Acceleware Reports Results for the Three Months and Year ended December 31, 2017
CALGARY, April 25, 2018 /CNW/ - Acceleware® Ltd. ("Acceleware" or the "Company") (TSX-V: AXE), a leading developer of high performance seismic imaging applications and RF heating technology, today announced results for the three months and year ended December 31, 2017 (all figures are in Canadian dollars unless otherwise noted).
During the year ended December 31, 2017, Acceleware was successful in its objectives relating to the research, development and commercialization of its RF heating technology. Acceleware filed three RF heating patent applications and commenced preparation of additional applications; completed a successful field test of critical components of the RF XL technology; and was conditionally awarded $10 million in non-repayable funding for a commercial-scale field test of RF XL. Acceleware continues to make progress in negotiating agreements with funding sources and potential oil sands partners to complete the commercial-scale test of its RF XL technology, as more fully disclosed in the Company's news release dated November 3, 2017.
During the year ended December 31, 2017 the Company raised gross proceeds of $837,192 in equity to finance further development of its RF heating technology and converted $1,014,302 in convertible debentures plus accrued interest into common shares and warrants.
During the three months ended December 31, 2017 ("Q4 2017") Acceleware recorded higher revenue than both the three months ended December 31, 2016 ("Q4 2016") and the three months ended September 30, 2017 ("Q3 2017"). The higher revenue resulted in lower total comprehensive loss in Q4 17 compared to both Q4 16 and Q3 17. However, for the year as a whole, the Company's software and services business continued to face a challenging oil and gas market, with decreased product sales leading to lower revenue compared to the year ended December 31, 2016. The decline in revenue year over year was primarily due to lower seismic imaging software sales, particularly AxRTM and work related to a major custom RTM solution for Repsol, which was completed in 2017. Consulting services work for RF heating increased in 2017 compared to 2016. In line with the decrease in total revenue combined with increased investment in research and development ("R&D") and general and administrative ("G&A") expense, total comprehensive loss increased in 2017 compared to 2016. Cash flow used in operating activities increased in 2017 compared to 2016 due to increased investment in the RF heating business segment including R&D, and a significantly higher investment in working capital.
During Q4 2017, the Company recognized revenue of $271,690 representing a 55% increase over the $175,639 recognized during Q4 2016, due to higher maintenance revenue. Revenue rose 14% compared to the $237,576 recognized in Q3 2017 primarily on higher software product and consulting revenue.
| Revenue |
Three months |
Three months |
Three months |
% change |
% change |
|||
| RF Heating |
$ |
3,953 |
$ |
— |
$ |
20,700 |
N/A |
-81% |
| Software & Services |
267,737 |
175,639 |
216,876 |
52% |
23% |
|||
| $ |
271,690 |
$ |
175,639 |
$ |
237,576 |
55% |
14% |
|
During Q4 2017, Acceleware had a total comprehensive loss of $745,937, compared to a total comprehensive loss of $953,737 for Q4 2016. The difference is a result of an 55% increase in revenue, combined with a 6% increase in expenses. Total comprehensive loss of $745,937 in Q4 2017 was also lower than the loss of $913,38 recorded in Q3 2017 due to higher revenue, and a gain on derivative instruments related to the Company's convertible debentures which were converted in Q4 2017.
During the year ended December 31, 2017, Acceleware recognized revenue of $1,320,067 - 5% lower than the $1,395,169 recognized during the year ended December 31, 2016. The decrease is primarily a result of a 70% decline in product revenue, and despite a 74% increase in maintenance revenue. On a segmented basis, the Company's RF heating segment recorded a 159% increase in revenue in 2017, climbing to $224,653 from $86,648 recorded in 2016, the increase coming from the sale of the field test results to an oil sands producer. The software and services segment revenue declined 16% in 2017 to $1,095,414 from $1,308,521 recorded in 2016, primarily due to lower seismic imaging software revenue.
| Revenue |
Year ended |
Year ended |
Percentage change |
||
| RF Heating |
$ |
224,653 |
$ |
86,648 |
159% |
| Software and Services |
1,095,414 |
1,308,521 |
-16% |
||
| $ |
1,320,067 |
$ |
1,395,169 |
-5% |
The Company had total comprehensive loss for the year ended December 31, 2017 of $2,749,731, an increase of 37% compared to a total comprehensive loss of $2,010,009 for the year ended December 31, 2016. The higher total comprehensive loss for the year ended December 31, 2017 is due to the above noted decrease in revenue coupled with a 18% increase in expenses, driven by higher R&D expense associated with RF heating and higher G&A expenses.
On a segmented basis, loss from operations attributed to the RF heating segment increased 20% to $2,370,393 in 2017 from $1,969,010 in 2016 due to higher R&D and G&A expenses. The software and services segment recorded a loss from operations of $254,027 in 2017, compared to income from operations of $20,703 in 2016 due to lower revenue.
At December 31, 2017, Acceleware had $403,501 (December 31, 2016 - $1,616,415) in working capital, including $781,315 (December 31, 2016 - $1,922,318) in cash and cash equivalents, and $183,373 (December 31, 2016 - $58,095) in combined short-term and long-term debt in the form of finance leases. On September 26, 2017, the Company closed a non-brokered private placement consisting of 4,651,066 units at a price of $0.18 per unit for gross proceeds of $837,192, and proceeds net of issue costs of $825,807. Each unit consisted of one common share and one-half common share purchase warrant. Each warrant entitles the holder to purchase an additional common share of the Company at a price of $0.27 per common share for a period of two years. The decrease in cash (and consequently working capital) is a result of the comprehensive loss incurred in 2017, and an increased investment in working capital, offset by the proceeds from the private placement. At November 17, 2017, the Company had $1,014,302 (December 31, 2016 - $928,800) (principal plus accrued interest) in convertible debentures that accrued interest at 10% per year. On November 17, 2017, the Company forced conversion of the convertible debentures, exercising the option to convert all outstanding principal and accrued interest into 6,762,014 units of one common share of the Company plus ½ common share purchase warrant.
Additional information, including the audited financial statements for the year ended December 31, 2017, and management's discussion and analysis relating thereto, are available on SEDAR at www.sedar.com.
About Acceleware:
Acceleware (www.acceleware.com) develops high performance seismic imaging and modeling software products and provides innovative technology for radio frequency (RF) heating, an emerging thermal enhanced oil recovery method. As experts in programming for multi-core CPUs and massively parallel GPUs, Acceleware's professional services team specializes in accelerating computationally intense applications for clients to speed up product design, analyze data and help make better business decisions. Acceleware's products and services are used by some of the world's largest energy and engineering companies.
Acceleware is a public company on Canada's TSX Venture Exchange under the trading symbol AXE.
Disclaimers
This press release contains "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking information generally means information about an issuer's business, capital, or operations that is prospective in nature, and includes disclosure about the issuer's prospective financial performance or financial position.
The forward-looking information in this press release includes information about the completion of a commercial-scale test of Acceleware's RF heating technology. Acceleware assumes that the Company will be able to conclude the required agreements to access funding and commence the test.
Actual results may vary from the forward-looking information in this press release due to certain material risk factors. These risk factors are described in detail in Acceleware's continuous disclosure documents, which are filed on SEDAR at www.sedar.com.
Acceleware assumes no obligation to update or revise the forward-looking information in this press release, unless it is required to do so under Canadian securities legislation.
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.
SOURCE Acceleware Ltd.
Geoff Clark, Tel: +1 (403) 249-9099, [email protected]; Acceleware Ltd., 435 10th Avenue SE, Calgary, AB, T2G 0W3, Canada, Tel: +1 (403) 249-9099, www.acceleware.com
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