the first half of calendar 2016 wherein we worked collaboratively with Microsoft teams in their first Accelerator program for Machine Learning and big data, and subsequently an extensive private preview program with two US-based pipeline operators which took place during the second half of calendar 2016. We believe that the value proposition of the OneBridge solutions is well understood by these private preview customers, and expect that the support and assistance we gained in the last year to engage new customers during our next fiscal year will continue.
Our CIM and HoloLens solutions were demonstrated to an international audience of industry attendees at the annual Pipeline Pigging and Integrity Management tradeshow (“PPIM”) held this year in Houston, Texas between February 27 and March 3, 2017. On March 29, 2017, OneBridge presented its solutions at a Pipeline Asset Management Workshop hosted by Microsoft at their Technology Center in Houston, which was attended by senior managers from approximately 30 companies who are responsible for pipeline integrity roles including engineering, integrity management, maintenance, data science, analytics and information technologies. OneBridge had a trade booth at the Banff 2017 Pipeline Workshop held at the Banff Centre from April 3-6, 2017, which was attended by more than 850 participants which focused on various aspect of the oil and gas pipeline industry including regulatory and standards development; inspection; corrosion; integrity, risk and asset management; geohazards and emergency preparedness and response. Microsoft sales teams worked collaboratively with OneBridge by donating computer hardware, personnel and other resources which assisted our presence at these venues.
We are encouraged by the input and feedback received from numerous potential customers who had the opportunity to investigate our solutions, and we are now actively engaged in follow-up discussions and actions with potential new customers. Our two main challenges appear to be (1) long sales cycles which we anticipate will be six months or more; and (2) the pervasive reluctance and skepticism to embrace a new automated solution to replace legacy practices. Our sales process has generally involved senior executives of the prospective customers, as our solutions operate much differently than the status quo processes and products that serve the industry today. We have found that numerous successive meetings are required with prospective customers to analyze the benefits of cloud versus desk-top systems and to determine, articulate, educate and fully communicate the higher value proposition that OneBridge solutions can provide over legacy systems.
To address these sales challenges, OneBridge has created a Pilot Project program which we anticipate will encourage new customers to engage the use of CIM on a trial basis. The Pilot Project program is designed to operate as a “fast succeed/fast fail” initiative, wherein potential customers will provide data for a small portion of their pipeline, and within a week or two have it analyzed and reported on by the CIM solution so prospects can understand and experience the value proposition of using CIM first-hand. The Pilot Projects will be revenue generating for OneBridge and their pricing is expected to be within the financial authorization levels of integrity management personnel, thus alleviating the need for multi-level approval which lengthens sales cycles. We believe the value of using CIM, once it can be applied to, and demonstrated with a customer’s specific data, will be seen as highly compelling leading to quicker purchase of full subscriptions to use the product.
Exposition of the OneBridge solutions at the three conference venues attracted interest from certain industry vendors who currently provide services based on legacy solutions to their customers. We are following up with several of these to explore alternatives such as joint sales projects, third party licensing arrangements or other means to enable them to utilize OneBridge solutions as part of the services they provide to their customers.
We believe once key industry participants who have embraced our solution share their experience with their industry peers at industry gatherings, work-shops and conventions, our CIM solution will gain traction as a compelling alternative to the on-premise desktop solutions that serve the industry today.
In the year, the Company also completed several small public awareness consulting contracts with new pipeline customers and also completed a large Public Awareness contract to identify and mail safety brochures to all the structures in the buffer zone of a pipeline. These Public Awareness contracts and related revenue will not repeat in the next fiscal year as we have elected to postpone further evolution of our SMS/CA software products during the next few quarters in order to devote full operational focus to our CIM solution.
We believe that the combination of (i) OneSoft’s alignment with Microsoft cloud deployment strategies; (ii) our deep domain expertise with respect to the pipeline industry and development expertise regarding cloud computing; (iii) the high degree of interest and motivation of oil and gas pipeline customers to improve their safety practices; and (iv) the need for hazardous pipeline operators to comply with increasingly stringent operational, safety and regulatory requirements have potentially positioned the Company for significant future growth and opportunity. We believe that our solutions are ideally poised to provide comprehensive, cost-effective functionality and capability that legacy desk-top systems are not able to replicate, and that our solutions are sufficiently revolutionary to be disruptive to legacy systems typically used in the industry today.
Our corporate development strategy continues to encompass pursuit of initiatives that support value creation for our shareholders, potentially including joint ventures and M&A scenarios that are synergistic and supportive of our objectives.
Q4 AND FISCAL YEAR FINANCIAL HIGHLIGHTS
Financial results are summarized as follows:
| (in $,000)’s, per share in $ | Three months ended February | Year ended February | ||||||||||
| 2017 | 2016 | Increase / (Decrease) |
2017 | 2016 | Increase / (Decrease) |
|||||||
| Continuing Operations | $ | $ | % | $ | $ | % | ||||||
| Revenue | 243 | 142 | 71.1 | 571 | 405 | 41.0 | ||||||
| Net loss | (655 | ) | (321 | ) | 104.2 | (1,642 | ) | (2,240 | ) | (26.7 | ) | |
| Discontinued operations: | ||||||||||||
| Net (loss) income | (66 | ) | 1 | (6,762.9 | ) | 178 | (91 | ) | 296.0 | |||
| Consolidated net loss | (721 | ) | (320 | ) | 125.5 | (1,464 | ) | (2,331 | ) | (37.2 | ) | |
| Weighted average common shares outstanding – basic and fully diluted (OOO)’s | 66,726 | 47,074 | 65,426 | 40,553 | ||||||||
| Per share: | ||||||||||||
| Continuing operations – loss | (0.01 | ) | (0.01 | ) | – | (0.03 | ) | (0.06 | ) | (50.0 | ) | |
| Discontinued operations – income | – | – | – | – | – | – | ||||||
| Consolidated net loss | (0.01 | ) | (0.01 | ) | – | (0.03 | ) | (0.06 | ) | (50.0 | ) | |
Revenue for the quarter and the year increased from the comparable prior periods based on Management’s decision to focus on oil and gas pipeline software in the current year, the precursor of which was the selling of the OneNFP accounting software product line in the prior fiscal year. This new focus also resulted in higher gross profit of $450,230 for the current year and $159,965 for the current quarter (compared to $38,170 and $3,039 in the prior comparable periods). The reduction of $722,935 in the consolidated net loss for the current year compared to the previous year was a result of the increase in gross profit, capitalization of software development costs of $965,944 and settlement of the Sylogist litigation as noted below offset by an increase of $553,043 in operating expenses, expense of $178,379 revaluing contingently issuable shares and a net reduction of $125,242 in net income tax recovery. In Q4 of this fiscal year, the Company recorded $463,978 in non-cash expenses including $209,388 in stock-based compensation, $129,100 in impairment charges relating to two intangible products, $82,571 in amortization and depreciation and $42,919 to increase the value of contingently issued shares. The consolidated net loss for the quarter was $720,695 versus $319,592 for the comparable quarter last year.
During Fiscal Q4 this year, certain warrant holders exercised 907,000 warrants to generate cash proceeds of $93,552. Subsequent to the fiscal year end, on March 6, 2017, certain insiders sold some of their shares and used a portion of the sale proceeds to exercise warrants to replace the shares sold, which raised $1,822,389 for the Company without incurring the further dilution that a new private placement would have caused. These funds and anticipated cash from operations is felt sufficient to allow the Company to execute its business plan as envisioned for fiscal 2018.
On October 21, 2016, the Company and Sylogist Limited finalized a settlement agreement whereby all matters associated with OneSoft’s statement of claim against Sylogist, and Sylogist’s counterclaims against OneSoft, its subsidiaries and its senior executives and directors were resolved, without admission of liability by either side. The agreement is a compromise of the disputed claims and all actions have been discontinued on a without costs basis. OneSoft received $244,306 in cash and forgiveness of unpaid accrued royalties of $88,269 as part of the settlement terms. Terms of the settlement, except for those which relate to financial disclosure to meet regulatory compliance requirements, are confidential.
On March 31, 2016, the Company announced the closing of an over-subscription to its non-brokered private placement of 3,333,333 units at a price of $0.075 per Unit for gross proceeds of $250,000. Each unit sold was comprised of one common share and one Common Share purchase warrant. Each warrant entitles the holder to purchase one additional Common Share at a price of $0.15 per Common Share for a period of twenty-four months following the date of closing. After four months and one day following the closing date, the Company will have the right to accelerate the expiry date of the Warrants if the closing price of the Company’s common shares is equal to or exceeds $0.50 for twenty consecutive trading days. The Company raised a total of $1,250,000 under the Private Placement, including the initial subscriptions of 13,333,333 Units, with the same terms, for gross proceeds of $1,000,000 which closed on February 25, 2016.
About OneSoft Solutions Inc.
OneSoft Solutions Inc. has developed software technology and products that have capability to transition legacy, on premise licensed software applications to operate on the Microsoft Cloud, in conjunction with Office 365, CRM Online, Microsoft BI and Microsoft Azure Machine Learning. OneSoft’s business strategy is to seek opportunities to convert legacy business software applications that are historically cumbersome to deploy and costly to operate, to a more cost efficient subscription based business model utilizing the Microsoft Cloud platform and services, with accessibility through any internet capable device. Visit www.onesoft.ca for more information.
About OneBridge Solutions Inc.
OneSoft’s wholly owned subsidiary, OneBridge Solutions Inc., is developing revolutionary new applications for the Oil & Gas pipeline industry, which we believe may allow the pipeline operator to predict pipeline failures and thereby save lives, protect the environment, reduce operational costs and address regulatory compliance requirements. OneBridge utilizes a single geo-spatial database that accommodates pipe-centric, structured and unstructured big data, with capability to address the key functions that pipeline companies require to manage, operate and maintain their pipelines. OneBridge solutions are designed to address two key areas of functionality – Cognitive Integrity Management (“CIM”) and Safety Management Systems and Compliance Analytics (“SMS/CA”) solutions, all of which will be deployed as SaaS solutions that leverage Data Science, Azure Machine Learning, HoloLens, Microsoft BI and other components of the Microsoft Cloud platform and services. Visit www.onebridgesolutions.com for more information.
ON BEHALF OF THE BOARD OF DIRECTORS
ONESOFT SOLUTIONS INC.
Douglas Thomson, Chair
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 for the purpose of providing 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 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 a number of 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 as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Dwayne Kushniruk
CEO
(780) 437-4950
dkushniruk@onesoft.ca
www.onesoft.ca