OneSoft Solutions Inc.
TSX VENTURE : OSS

OneSoft Solutions Inc.

June 22, 2016 16:01 ET

OneSoft Solutions Inc. Reports Financial Results for Fourth Quarter and Year Ended February 29, 2016

EDMONTON, ALBERTA--(Marketwired - June 22, 2016) - OneSoft Solutions Inc. (the "Company" or "OSS") (TSX VENTURE:OSS), a North American developer of cloud‐based business solutions announces its financial results for the fourth quarter and year ended February 29, 2016.

Financial results are summarized as follows:

Three months ended February Year ended February
(in $,000)'s, per share in $ Increase / Increase /
2016 2015 (Decrease) 2016 2015 (Decrease)
$ $ % $ $ %
Continuing Operations
Revenue 142 87 63.5 405 174 132.8
Net loss (321 ) (548 ) (41.5 ) (2,240 ) (2,101 ) 6.6
Discontinued operations:
Net income (loss) 1 310 (99.7 ) (91 ) 10,622 (100.9 )
Consolidated net (loss) income (320 ) (238 ) 34.5 (2,331 ) 8,521 (127.4 )
Weighted average common shares outstanding - basic and fully diluted (OOO)'s 47,074 15,194 40,553 14,567
Per share:
Continuing operations - loss (0.01 ) (0.04 ) (81.1 ) (0.06 ) (0.14 ) (57.1 )
Discontinued operations - income 0.02 (100.0 ) 0.73 (100.0 )
Consolidated net (loss) income (0.01 ) (0.02 ) (56.6 ) (0.06 ) 0.59 (110.2 )

Fiscal Year Highlights

On July 17, 2015, the Company acquired the assets of Bridge Solutions in exchange for 11,733,024 OneSoft shares, fair valued at $818,077. This acquisition essentially set the stage for the Company's future direction and opportunities.

In the fall of 2015, OneSoft determined that the most prudent and opportunistic future course of action was to terminate progression of and sell the assets pertaining to its OneNFP business which was focused on the not-for-profit sector to pivot to focus solely on the OneBridge business unit. Further to this decision, on February 24, 2016, OneSoft announced it had sold to Tangicloud Technologies Inc. ("TTI") of Denver, Colorado, certain assets, rights and operational responsibility for the OneNFP business.

In December 2015, OneBridge was selected from 721 candidates in 50 countries to be one of 11 companies to participate in Microsoft Ventures Accelerator Program for Machine Learning and Data Sciences. Microsoft is providing approximately US $600,000 of grants, credits and services to OneBridge and numerous other benefits and resources that enable OneBridge to accelerate its technology and business development initiatives.

On February 2, 2016 the Accelerator program commenced and continued through June 2, 2016, culminating in "Demo Day", wherein OneBridge's business and technology was showcased to an international audience of analysts, press, investors and the public, hosted by Microsoft at a Seattle venue, and streamed live over the internet.

The Company has operated essentially as a pre-revenue start-up following the sale of its Serenic operating businesses in July, 2014. This has necessitated a further investment in technology, product and business development during Fiscal 2016. The Company had consolidated revenues for Fiscal 2016 of $405,418 compared to revenue of $174,466 in the prior year. The net loss on continuing operations for Fiscal 2016 was $2,239,599 compared to a loss from continuing operations of $2,101,401 in the prior year.

During the year, the Company completed two private equity placements in which a total of 33,333,333 units were issued with each unit consisting of one common share and one share purchase warrant. The private placements raised $1,947,772 after payment of related expenses and collection of all subscriptions. In March 2016, subsequent to the fiscal year‐end, the Company closed an overallotment of the second private placement and issued an additional 3,333,333 units to raise a further $250,000. Company management conducted each of the private placements and no finder's fees or commissions were paid. As at February 29, 2016, cash was $779,053 and subscriptions receivable totaled $296,432 which were collected in early March, 2016.

In April 2015, the Company announced a new Stock Option plan whereby it can reserve up to 10% of the issued and outstanding shares for the granting of stock options. This plan, which was implemented to incent, attract and retain management and director talent necessary to advance the Company's objectives, replaced the Company's prior stock option plan which terminated when the Serenic subsidiaries were sold in July, 2014. At fiscal year-end, the Company had 2,406,000 options issued and outstanding, at an average strike price of $0.10 per share.

The Company continued to aggressively pursue legal action concerning the $528,000 owed by Sylogist from its purchase in 2014 of certain operating subsidiaries and defend the Counterclaim filed by Sylogist during Fiscal 2016 which the Company believes is base‐less and without merit. A hearing for summary dismissal of the Sylogist claim has been filed by the Company and has been scheduled to be heard on November 8, 2016.

Fourth Quarter Highlights

Total revenue for the quarter increased this quarter compared to last year due to revenue generated by OneBridge. Gross profit in the quarter was $3,039 compared to a gross profit loss last year of $47,825. In Q4 this year, OneBridge contributed sufficient gross profit to offset the gross profit loss incurred by OneNFP.

The Company's net loss in the quarter from continuing operations was $227,034 less than this quarter last year. Expenses increased $325,462 which included salaries and employee benefits increasing by $123,415 due to the addition of OneBridge personnel and the contracted development team working on OneBridge projects and amortization expense related to OneBridge intellectual property which was $90,021 versus $nil last year. Income tax expense was $461,520 less than last year due to income tax recovery this quarter of $289,865 generated by the amortization of the intangible assets purchased in the Bridge acquisition and the recovery of income taxes paid in the prior year. Last year, the Company's income tax expense was $170,665 due to the gain on the sale of the Serenic operating companies.

Discontinued operations

In the fourth quarter this year, income was $990. In this period last year, the Company recorded net income of $310,082 due to a favourable adjustment in the estimated income tax expense of $326,491.

OUTLOOK

We believe that OneSoft's early adoption and investment in Microsoft's Cloud technology, and alignment with Microsoft cloud software deployment strategies, have positioned the Company for significant future growth and opportunity. Our decision to sell the OneNFP associated assets and to allocate resources to the OneBridge project allowed us to focus our resources and efforts on what we believe is a highly opportunistic project and market segment that involves enterprise level customers who are highly motivated to improve the reliability and safety of their pipeline infrastructure, in order to comply with increasingly stringent operational, safety and regulatory requirements. We believe our software solutions address these requirements with significant advantage over legacy systems used by the industry today, including more comprehensive and cost-effective functionality and capability.

We believe our participation in Microsoft Venture's Accelerator program has provided a significant opportunity to advance our business from several perspectives. Our technology and product development has been accelerated, as has the advancement of our sales, marketing and business development initiatives. We are working with Microsoft personnel who focus on enterprise level sales activities with oil and gas pipeline companies and expect to conduct collaborative sales efforts that involve our future customers. We also anticipate that our exposure from Accelerator may potentially generate interest from investor groups seeking investments in next generation cloud software companies, which may be highly beneficial to advance our corporate development and value creation objectives.

Management's priority in the near term is to progress the OneBridge applications and viability as a preferred vendor of solutions for the pipeline industry within North America and to grow OneBridge's revenues. Based on current negotiations with prospective customers, we anticipate that meaningful revenue generation will commence within the next couple of quarters as we engage early adopter customers to participate as Private Preview users of our new software solutions, and that it may increase substantively more as we evolve our products to general release status in the latter part of calendar 2016.

We also intend to pursue corporate development initiatives necessary to support value creation for our shareholders, including implementation of investor relations and market‐making programs, and pursuit of joint venture and potential M&A projects which are appropriate and synergistic to our strategies.

Management believes that the combination of cash generated from its recently closed private placements, the Private Preview revenue that we anticipate will occur and the potential exercise of outstanding warrants as expected will be sufficient to finance the company from its current early‐revenue stage to profitability within the next two fiscal years.

EXERCISE OF WARRANTS

In June, 2016, shareholders exercised 1,930,000 warrants with a strike price of $0.10 to acquire 1,930,000 common shares for cash proceeds of $193,000.

FURTHER INFORMATION:

Please review the Management's Discussion and Analysis and the audited Consolidated Financial Statements for the year ended February 29, 2016 filed on SEDAR (www.sedar.com) for more detailed information regarding the Company's results and Outlook.

ON BEHALF OF THE BOARD OF DIRECTORS

ONESOFT SOLUTIONS INC.

Douglas J. 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.

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.

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