OneSoft Solutions Inc.

good morning and thank you for joining us for one soft solutions financial conference call to discuss its financial results for the third quarter of fiscal year 2023 ending september 30th 2023 on the call today we have one soft ceo dave kushneruk cfo paul johnston and president and ceo brand brandon taylor as a reminder All participants are in listen-only mode and the conference is being recorded. Before management discusses the results, I would like to remind everyone that certain statements in this call may be forward-looking in nature. These include statements involving known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. For caveats about forward-looking statements and risk factors, please see OneSoft's MD&A for the quarter ended September 30th, 2023, and for the fiscal year ended December 31st, 2022, which can be accessed on the company's profile at CDAR Plus and on the company's website. I will now pass the call over to OneSoft CEO, Dave Krishnarik. Please go ahead.

Good morning and welcome to everyone on the call. I'm Dwayne Krishnarik, OneSoft CEO. So this is our second financial results conference call. And we're assuming that most attendees are familiar with our company. But to explain a little bit about what we do, in general, we provide software as a service or SAS solution that ingests, correlates and analyzes big data. We use cloud computing and machine learning to do this. And this helps pipeline operators to predict when and where oil and gas pipeline failures might occur. It allows these operators to optimize their integrity management and automates many of the functions that they must carry out to manage and maintain their pipeline assets, including regulatory compliance. For those listeners who want to better understand our history and progress to date, please view our last conference call, the link for which is accessible on www.onesoft.ca website. So you click on investor heading, then AGM and financial info, then Q2 earnings call. I have just a few remarks before Paul Johnston, our CFO, reviews financial information, which will be followed by Brandon Taylor, our president and COO, who will discuss operational highlights during the quarter and subsequent to the quarter's end. We'll then wrap up the call by addressing investor questions. The third quarter of fiscal 2023, ending September 30th, progressed essentially in accordance with our expectations. Some highlights from the quarter include revenue continued to increase quarter over quarter and year over year by 33% and 59% respectively over their comparative periods. And this came about as a result of addition of new customers, the acquisition of IAM operations last year, and as our customers loaded more data and increased their consumption of our solutions. One of the notable highlights this quarter was we posted a profit in Q3 for the first time since fiscal 2018. We were profitable that year, but decided to increase R&D and other spending since then to increase our competitive moat, to invest in new revenue opportunities by developing new functionality that our customers were requesting. So these activities caused expenses to exceed revenues as we progressed our business and technology roadmaps. We are very encouraged that this strategy is working as planned. It's now delivering 50% year-over-year revenue growth and attracting new customers who have interest in the whole pipeline integrity solution we're building out. This also serves to lock in customer loyalty over multiple years into the future. Paul will review details regarding the year-to-date progress of the guidance we published at the beginning of this year, and I'm pleased to report that we expect to achieve the fiscal 2023 guidance in all material respects, even considering that we decided to further increase our development expenses mid-year. Our solution is becoming more and more entrenched as the new industry standard and we are not yet encountering competition from any other software vendor who is able to deliver a cloud SaaS application to compete with our cognitive integrity management or SIM platform. Our competition today continues to be legacy systems and processes, mostly built around Excel spreadsheets, and those simply cannot rival the data management and analytics that SIM provides. legacy systems do not address where the industry is going which is heading towards more sophisticated data capture management and analytics and the compilation of the large data lakes that will be required to advance machine learning and ai for the industry from corporate and business development perspectives We are continuing to seek new relationships that can help us to engage and support customers outside the USA, as well as other scenarios that can accelerate our market capture and revenue growth. And I'm happy to announce that we are reiterating our full year guidance, which we provided. With this, In introduction, I would now like to pass the call to Paul Johnston, CFO, to review the company's Q3 2023 financial information.

Paul? Thank you, Duane. I'm Paul Johnston. I will present the financial results for the periods ending September 30th, 2023. I remind you that all figures reported are in Canadian dollars. Before highlighting the specific details of the quarterly financials, I first want to start by highlighting the progress OneSoft has made in growing revenues over the past seven years. This chart illustrates Q3 2023 was another solid quarter with revenue up sequentially and year over year. We're extremely proud that our SIM solution and IM operations have produced a compound annual growth rate of 43.9% over the last approximately seven years, and by 55% in fiscal 2022 over fiscal 2021. In Q3, revenue was 2.8 million and it increased by 685,000 or 32.9% over Q3 2022. The increase was driven by adding new SIM customers and by customers expanding their use of SIM by $753,000 while IM operations revenue declined to $68,000. Gross profit increased by 590,000, or 38.3%. The increase was due to the higher sales volume and the moderation of direct costs, which allowed the gross margin to increase to 76.9% from 73.9%. Operating costs, net of costs capitalized, increased by 106,000, The company has increased the number of staff since September 2022, and wage increases have been selectively granted. Marketing expenses were at the same level as in Q3 2022. General and administrative expense costs moderated by $43,000. In this quarter last year, the company incurred legal fees for the IM Operations Group acquisitions, and it was also conducting a legal action against the party who had breached a software license use agreement. The acquisition was completed last year, and the legal action successfully concluded in Q1 this year. As neither of these expenses repeated in this quarter this year, these costs declined, and the savings were partially offset by higher accruals for insurance, annual audit, and higher annual fees paid to securities commissions. Software development costs declined in the quarter as new product development slowed due to the completion of internal corrosion and lateral crack management per year this year, and due to staff being highly engaged with functionality requirements requested by existing customers and the implementation of SIM with a large new customer. Other expenses increased $65,000. Amortization of software development costs increased An income from the Alberta Provincial Innovation Employment Grant, which is like a SRED grant, and foreign exchange decreased. Due to the much higher sales revenue and gross profit and only moderate increases in expenses and other expense, the company generated net income of $118,000. This was an improvement of $419,000 over the net loss of $300,000 recorded in Q3 2022. I now direct my remarks to the financial results for the nine months ended September 30th, 2023. Revenue increased by 59% or 2.8 million from 4.7 million in this period last year to 7.5 million this year. The addition of new customers and greater use of SIM by existing customers generated 2 million of the increase. Revenue from the IM operations increased by $767,000 due to it being acquired on June 30th, 2022, resulting in three months of revenue being included in this period last year and nine months of revenue being included in the period this year. Those profit increased by 67% to $5.6 million from $3.3 million this period last year, Driven by the higher sales volume and proportionally reduced direct costs, the gross margin rose to 74.7% of sales from 71.2% last year. Operating expenses increased by $815,000, or 15.8%. Salaries and employee benefits were higher due to an increase in staff complement, salary increases, and higher accruals for year-end incentives. Marketing expenses increased due to more production trials and benefit analyses being conducted, and higher sales travel expense promoting our products to potential customers. Higher accruals for professional fees for the annual audit and related issues caused G&A expense to rise. Expenses capitalized as software development decreased by $143,000 in 2023, as staff were engaged developing software enhancements for existing customers, implementing a large new customer, and that two new products having completed their development in earlier periods. The net loss decreased by 53.5% to $1.1 million from $2.3 million in this period last year. The higher sales revenue and gross margin were the primary factors causing the reduction in the net loss. Looking at our statement of financial position, cash was $4.3 million at period end. The signing of new accounts and renewal of SIM contracts caused accounts receivable to rise to $2.4 million. We wish to note that $2.3 million of trade receivables were collected in October 2023. The company's only debt was the acquisition price payable of $238,000 for IAM operations, as at September 30th, 2023. Working capital on September 30th, 2023 was $1,314,000 versus $1,429,000 as at December 31st, 2022. The customer believes its cash of 4.3 million and accounts receivable of 2.4 million and expected future cash receipts are sufficient to finance company operations and there will be no need to incur additional financing unless a special situation such as an acquisition or merger opportunity were to arise. Deferred revenue is an important source of financing for the company due to customers being required to pay the annual cost of their SIM contracts at the start of their contract fiscal year. This table shows that in the nine months ended September 30th, 2023, The company received $7.6 million in payments from its customers, which was $2.6 million higher than last year. 5.5 million of services were delivered in the same period, resulting in the deferred revenue balance being $2 million higher than as at December 31st, 2022. On this slide, we're showing our adjusted EBITDA or earnings before interest tax depreciation amortization and stock compensation expense. Some people use adjusted EBITDA as a proxy for a company's ability to generate cash. In Q3 2023, the company generated positive EBITDA of $308,000 as compared to negative EBITDA in the comparative period of $100,000. Year to date in 2023, the company's negative EBITDA was $274,000 an improvement of $1.3 million over the negative EBITDA in this period in 2022 of $1.6 million. We now move to reviewing the guidance we provided for our company in 2023. We presented guidance in January 2023 that revenue of $10.1 million would be realized in 2023, which is a 47% increase year over year. In September 2023, revenue of $7.5 million has been recorded, which is 74% of the guidance value. Given that the year is 75% complete, and considering our sales prospects, we believe the guidance will be achieved. Gross profit shows similar achievement in that 74% of the guidance value has been recorded. Lastly, our guidance for net loss was $1.3 million and the adjusted EBITDA loss would be negative $28,000. Management believes these values will be achieved. Please refer to our Q3 2023 interim financial statements and management discussion and analysis published on CDAR for more information. This concludes my overview of the financial results. I will now turn the meeting over to Brandon Taylor, President and COO of OneSoft, for operational remarks.