Augusta Announces Results for the First Quarter of 2018 and Year Ending December 31st 2017 and Corporate Update
May 1, 2018 (Source) — Augusta Industries Inc. (TSXV: AAO) (the “Corporation”) is pleased to announce that it has released its financial results for the year ended December 31, 2017 and for three months ended March 31, 2018.
Summary for Three Months Ended March 31, 2018
For the three months ending March 31, 2018, the Corporation had revenues of $1,720,000 as compared to $879,000 during the three months ending March 31, 2017.
Total profit from operations for the three months ending March 31, 2018 was $31,000 or a net profit of $0.00 per share compared to a loss of $77,000 or $0.00 per share for the three months ending March 31, 2017. Gross margins for the three months ending March 31, 2018 was 16% compared to 23% for the three months ending March 31, 2017 due to the change in mix between Macron and FOX-TEK sales during the period. The operating expenses in the three months ending March 31, 2018 was less at $244,000 compared to $277,000 for the same period in 2017. Stock based compensation during the three months ending March 31, 2018 was $31,000 compared to $101,000 during the three months ending March 31, 2017.
Summary for Year Ended December 31, 2017
For the year ended December 31, 2017, the Corporation had revenues of $2,556,000 compared to $4,596,000 during the year ended December 31, 2016.
Total loss from operations for the year ended December 31, 2017 was $666,000 or a net loss of $0.00 per share compared to a profit of $7,000 or $0.00 per share for the year ended December 31, 2016. Gross margins for the year ended December 31, 2017 was 21% similar to 22% for the year ended December 31, 2016. The operating expenses in the year ended December 31, 2017 was slightly higher at $1,209,000 compared to $1,019,000 for the same period in 2016. Stock based compensation during the year ended December 31, 2017 was $250,000 while there were no such expenses during the year ended December 31, 2016.
The financial statements, notes to the financial statements and Management’s Discussion and Analysis for the year ended December 31, 2017 and for three months ended March 31, 2018 are available on SEDAR at www.sedar.com.
Corporate Update – Business Development
The Corporation has created a wholly owned subsidiary, Paragon Blockchain Inc. (“Paragon”) to commence the process of implementing blockchain technology. Paragon has entered into a memorandum of understanding with an undisclosed blockchain company (the “UBC”) to advise and develop a new set of blockchain applications for the Corporation. The UBC will act as technical advisor and initiate the process of developing a new set of blockchain applications that will integrate, amongst other things, artificial intelligence (“A.I.”) for the purpose of sorting critical procurement opportunities within US government agencies for Marcon International Inc. (“Marcon”), Fox-Tek Canada Inc. (“Fox-Tek”).
Blockchain technology has the potential to unlock substantial new opportunities capable of impacting the business of Marcon. Specifically, Marcon seeks to create an eco-system in the supply chain management of clients to change the dynamics of the scoping and bidding process by providing vendors and subcontractors with A.I. data mining tools to proactively drive the process.
Blockchain technology is of critical importance to Fox-Tek as well particularly the expansion of its’ non-intrusive technology in the oil and gas industry, whose clients include many of the biggest companies in the world. Fox-Tek believes a common system of record connecting data collected for events is of paramount importance to clients. The Corporation will create a platform that will allow for the analysis of data that incorporates an auditing system built for regulatory and quality assurance oversight. The platform will implement a distributed blockchain ledger using smart contracts. These smart contracts provide customization of blockchain data.
Fox-Tek continues to support its independent sales agents and distributors primarily outside of North America with the intent of utilizing their local contacts and established relationships within the oil and gas industry to expedite the distribution of Fox-Tek’s products in the local jurisdictions.
After a very successful first introductory trip to India, Fox-Tek has submitted a number of technical proposals and bids on a number of different projects based on the Corporation’s various technologies. One of the more interested oil companies has requested a bid for 2 large EFM systems to be placed on vessels within a refinery. The client has provided a sample plate for testing purposes that would lead to a custom design for that specific material. The Corporation is also working on introducing our leak detection technology for long distance applications in India.
The Corporation has initiated talks with the Ontario Centres of Excellence (“OCE”) to supplement a number of high quality personnel within the OCE. This includes having a Post Doctorate Fellow to come to the offices of the Corporation and provide a full assessment on the company’s data analysis techniques and to look at ways to better manage our large database of data.
Through OCE, Fox-Tek, along with the McMaster University’s Centre of Opportunity, will be developing an innovative constant current source. This will be used across all of the Corporation’s EFM products, providing its existing and new clients with a better quality of analysis with the use of a high precision constant current source. A full prototype demonstrator has been completed.
The Corporation has been working to fulfill its obligations toward the engineering and field services to meet the requirements of the contract announced on July 10, 2017 with one of the Corporation’s largest and long standing clients in North America.
The Corporation is still working closely with the Trans Africa Pipeline project (“T.A.P.”) to provide non-intrusive sensing equipment which will verify the integrity of the pipeline composite at key locations. In addition to the non-intrusive sensing equipment, Fox-Tek will provide optical based sensing technology which would allow T.A.P. to monitor the right of way zones from possible third-party intrusions. The last update was that partial financing is completed and the site survey will be concluded for the Desalination Plant will be underway later in 2018.
The company is continuing with the qualification process with Petrobras to become a supplier of corrosion detection monitoring systems, optical strain/pressure/temperature sensors & leak detection technology.
The Corporation is working with FiBos on two separate applications to monitor pressure in injectors. These injectors are critical to the plant operations since failures could lead to slowdowns or shutdowns of operations. A proof of concept was successfully completed and we are current working Phase 2
Sales of EFM Corrosion Monitoring Systems
The Corporation has successfully completed 3 site surveys for one of its largest and long standing clients in North America and is negotiating a contract with the client to convert a competitor’s technology to Fox-Tek’s EFM technology.
The Corporation continues to work closely with engineering firms and major oil and gas companies in the Middle East, England, in addition to all the major Canadian companies. There have been increased interest in the Corporation’s products from a number of overseas markets including India and the UK. The Corporation entered into a contract in 2016 with a company in the U.K. for the supply of a custom built EFM system for a laboratory. This system was shipped out in the first quarter of 2017 and installed in the second quarter of 2017. The Corporation is confident this could lead to future orders for more portable and mobile systems that could be used for periodic monitoring for less critical applications.
The Corporation is also negotiating a contract for sale of another EFM unit to another of its clients.
The Corporation continues to enhance the DMAT platform (Data Management and Analysis Tool). Response from customers utilizing the DMAT service has been very positive. For DMAT, the revenue stream is guaranteed when a customer acquires the hardware. The Corporation has successfully negotiated new contracts with several clients, for engineering services and data analysis, for the 2017 fiscal year and beyond.
Leak Detection Technology
Fox-Tek’s leak detection technology has the potential of becoming a disrupting technology within the oil and gas sector due to its ability to detect minute amounts of volatile organic compounds present in hydrocarbon leaks. Due to the nature of the technology, it will likely have fewer false alerts unlike a number of competing technologies.
- The Corporation has received a contract for a system to detect oil on water in a drainage culvert.
- The Corporation has been invited to be part of an onsite technical review for the use of its technology to monitor leaks in a pipe, within a tank farm. A budgetary/technical proposal was provided to the client. The pipe is estimated to be about 500 meters long. A site survey will be conducted end of April followed by contract negotiations
- Fox-Tek has successfully completed a valuation of its leak detection technology by a large consortium consisting of a number of oil and gas companies.
- Fox-Tek is working closely with CANMET on the development of a new sensor technology (RFID corrosion sensor) to be used as a way to determine the damage of time on pipeline coatings. A letter of interest was submitted pursuant to a government initiative and the company has been selected to participate in phase 2 – LOI Technical Review.
The company has an additional 5 bids for a number of applications utilizing a number of its technologies (EFM, FBG and leak detection.)
Marcon provides procurement and support services to existing and new projects worldwide in the energy sector. Initially Marcon had focused on providing services in the energy sector but moved on to government contracts and government services. Marcon has two subsidiaries, Marcon USA and Marcon UK, to help enhance and support its logistic and sales operations. Over the years it has established a good reputation and has been a consistent performer for its clients in the government as well as the international oil and gas industry.
Marcon has built an impressive pipeline of quotes in 2018 along with increased bidding activity. Majority of the larger bids and quotes for Marcon are time consuming both in preparation of the bidding process and with the client and the end users. Marcon has successfully signed numerous deals year to date and will continue to do so and update the public through periodic press releases. Backlog sales in Marcon for the period ending March 31, 2018 were $819,000.
About the Corporation:
Through its wholly owned subsidiaries, Marcon, Fox-Tek and Paragon, the Corporation provides a variety of services and products to a number of clients.
Marcon is an industrial supply contractor servicing the energy sector and a number of US Government entities. Marcon’s principal business is the sale and distribution of industrial parts and equipment (Electrical, mechanical and Instrumentation.) In addition to departments and agencies of the U.S. Government, Marcon’s major clients include Saudi Arabia-Sabic Services (Refining and Petrochemical), Bahrain National Gas Co, Bahrain Petroleum, Qatar Petroleum, Qatar Gas, Qatar Petrochemical, Gulf of Suez Petroleum, Agiba Petroleum and Burullus Gas Co.
Fox Tek develops non-intrusive asset health monitoring sensor systems for the oil and gas market to help operators track the thinning of pipelines and refinery vessels due to corrosion/erosion, strain due to bending/buckling and process pressure and temperature. The Corporation’s FT fiber optic sensor and corrosion monitoring systems allow cost-effective, 24/7 remote monitoring capabilities to improve scheduled maintenance operations, avoid unnecessary shutdowns, and prevent accidents and leaks.
Blockchain technology has the potential to unlock substantial new opportunities capable of impacting the business of Marcon. Specifically, Marcon seeks to create an eco-system in the supply chain management of clients to change the dynamics of the scoping and bidding process by providing vendors and subcontractors with A.I. data mining tools to proactively drive the process. Blockchain technology is of critical importance to FOX-TEK as well particularly the expansion of its’ non-intrusive technology in the oil & gas industry, whose clients include many of the biggest companies in the world.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and as neither approved nor disapproved the contents of this press release.
This press release contains forward-looking statements based on assumptions, uncertainties and management‘s best estimates of future events. Actual results may differ materially from those currently anticipated. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements are detailed from time to time in the Corporation‘s periodic reports filed with the Ontario Securities Commission and other regulatory authorities. The Corporation has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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