Calgary, Alberta--(Newsfile Corp. - August 24, 2021) - Raise Production Inc. (TSXV: RPC) ("Raise" or the "Company") has released its financial results for the three and six months ended June 30, 2021. Selected financial and operational information is outlined below and should be read in conjunction with Raise's financial statements and management's discussion and analysis for the three and six months ended June 30, 2021, which are available on SEDAR at www.sedar.com.
HIGHLIGHTS FOR THE QUARTER
- The Company negotiated during the quarter and announced on July 12, 2021, the intention to complete a reverse takeover transaction with Cleantek Industries Inc. ("Cleantek") with Cleantek completing a broker private placement for $10 million prior to the closing date of the business combination.
- The Company completed the full conversion of its secured convertible debentures to common shares amounting to the extinguishment of $2,334,027 in principal and interest.
- The net loss for the three and six months ended June 30, 2021 decreased 60% and 70%, respectively, compared to the same periods in the prior year, primarily as a result of the Company continuing to implement actions to preserve its cash position.
- The Company continued to assist Q2 Artificial Lift Services ("Q2 ALS") with its exclusive license agreement for the manufacturing, sales and service of the Company's HARPTM and REALTM products including the transfer of Raise's remaining HARPTM and REALTM inventory to Q2 ALS.
PRESIDENT'S UPDATE
The Company is providing an update to its shareholders on its financial results and recent activities related to its business and operations.
The Company has three systems that can be used independently or in combination in horizontal wellbores:
- the High Angle Reciprocating Pump ("HARP");
- the Raise Efficient Artificial Lift ("REAL") Horizontal Separator;
- the Horizontal Artificial Recovery Technology ("HART").
As stated in the Company's press release dated May 27, 2021, Raise finalized its exclusive rights agreement with Q2 ALS for the manufacturing, sales and service of the Company's HARPTM and REALTM products in exchange for a ten-year royalty payment on all Raise products sold as complete components or parts. The Company continues to assist Q2 ALS with the license agreement to ensure a smooth transition of Raise's customers and products. All Raise's remaining HARPTM and REALTM inventory was transferred to Q2 ALS in May 2021 to be paid for on an "as-used" basis once the Q2 ALS's existing HARPTM inventory received through its previous distribution agreement has been exhausted.
As stated in the Company's press release dated July 12, 2021, Raise entered into an arrangement agreement with Cleantek whereby Raise and Cleantek will complete a business combination pursuant to a plan of arrangement under the Business Corporations Act (Alberta) (the "Transaction"). The Transaction will result in an arm's length "reverse takeover" of Raise and the combined business of both companies will continue under the name "Cleantek Industries Inc.". In conjunction with entering into the Transaction, Cleantek entered into an agreement with a syndicate of investment dealers for a brokered private placement offering of subscription receipts of Cleantek on a best-efforts basis for minimum gross proceeds of $10 million (the "Financing").
The Company is pleased to inform its shareholders that the process is proceeding as per the planned schedule with the Financing expected to close on or about August 31, 2021 and the Transaction expected to close on or about October 31, 2021, subject to receiving all required regulatory approvals. The Company will provide further updates when available.
In the interim period, the Company continues to take significant steps to reduce its monthly operating expenses and preserve its cash position to meet its financial liability obligations as they become due. These measures included extinguishing the Company's long-term convertible debt in exchange for common shares, significantly reducing the Company's salary expense through terminations, salary reductions and receiving government assistance through the Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy programs, selling all of its property and equipment, cancelling its office, machine and vehicle leases and reducing general operating expenses to minimum levels.
RESULTS OF OPERATIONS
Statements of Loss and Comprehensive Loss
| Three months ended June 30 | Six months ended June 30 | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Revenue from contracts with customers | $ | 110,980 | $ | 110,776 | $ | 382,963 | $ | 229,653 | ||||
| Cost of sales | 588 | 62,760 | 157,935 | 124,943 | ||||||||
| Gross margin | 110,392 | 48,016 | 225,028 | 104,710 | ||||||||
| Other income | 4,232 | 31,661 | 4,232 | 33,530 | ||||||||
| Expenses: | ||||||||||||
| General and administration | 246,450 | 194,344 | 396,260 | 631,615 | ||||||||
| Inventory impairment | 125,069 | - | 141,822 | - | ||||||||
| Gain on extinguishment of convertible debt | (117,444 | ) | | - | (117,444 | ) | - | |||||
| Gain on disposal of assets | (80,545 | ) | - | (80,545 | ) | - | ||||||
| Finance costs | 15,078 | 66,656 | 77,729 | 132,482 | ||||||||
| Depreciation and amortization | 21,040 | 57,984 | 42,999 | 117,087 | ||||||||
| Research expenses | 6,579 | 13,211 | 18,586 | 50,194 | ||||||||
| Stock-based compensation | 752 | 4,208 | 6,440 | 69,636 | ||||||||
| 216,979 | 336,403 | 485,847 | 1,001,014 | |||||||||
| Net loss and comprehensive loss | $ | (102,355 | ) | $ | (256,726 | ) | $ | (256,587 | ) | $ | (862,774 | ) |
| Net loss per share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) |
About Raise Production Inc.
The Company is an innovative oilfield service company that focuses its efforts on the production service sector, utilizing its proprietary products to enhance and increase ultimate production in both conventional and unconventional oil and gas wells.
For further information please contact:
Tom Kehoe, Investor Relations
E-mail: tkehoe@raiseproduction.com
Eric Laing, President and Chief Executive Officer
E-mail: elaing@raiseproduction.com
Susan Scullion, Chief Financial Officer
E-mail: sscullion@raiseproduction.com
Raise Production Inc.
Tel: (403) 699-7675
Web site at: www.raiseproduction.com
Neither 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 news release.
Certain information included in this press release constitutes forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain or can be identified by statements that include words such as "anticipate", "assume", "based", "believe", "can", "continue", "depend", "estimate", "expect", "forecast", "if", "intend", "may", "plan", "project", "propose", "result", "upon", "will", "within" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this document include but are not limited to: the completion of the Transaction, and the anticipated date thereof; the Company's intention to carry out the combined business of the Company and Cleantek under the name Cleantek Industries Inc; the completion of the Financing, and the anticipated date thereof; the Company's business strategy, short and long term objectives, strength and focus; the use of the company's patented products to enhance and increase production in conventional and unconventional horizontal oil and natural gas wells; the license agreement with Q2 ALS and the impact thereof, including the marketing, sale, distribution, production, manufacturing, assembly, installation, servicing and inventory management of the Company's technologies; royalty income resulting from the license agreement with Q2 ALS; sales and marketing activities; increased visibility in the market; estimates and source of funds of future product development and capital and operating expenditures; capital raising; the availability of credit; the Company's credit risk; continued usage of service providers and contractors, including Q2 ALS; estimates regarding current cash resources and cash flow, project revenue, and its ability to meet strategic objectives into 2021; anticipated sales; profitability expectations; commercialization plans and the timing thereof; operating and other costs and the effects thereof; the effect of oil and natural gas market conditions on the Company; financial results and the impacts of International Financial Reporting Standards on these statements.
The forward-looking statements contained in this news release are made as of the date hereof and the Company does not undertake any obligation to publicly update or revise any of the included forward-looking statements, except as required by applicable Canadian securities law. Forward-looking statements are based upon the current opinions, estimates, projections, assumptions and expectations of management of the Company as at the effective date of such statements and, in some cases, information supplied by third parties. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from third parties is reliable, it can give no assurance that those expectations will prove to have been correct. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statement will not occur. These risks and uncertainties include but are not limited to: obtaining regulatory approvals, including from the TSXV, in respect of the Transaction and the Financing; deployment and commercialization of the Company's products, competition in the market, regulatory changes, reliance on third party distributors including Q2 ALS, the risk that the low commodity price environment will be sustained for an indefinite period, the impact of the COVID-19 pandemic and variant strains of the virus, and the resulting effects on economic conditions, restrictions imposed by public health authorities or governments, fiscal and monetary responses by governments and financial institutions and disruptions to global supply chains and other general industry, economic, market and business conditions, delays or changes in plans with respect to developing, manufacturing, marketing and distributing and installing the Company's products. Readers are cautioned that the foregoing list of risks, uncertainties and assumptions are not exhaustive. Accordingly, readers should not place undue reliance upon the forward-looking statements contained in this news release and such forward-looking statements should not be interpreted or regarded as guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, investors should review the Company's continuous disclosure filings that are available at www.sedar.com.
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