OneSoft Solutions Inc.
TSX VENTURE : OSS

OneSoft Solutions Inc.

July 13, 2015 16:00 ET

OneSoft Solutions Inc. Announces the Proposed Acquisition of the Business of Bridge Solutions Inc.

EDMONTON, ALBERTA--(Marketwired - July 13, 2015) - OneSoft Solutions Inc. ("OneSoft" or "OSS") (TSX VENTURE:OSS), a North American developer of cloud-based business solutions, is pleased to announce that further to its announcement on June 17, 2015, OSS has entered into an agreement to acquire the business and assets of Bridge Solutions Inc. ("Bridge"), a private Alberta company established in 2002 (the "Transaction").

About Bridge

Bridge was founded and operated by Tim Edward ("Edward"), who has developed numerous operating processes and software applications for the oil and gas pipeline industry (the "Industry"). Mr. Edward pioneered a spatial data infrastructure ("SDI") framework. This technology includes concepts, trade secrets, processes, tools, and calculations that interconnect and integrate geographic data and metadata, without the requirement for legacy geographic information system ("GIS") functionality. Bridge's processes integrate and analyze data from diverse data sources in an efficient manner, in order to provide Industry operators with comprehensive information about their pipelines to optimize infrastructure management and to identify potential threats to a pipeline's integrity. Such industry-common data sources typically include a combination of spatial and linear data from in-line inspections ("ILI"), Direct Assessments ("DA") data, spatial and linear; Cathodic Protection ("CP") data, spatial and linear; Direct Current Voltage Gradient data ("DCVG"); Non-Destructive Engineering data ("NDE"); Excavation data; Public Awareness data; and various environmental and land use datasets (collectively the "Bridge SDI"). Customers of Bridge products and services include several pipeline companies, most of which are US based. Bridge has also worked closely with several Industry associations and government regulators who are believed to be supportive of Bridge's approach and processes.

About the Industry and Other Potential Infrastructure Opportunities

The Industry is believed to present a significant opportunity within a much larger universe of infrastructure opportunities. Other opportunities that have infrastructure concerns similar to the Industry may include railways, municipal water and sewer, and transportation and highways, which may present future opportunities to utilize the Bridge SDI.

The American pipeline industry itself currently operates 4.8 million kilometers (2.6 million miles) of pipelines. Over the past two decades there have been over thirty critical incidents involving pipelines in the US alone. Collectively they resulted in at least 84 known fatalities, 630 injuries, and losses in excess of US $1 Billion. These incidents are typically low frequency, but very high consequence events. With an ever increasing regulatory burden, pipeline operators struggle with the complexity and challenges of coordinating tens of millions of integrity records, coordinating with multiple private and public response agencies, as well as understanding and managing the short and long term impacts that endure well beyond the incipient stage of an incident. While legacy GIS systems have fallen short of managing these tasks, we believe that the Bridge SDI technology can address them effectively, particularly if the solutions are successfully converted to the Microsoft Cloud model as envisioned.

About the Bridge SDI

Development of the Bridge SDI is essentially based on the following concepts and components:

  • Real-world 3D Positioning. Bridge and Edward have pioneered new technology, using software program routines, mathematical calculations and certain functionality performed by a third party desk-top GIS software program, Manifold, to create a process that can drape linear data, such as that associated with a pipeline, on a 3-dimensional ("3D") surface to create a 3D real-world model of that linear asset, without incorporating dynamic segmentation processes ("Bridge PDI3D"). The primary advantage of Bridge PDI3D over legacy dynamic segmentation is that Bridge PDI3D delivers more accurate and timely results while excluding limitations inherent in dynamic segmentation processes.

  • No dependency on GIS. The Bridge SDI has been designed to operate without dependency on legacy GIS systems (such as ESRI, the prevalent GIS commonly used by pipeline operators today), which compared to Bridge SDI are typically expensive to implement and operate, and offer relatively cumbersome methods to attach spatial references to data.

  • Web Data Link. Bridge and Edward innovated a process, initially working with the Pipeline Association for Public Awareness ("PAPA"), whereby geographic and geometric data stored in the Pipeline Open Database Standard ("PODS") database system can be read in web pages, for viewing, editing, updating and refreshing on a real time basis ("Bridge WDL"). In the first critical minutes of an event, communication of information, most often between first responders and pipeline operators, is critical to determining the outcome of an incident. Providing responding agencies with current up to the minute data is crucial to responder safety and ensuring that the appropriate assets are activated based on potential risks.

  • Dig Data Management System. Bridge and Edward pioneered a framework of software and manual processes, procedures, forms, tools and concepts which together encapsulate a workflow process that is based on various datasets of information associated with pipelines, for the purpose of managing, analyzing, maintaining and repairing pipelines, as well as updating all associated data and information typically required by pipeline operators in order to maintain pipelines to safe and regulatory-compliant standards ("Bridge DDMS"). Pipeline operators struggle with the mass of data used to manage pipeline assets. Current legacy GIS systems are often cobbled by their inability to process the data, leading to data errors, missed compliance activities and slow propagation of data to end users.

  • Public Awareness ("PA") Application. Edward has pioneered and developed a framework of software and manual processes, procedures, forms, tools and concepts which together encapsulate a workflow process whereby pipeline operators can meet compliance requirements regarding PA mandates. The processes incorporate a proprietary methodology to create the data required by the PA Application (e.g., individually unique fire department jurisdictional maps), using a combination of third-party sourced information (e.g., US Postal zip code; meteorological data, etc.) and Bridge-created data (e.g., identification of specific building structures on third party mapping databases). By understanding the relative location of structures, and their possible interaction with the pipeline or facility, operators can meet High Consequence Area (HCA) compliance mandates and better respond in an incident.

  • Additional Components of Bridge Technology. Bridge and Edward have developed numerous other computerized and manual concepts, routines and processes in support of the Bridge PDI3D, Bridge WDL and Bridge DDMS modules which can spatially integrate multiple raw pipeline data sets in various formats to create 3D computerized models which accommodate Global or Universally Unique Identifiers, ("GUIDs or UUIDs"). Data sets are designed to function within and integrate with PODS, which has evolved to become the defacto industry standard database used by pipeline operators within North America and certain other countries.

Parties to the Transaction

Dwayne Kushniruk is a significant shareholder, director and the President and CEO of OneSoft, and is involved with and has a financial interest in Bridge. Brandon Taylor is a shareholder of OneSoft and the President of OneSoft's US subsidiary, OneCloudCo Limited, and has worked with and has a financial interest in Bridge. Messrs. Kushniruk and Taylor are therefore deemed to be Related Parties with respect to the Transaction. Mr. Edward has had no prior involvement with OneSoft, other than as a minority shareholder.

The board of directors of OneSoft formed an Independent Committee to investigate and assess the Bridge business and its potential value to the OneSoft organization and fairness of the Transaction to its shareholders.

Synergies and Valuation Considerations

The Bridge SDI systems currently operate as conventional "on-premise" software applications, similar to offerings from competing vendors. Compared to the capability of Microsoft's new Cloud technology, the on-premise computing infrastructure generally lacks sufficient computing power to run these applications as efficiently, due to the vast amounts of data that needs to be processed. Consistent with OneSoft's business strategies, its objective is to re-develop Bridge's technology and applications to operate on Microsoft's Cloud platform in order to utilize Office 365, CRM On-Line, X-Box graphical technology and a fleet of Azure servers to provide greatly increased computing capability. The simultaneous harnessing of multiple high-capacity servers in the Microsoft Cloud platform to provide responses within minutes rather than hours or days, along with the alternative to utilize any internet-capable device to access the applications, will be revolutionary for the Industry, and if executed successfully, may result in significant customer and revenue growth.

Edward and Bridge have pioneered software applications for the Industry, and OneSoft has been a pioneering Cloud partner with Microsoft. The primary synergy between Bridge and OneSoft is to combine the expertise of the Bridge technology applications with OneSoft's development expertise to transform and optimize Bridge's legacy applications for the Microsoft Cloud technology and business model.

The Independent Committee and OneSoft Board believe the acquisition value is fair and equitable, and potentially very accretive for OneSoft shareholders. OneSoft is still in early stages of its development as a company with revenues that currently recover only a small portion of its development, marketing and administrative expenses while Bridge has garnered higher revenues from its early adoption customers and has historically operated on a cash neutral to positive basis. OneSoft wishes to complete an acquisition that is not overly dilutive or cash dependent and the structure of the Transaction is only possible because of Mr. Kushniruk's involvement in Bridge and his intimate understanding of the synergies that potentially render this acquisition highly advantageous for both Bridge and OneSoft. Management expects that the future Bridge revenue and EBITDA contribution to OneSoft's overall results will be significant, based on pro-forma financial projections which are believed reasonable. Having considered all factors, the Board and Management believe that the synergies between Bridge and OneSoft are highly opportunistic, and that the business risks that may be associated with this acquisition can be adequately managed.

Key Terms of the Transaction

Pursuant to the terms of the Transaction, OneSoft will acquire all rights, title and interest in and to the Bridge SDI including but not limited to, the intellectual property rights, software contracts, license agreements, work-in-process and trademark rights, as well as any and all rights that pertain to customer records, marketing and technical materials, telephone and internet identities associated with the Bridge business (collectively the "Bridge Assets"). OneSoft will acquire the Bridge Assets and goodwill associated therewith for an acquisition price of $762,647, to be paid in OSS shares at a deemed price of $0.065 per share. The issuance of approximately 11,733,031 OSS shares in total for this acquisition (the "Acquisition Shares") will be issued to Messrs. Edward, Kushniruk and Taylor as to 50%, 39% and 11%, respectively, and will be subject to escrow restrictions in accordance with the policies of the TSX Venture Exchange and a hold period under applicable securities legislation. No finder's fees are payable with respect to this Transaction.

To facilitate the Transaction, a new Alberta company, OneBridge Solutions Inc. ("OneBridge") has been incorporated, which has acquired all rights, title and interest in and to the Bridge Assets from Bridge and Edward. On closing of the Transaction ("Closing"), OneSoft will own one hundred percent (100%) of the shares of OneBridge and will operate the Bridge business as a subsidiary of OneSoft on a go forward basis. Mr. Edward will enter into employment and non-compete agreements with OneSoft, will assume the position of President of OneBridge post-Closing and will remain actively involved in OneBridge operations for the foreseeable future.

The Transaction is subject to certain closing conditions that are typical for transactions of this nature, as well as receipt of shareholder consent and approval by the TSX Venture Exchange and other regulatory approvals as may be necessary.

Go Forward Strategy

OneSoft's go-forward strategy will include an accelerated re-development of the Bridge SDI and software products to operate on the Microsoft Cloud technology and business model, which management believes will ultimately enhance the marketability of the Bridge SDI, products and services, and thereby increase the opportunities and revenues associated with the Bridge assets above historical levels.

Dwayne Kushniruk, CEO of OneSoft, commented, "From OneSoft's perspective, this acquisition represents an excellent opportunity to apply our expertise regarding Microsoft Cloud to new markets and customers who require next generation products and solutions. I strongly believe that integrating the Bridge and OneSoft operations will be highly beneficial for both entities." Tim Edward added, "This will provide increased infrastructure, resources and capacity to take the Bridge projects forward, and an opportunity to supplant many of the competitive, legacy solutions that we believe currently underserve the Industry."

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 OneSoft 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 OneSoft 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 OneSoft 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 OneSoft 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.

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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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