CALGARY, Aug. 29, 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 its financial and operating results for
the three and six months ended June 30,
2018 (all figures are in Canadian dollars unless otherwise
noted). This news release should be read in conjunction with the
Company's unaudited condensed interim financial statements for the
six months ended June 30, 2018 and
Management's Discussion and Analysis ("MD&A") thereto, and the
audited consolidated financial statements for the year ended
December 31, 2017 and the MD&A
thereto. The above documents are available on Acceleware's website
at www.acceleware.com or on SEDAR at www.sedar.com.
Q2 2018 FINANCIAL SUMMARY AND OPERATING HIGHLIGHTS
During the second quarter, Acceleware's software and services
business experienced a strong rebound with revenue increasing by
more than 100% over the first quarter of 2018. Subsequent to the
quarter, on July 17, 2018 the Company
announced a significant milestone in the development of its RF XL
radio frequency heating technology with the commencement of its a
commercial-scale test of Acceleware's RF XL radio frequency heating
technology with Prosper Petroleum at its Rigel property in
northeast Alberta.
- Generated second quarter revenue of $350,098 compared to $170,259 recognized during Q1 2018, representing
an increase of 106%. The improvement was primarily attributable to
a 325% increase in software consulting (HPC training) revenue and a
42% increase in software (principally seismic) maintenance revenue.
Revenue also increased 12% in Q2 2018 compared to the $312,612 recorded in Q2 2017 also primarily as a
result of higher seismic software maintenance revenue.
- Reduced operating loss by 23% in Q2 2018 to $645,643 from $833,879 in Q1 2018 on higher revenue. Operating
loss was also 14% lower than the $753,686 recorded in Q2 2017 resulting from
higher revenue and lower cost of revenue and general and
administrative (G&A) expense.
- Narrowed total comprehensive loss by 23% compared to Q1 2018
when it was $839,377 as a result of
stronger revenue. The total comprehensive loss for the second
quarter of 2018 was $645,911, 1%
higher than the total comprehensive loss of $641,197 recorded in Q2 2017. Despite generating
higher revenue and lower expenses in Q2 2018, the year-over-year
increase was the result of a gain on derivative instruments that
were recorded in Q2 2017.
- Maintained working capital of $56,312 (December 31,
2017 – $403,501) including
$666,130 (December 31, 2017 - $781,315) in cash and cash equivalents, with
$188,634 (December 31, 2017 - $183,373) in combined short-term and long-term
debt in the form of finance leases. The decrease in cash is a
result of the comprehensive loss incurred in the six months ended
June 30, 2018, offset by cash
received of $222,443 related to the
Company's 2017 Alberta SR&ED tax credit claim, and $778,897 received from the exercise of stock
options and warrants.
SIX MONTHS ENDED JUNE 30, 2018
FINANCIAL SUMMARY
Although Acceleware had a stronger Q2 2018 compared to Q2 2017,
a weaker Q1 2018 contributed to lower revenue and consequently
higher loss in the six months ended June 30,
2018 compared to the six months ended June 30, 2017.
- Revenue was 36% lower in the six months ended June 30, 2018 falling to $520,357 from $810,801 recorded in the six months ended
June 30, 2017 due to lower RF heating
revenue (the Company sold data from a field test of RF XL in the
six months ended June 30, 2017),
lower seismic software product revenue, and lower software
consulting revenue.
- Operating loss rose 28% in the six months ended June 30, 2018 to$1,479,522 from $1,155,672 recorded in the six months ended
June 30, 2017 due to lower revenue
and higher G&A expense related to share-based compensation
(stock options).
- Total comprehensive loss increased 36% in the six months ended
June 30, 2018 to $1,485,288, from a loss of $1,090,056 recorded in the six months ended
June 30, 2016. The increase is a
result of lower revenue, and a gain on derivative instruments
recorded in the six months ended June 30,
2017.
RF HEATING BUSINESS SEGMENT
RF Heating is Acceleware's patented and patent-pending RF XL
technology that has the potential to save billions of dollars in
oil sands production costs. When applied, the technology has the
potential to reduce both capital and operating costs, while
offering major environmental benefits, including immediate
greenhouse gas ("GHG") emission reductions, a substantial decrease
in land use, no requirement for external water or solvents and no
tailings ponds. As an electrically driven process, Acceleware also
believes that RF XL technology can provide a clear pathway to
zero-GHG production of heavy oil and oil sands.
During the second quarter of 2018, the Company continued to
invest in RF heating research and development (R&D) with the
preparation of additional patent applications, and engineering and
design work in anticipation of the Company's imminent
commercial-scale test of RF XL. Acceleware is pleased to announce
it has now:
- Completed the initial design of the prototype RF generator with
General Electric;
- Furthered the design concepts for the drilling and completion
of the RF XL and production wells, and continued its work on the
design of surface facilities;
- Created a six-member Advisory Board that will support the
commercialization of its RF technology and has commenced working
with the Acceleware executive team; and
- Announced a commercial-scale test agreement with Prosper
Petroleum Ltd., paving the way for the Company to access the
$10 million non-repayable grant
awarded to the Company by Sustainable Development Technology Canada
(SDTC) and Emissions Reduction Alberta (ERA). The grant is subject
to the Company completing contribution agreements with both SDTC
and ERA, which are expected to be signed in Q3 2018.
During the second quarter of 2018, operating losses attributed
to the RF heating business segment were $628,420, a 14% reduction from the $730,579 in Q2 2017, due to lower G&A
expense, and lower research and development (R&D) expense.
SOFTWARE AND SERVICES BUSINESS SEGMENT
Acceleware's Software and Services Business Segment helps
customers meet their high performance software needs including
software development and porting, acceleration assessments and
mentoring. This includes its seismic imaging software that provides
the most accurate and advanced imaging available for oil
exploration in complex geologies.
During the second quarter of 2018, the Company saw increased
demand for products and services in both oil and gas and non-oil
and gas verticals.
- Recognized software and services revenue of $350,098 in Q2 2018 - 106% higher than the
$170,259 recognized during Q1 2018.
The increase is primarily a result of a 325% increase in software
consulting (HPC training) revenue and a 42% increase in seismic and
EM software maintenance revenue. Revenue also increased 12% in Q2
2018 compared to the $312,612
recorded in Q2 2017 primarily as a result of higher seismic
software maintenance revenue.
- Operating loss attributed to software and services was 25%
lower at $17,223 in Q2 2018, compared
to a loss of $23,107 in Q2 2017 due
to higher revenue, and lower cost of revenue. Software and services
operating loss decreased significantly in Q2 2018 compared to the
operating loss of $238,875 recorded
in Q1 2018 on higher revenue, and lower R&D and G&A
expenses. For the six months ended June 30,
2018 software and services operating loss was $256,098 compared to operating loss of
$9,495 for the six months ended
June 30, 2017 due to lower seismic
product revenue, higher G&A expense related to stock-based
compensation, and higher R&D investment.
ABOUT ACCELEWARE:
Acceleware (www.acceleware.com) is an innovator of clean-tech
oil and gas technologies comprising two business units: Radio
Frequency (RF) Enhanced Oil Recovery; and Seismic Imaging
Software and Software Acceleration Services.
Acceleware is developing RF XL and Modular RF, its patented and
patent-pending low-cost, low-carbon production technologies for
heavy oil and oil sands that are materially different from any
heavy oil recovery technique used today. They will use no water,
require no solvent, have a small physical footprint, can be
redeployed from site to site, and can be adapted to a multitude of
reservoir types, while expected to greatly reduce and eventually
eliminate production greenhouse gas emissions (GHGs). In shallow
oil sands implementations, no tailings ponds will be required.
Our seismic imaging software solutions are state of the art for
high fidelity imaging, providing the most accurate and advanced
imaging available for oil exploration in complex geologies.
Acceleware's professional services team accelerates computationally
intense applications for clients to speed up product design,
analyze data and help them make better business
decisions.
Acceleware is a public company on Canada's TSX Venture Exchange under the
trading symbol "AXE".
DISCLAIMER
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.