Acceleware® Ltd. (“Acceleware” or the “Company”) (TSX-V: AXE), a
leading innovator of transformative technologies targeting the
decarbonization of industrial heating, today announced its
financial and operating results for the three months ended March
31, 2024 (all figures are in Canadian dollars unless otherwise
noted). Acceleware’s results reflect contributions from the
Company’s two business units, radio frequency (“RF”) heating for
industrial applications using the Company’s proprietary Clean Tech
Inverter (“CTI”) including enhanced oil recovery (“RF XL”), and
high-performance computing ("HPC”) scientific software. This news
release should be read in conjunction with the Company’s unaudited
interim condensed financial statements and the accompanying notes
for the three months ended March 31, 2024 and management’s
discussion and analysis (“MDA”) thereto, together with the audited
financial statements for the year ended December 31, 2023, notes
and MDA thereto, all of which are available on Acceleware’s website
at www.acceleware.com or on www.sedarplus.ca.
HIGHLIGHTS
Financial highlights for the three months ended
March 31, 2024:
|
|
|
Three Months Ended |
|
|
|
|
Mar 31, 2024 |
|
Mar 31, 2023 |
|
Revenue |
|
|
|
43,594 |
|
103,547 |
|
Comprehensive income/ (loss) |
|
|
|
(969,971) |
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(255,617) |
|
Gross R&D expenditures |
|
|
|
501,115 |
|
752,368 |
|
Government assistance |
|
|
|
- |
|
434,023 |
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|
|
|
|
|
|
|
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Encouraged by positive results to date, the
Company worked closely with industry partners to determine the most
appropriate next steps in the RF XL Pilot. It was determined that
the most practical path forward involves a redeployment of all
subsurface components incorporating the multiple improvements and
upgrades that Acceleware has made to the RF XL downhole system.
Acceleware is actively sourcing an additional $5 million of funding
to complete the redeployment. The redeployment is expected to
enable higher power to be distributed in the reservoir for a
sustained period in a second phase of heating. Please refer to the
MDA for a complete RF XL Pilot update.
On April 11, 2024 Acceleware announced that is
had been awarded Phase 2 of a potash ore drying project by the
International Minerals Innovation Institute (“IMII”). The new
project phase will advance Phase 1 work and is intended to further
validate the use of radio frequency energy from Acceleware's CTI to
dry potash ore and other minerals. Phase 2 work will include the
construction and testing of a lab-scale prototype dryer, and on a
stage gate basis, the design, construction and testing of larger
shop-scale prototype. IMII is a non-profit organization jointly
funded by industry and government that is committed to developing
and implementing innovative education, training, research and
development partnerships for supporting a world-class minerals
industry. IMII's minerals industry members include BHP, Cameco
Corporation, Fission Uranium Corp., The Mosaic Company and Nutrien
Ltd.
Acceleware continued to invest in developing and
protecting new intellectual property with the total number of
patents issued, allowed, applied for, or in development growing to
a total of 61.
QUARTER IN REVIEW
Revenue of $0.04 million was generated in the
three months ended March 31, 2024 compared to $0.1 million in the
three months ended March 31, 2023 (“Q1 2023”) and $0.04 million in
the previous quarter ended December 31, 2023 (“Q4 2023”). Revenue
in Q1 2024 included software and maintenance revenue. Revenue was
lower in Q1 2024 and Q4 2023 due the variability in revenue earned
in the RF Heating segment for technology evaluation services in
applying CTI to industrial heating. While interest has increased in
EM Powered Heat and the CTI (see IMII project discussed above),
there was no revenue recognised in Q1 2024 or Q4 2023.
Total comprehensive loss for Q1 2024 was $1.0
million compared to a comprehensive loss of $0.3 million for Q1
2023 and a comprehensive income of $0.6 million for Q4 2023.
Comprehensive income in Q4 2023 was due to the receipt of
government assistance from CRIN relating to costs incurred from
January 1, 2022 to June 30, 2023. Offsetting lower spending in Q1
2024 and Q4 2023 were higher interest costs related to notes
payable funding the Company’s working capital. Comprehensive
income/(loss) in all periods was impacted by changes in value of
the derivative financial instruments embedded within the
convertible debenture. The changes in derivative value are driven
primarily by fluctuations in the Company’s share price.
Gross R&D expenses incurred in Q1 2024 were
$0.5 million compared to $0.8 million in Q1 2023 and $.07 million
in Q4 2023. R&D spending was lower in Q1 2024 and Q4 2023
compared to Q1 2023 due to a change in the nature of RF XL Pilot
activities. Most R&D activity in Q1 2024 was related to lab
engineering, designing and testing, data analysis, and partner
consultations. There was no government assistance received in Q1
2024 compared to $0.4 million in Q1 2023 and $2.1 million in Q4
2023, the latter constituting the first CRIN payment. Meanwhile,
the Government of Alberta’s Innovation Employment Grant (“IEG”) to
support research and development was effective January 1, 2021 and
provides a grant of up to 20% of eligible R&D expenses incurred
in Alberta. This new grant effectively replaced Alberta’s 10%
scientific research and experimental development refundable tax
credit that was eliminated as at December 31, 2019. The Company met
the eligibility criteria, claimed eligible R&D expenditures and
received $0.4 million in Q1 2023 related to 2021 eligible
expenditures and $0.1 million in Q3 2023 related to 2022 eligible
expenditures and $nil in Q4 2023. As at March 31, 2024 there was
$nil million government assistance receivable however a claim for
2023 expenditures is in process. Government assistance offsets
gross R&D costs.
G&A expenses incurred in Q1 2024 were $0.5
million compared to $0.3 million in Q1 2023 and $0.6 million in Q4
2023. There were higher non-cash payroll related costs incurred in
Q1 2024 and Q4 2023 due to the timing of option grants, higher
professional fees and lower salaries as the Company continues to
prioritize cost control given uncertain economic conditions.
At March 31, 2024, Acceleware had negative
working capital of $2,799,757 (December 31, 2023 – negative working
capital of $1,985,372) including $126,895 in cash and cash
equivalents (December 31, 2023 - $951,569) and $852,069 in
short-term notes payable (December 31, 2023 - $944,010). As of
March 31, 2024, Acceleware also had $2,215,000 in long-term 10%,
semi-annual interest, convertible debentures outstanding, the
principal amount of which is owing four years from the date of
issue or approximately Q1 2026. Fluctuations in non-cash working
capital were attributable to the timing of receipt and recognition
of government and partner funding and related R&D spending.
During Q4 2023, Acceleware received the first claim for
reimbursement under the new $3 million CRIN grant funding
arrangement noted above. There was $2,064,434 received in Q4 2023.
Cash and cash equivalents decreased in Q1 2024 due to timing of
payments of trade payables. Increasing the deficit is deferred
revenue of $4,350,000 as at March 31, 2024 (December 31, 2022 –
$4,350,000). Despite receiving non-refundable cash payments for
these amounts, the milestone payments have not met all requirements
for revenue recognition under IFRS 15 Revenue from Contracts with
Customers. These amounts will be recognized as revenue and increase
shareholders’ equity when RF XL Pilot heating is complete or the
data revenue contracts are terminated, whichever is earlier.
ABOUT ACCELEWARE:
Acceleware is an innovator of clean-tech
decarbonization technologies comprised of two business units: Radio
Frequency Heating Technology and Seismic Imaging Software.
Acceleware is piloting RF XL, its patented
low-cost, low-carbon production technology for heavy oil and oil
sands that is materially different from any heavy oil recovery
technique used today. Acceleware's vision is that electrification
of heavy oil and oil sands production can be made possible through
RF XL, supporting a transition to much cleaner energy production
that can quickly bend the emissions curve downward. With clean
electricity, Acceleware’s RF XL technology could eliminate
greenhouse gas (GHG) emissions associated with heavy oil and oil
sands production. RF XL uses no water, requires no solvent, has a
small physical footprint, can be redeployed from site to site, and
can be applied to a multitude of reservoir types. Acceleware is
also actively developing partnerships for RF heating of other
industrial applications using the Company’s proprietary CTI.
Acceleware and Saa Dene Group (co-founded by Jim
Boucher) have created Acceleware | Kisâstwêw to raise the profile,
adoption, and value of Acceleware technologies. The shared vision
of the partnership is to improve the environmental and economic
performance of the energy sector by supporting ideals that are
important to Indigenous peoples, including respect for land, water,
and clean air.
The Company’s 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 is a public company listed on
Canada’s TSX Venture Exchange under the trading symbol “AXE”.
NOTE REGARDING FORWARD-LOOKING
INFORMATION AND OTHER ADVISORIES
This news 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 are prospective in
nature, and includes disclosure about the issuer’s prospective
financial performance or financial position.
The forward-looking information in this press
release can be identified by terms such as “believes”, “estimates”,
“plans”, “potential”, and “will”, and includes information about,
the expected commercialization of RF XL, the expected cost of
the RF XL Pilot, the timing of the execution of the
RF XL Pilot and the redeployment, expected financing required
for the RF XL Pilot redeployment, and the anticipated
economic and societal benefits of the RF XL technology. Acceleware
assumes that current cost estimates are accurate, current
timelines will not be delayed by either internal or external
causes, that research and development effort including the
commercial-scale test plans will result in commercial-ready
products, and that future capital raising efforts will be
successful.
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.
This news release does not constitute an offer
to sell or a solicitation of an offer to buy any of the securities
described in this release in the United States. The securities have
not been and will not be registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”), or
any state securities laws and may not be offered or sold within the
United States or to U.S. persons unless registered under the U.S.
Securities Act and applicable state securities laws or an exemption
from such registration is available.
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.
For more information:Geoff ClarkTel: +1 (403)
249-9099geoff.clark@acceleware.com
Acceleware Ltd.435 10th Avenue SECalgary, AB,
T2G 0W3CanadaTel: +1 (403) 249-9099www.acceleware.com
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