CALGARY, Nov. 23, 2017 /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
and nine months ended September 30,
2017 (all figures are in Canadian dollars unless otherwise
noted).
During the three months ended September
30, 2017 (Q3 2017), Acceleware continued to invest in RF
heating research and development. After a successful 1/20 scale
field test, activities were focused on preparation for a
commercial-scale test of the RF XL technology. Development
activities included filing one new patent application, preparation
of five additional potential patent applications, and working with
service companies on proprietary well and well pad designs. On
November 3, 2017, the Company
announced that it had been awarded $10
million in financing for the commercial-scale test from
Sustainable Development Technology Canada and Emissions Reduction
Alberta. The funding is conditional on securing a suitable oil
sands partner and test site. In addition to the funding
announcement and technology development activities, the Company
also made progress in the identification of an oil sands partner
and the selection of a commercial-scale test site. Acceleware has
been in discussions with three potential oil sands operating
partners, and several simulations were conducted of potential oil
sands test sites using the Company's AxHeat software. Acceleware
generated revenue in its RF heating segment through the sale of
AxHeat in the three months ended September
30, 2017 (Q3 2017). The Company's software and services
business experienced a challenging oil and gas market in Q3 2017,
with decreased software product revenue compared to the three
months ended September 30, 2016 (Q3
2016), however a slight rebound was recorded compared to the three
months ended June 30, 2017 (Q2 2017).
Software maintenance, particularly seismic imaging software
increased in Q3 2017 compared to both Q2 2017 and Q3 2016. Software
consulting services revenue decreased significantly in Q3 2017
compared to both Q3 2016, and Q2 2017 due to decreased training
revenue. For the nine months ended September
30, 2017, revenue was lower than for the nine months ended
September 30, 2016 due to lower
product revenue and despite higher maintenance and consulting
revenue.
During the three months ended September
30, 2017, Acceleware recognized revenue of $237,576 - 35% lower than the $366,675 recognized during the three months ended
September 30, 2016. The decrease is a
result of lower software product and software services revenue.
Revenue in Q3 2017 also decreased 24% compared to the $312,612 recorded in Q2 2017 due to lower
software product and software services revenue including notably
lower consulting services for training. On a segmented basis, the
Company recorded $20,700 in RF
heating revenue in Q3 2017 compared to no revenue in either Q3 2016
or Q2 2017. Software and services revenue was 41% lower at
$216,876 in Q3 2017 compared to
$366,675 in Q3 2016, due in large
part to decreased services revenue including training. Software and
services revenue was also 31% lower in Q3 2017 compared to
$312,612 in Q2 2017 again due to
lower training services revenue. For the nine months ended
September 30, 2017 revenue decreased
14% to $1,048,377 from $1,219,530 in the nine months ended September 30, 2016 due to lower seismic imaging
product revenue.
The Company had total comprehensive loss for Q3 2017 of
$913,738, an increase of 181%
compared to a total comprehensive loss of $324,722 for Q3 2016. The higher total
comprehensive loss is a result of higher research and development
(R&D) investment, higher general and administrative (G&A)
expenses in the RF heating business, and lower revenue in the
software and services business, combined with a significant loss on
derivative instruments associated with the Company's convertible
debentures. Total comprehensive loss increased 43% in Q3 2017 to
$913,738 compared to $641,197 in Q2 2017, due to lower revenue and the
loss on derivatives (the Company recorded a gain on derivative
instruments in Q2 2017).
For the nine months ended September 30,
2017 total comprehensive loss was $2,003,794, an increase of 90% compared to a loss
of $1,056,272 recorded in the nine
months ended September 30, 2016. The
increase is a result of greater investment in research and
development (R&D) and higher general and administrative
(G&A) expenses, and higher finance expense (accrued interest
and accretion) associated with convertible debentures.
On a segmented basis, loss from operations attributed to the RF
heating segment was 39% higher in Q3 2017 at $537,838 compared to $385,802 in Q3 2016, due to higher investment in
R&D and higher G&A expense. Operating loss for RF heating
was 26% lower in Q3 2017 compared to the loss of $753,686 recorded in Q2 2017 due to lower R&D
and G&A expenses. Operating income attributed to software and
services decreased to a loss of $136,436 in Q3 2017, compared to income of
$79,434 in Q3 2016 due to lower
revenue, higher investment in R&D, and higher G&A expense.
Software and services operating loss was also lower in Q3 2017
compared to the loss of $23,107
recorded in Q2 2017 due to lower revenue.
For the nine months ended September 30,
2017, RF heating operating loss increased 43% to
$1,684,016 from $1,176,754 for the nine months ended September 30, 2016 due to higher R&D
investment, higher G&A expense related to stock based
compensation, and despite higher revenue. For the nine months ended
September 30, 2017 software and
services operating loss was $145,930
compared to operating income of $192,282 for the nine months ended September 30, 2016 due to lower seismic product
revenue.
Cash flow used in operating activities increased 502% to
$721,543 in Q3 2017 compared to
$256,971 in Q3 2016 due to the loss
and a higher investment in working capital. Cash flow used in
operations was also significantly higher in Q3 2017 compared to Q2
2017, rising 623% from $99,769 due to
increased investment in working capital. During the nine months
ended September 30, 2017 cash used in
operations was significantly higher at $1,684,306 compared to $491,825 used in the nine months ended
September 30, 2016. The increase is a
result of increased loss and higher investment in working
capital.
At September 30, 2017, Acceleware
had $1,058,126 (December 31, 2016 - $1,616,415) in working capital, including
$1,094,132 (December 31, 2016 - $1,922,318) in cash and cash equivalents, and
$61,046 (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 $823,486. 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.
At September 30, 2017, the Company
had $998,175 (December 31, 2016 - $928,800) (principal plus accrued interest) in
convertible debentures that accrue interest at 10% per year. The
decrease in cash (and consequently working capital) is a result of
the comprehensive loss incurred in the nine months ended
September 30, 2017, and an increased
investment in working capital, offset by the proceeds from the
private placement. The increase in working capital other than cash
is a result of the decrease in accounts payable and accrued
liabilities such as deferred salaries and other payroll
liabilities. 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 unaudited financial
statements for the three months ended September 30, 2017, the management's discussion
and analysis relating thereto, the audited financial statements for
the year ended December 31, 2016, 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 technical and
economic feasibility of Acceleware's RF heating technology.
Acceleware assumes that the results of simulations, testing and
economic modelling conducted to date are indicative of future
performance of the technology.
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.