This document replaces in its entirety the press release that was issued by Wavefront Technology Solutions Inc. on December 23, 2022 at 4:00 PM EST by adding a telephone number in the About Wavefront section.
Edmonton, Alberta--(Newsfile Corp. - December 23, 2022) - Wavefront Technology Solutions Inc. (TSXV: WEE) (OTCQB: WFTSF) (Wavefront or the Company), wishes to report directly to Wavefront shareholders on the precarious financial circumstances of the Company. Prior communications, press releases, financial documents, and Management Discussions and Analyses have described the economic and business factors, political conflict, public health, and Environmental, Social and Governance ("ESG") events driving the precipitous changes in the oil industry. As a small-scale oil industry technology supplier, Wavefront has not escaped the impact of the totality of these affairs.
While the recent upswing in oil prices has boded well for record profits by major oil companies, including several of Wavefront's clients, the oil and gas well stimulation market remains essentially at a stand-still. Only one of the Company's Permian Basin clients has continued with stimulation work since early August 2022. The remaining clients have curtailed stimulation work for various reasons unrelated to Wavefront's technology performance. A contributing factor for the stimulation work stand-still is vendor payment delays resulting in work stoppages as third-party suppliers seek back payments for work delivered and pre-payment for future services and supplies. Although Wavefront has been given many dates for restarting, those have not transpired, and it remains unknown when stimulation work will re-commence with these clients. While there is some indication of a resurgence in international activities, the Company's international distributors continue to lag in meeting targeted job numbers, revenue generation, and timely payment. The challenges Wavefront is currently experiencing in the marketplace make it difficult to specify a timeframe for a more historic workflow but, more importantly, secure sufficient working capital to fund continued operations.
As stated in previous communications and disclosures, the Company remained guarded about its prospects in the near term and conveyed that it may experience a continued period of revenue contraction. Compounding current financial impacts are the very long delays Wavefront is experiencing in realizing its receivables. Wavefront has worked diligently and thoroughly to expedite the collection of receivables from our clients but has yet to succeed. As multiple clients have been delaying paying large amounts owing to Wavefront, there has been a significant direct impact on the Company's working capital resources. Although the Company commenced certain further expenditure curtailments to reduce monthly cash consumption, the Company, by its strategic plan, is currently consuming cash resources at a rate over its operational cash inflow. As such, the Company's continuation as a going concern is dependent upon the Company's ability to collect its account receivables immediately and, moving forward, generate sufficient cash flows from operations to sustain working capital requirements.
The Company's current working capital position will not allow it to complete its fiscal year-end for August 31, 2022, audit and submit the Company's audited financial statements and Management Discussion & Analysis to the B.C. and Alberta Securities Commissions via SEDAR by the deadline date of December 29, 2022. Unfortunately, this will likely lead to the issuance of a cease trade order shortly after that deadline, which will remain until the Company can complete its audit and submit the audited financial statements and Management Discussion & Analysis to the relevant Securities Commission. We will work to meet these requirements as soon as practical. The TSX Venture Exchange may also impose additional requirements under its policies.
Wavefront previously described in press releases that it intended to explore and evaluate potential strategic alternatives to maximize shareholder value. Those alternatives may result in, among other things, a merger, acquisition, or divestiture of the Company. While there was no timetable to complete this activity, there is no assurance that this course of action will result in a specific transaction. Sufficient funding will be required until a strategic alternative can be secured. While the Company holds faith that circumstances may change positively and it may weather its current fiscal challenges, there is no assurance that it will be successful. There is no guarantee that the Company will ultimately be able to collect its receivables immediately or that Wavefront will find an acceptable strategic alternative. These circumstances indicate the existence of material uncertainties that create significant doubt about the Company's ability to meet its obligations and continue as a going concern.
The Board will continue to provide further disclosures as events require.
ON BEHALF OF THE BOARD OF DIRECTORS
WAVEFRONT TECHNOLOGY SOLUTIONS INC.
"Brett Davidson" (signed)
Brett Davidson, President, CEO & Director
About Wavefront:
Wavefront publicly trades on the TSX Venture Exchange under WEE and the OTCQB under WFTSF. The Company's website is www.onthewavefront.com. For further information, please get in touch with us at: investor.info@onthewavefront.com or telephone 780-486-2222.
Cautionary Disclaimer - Forward-Looking Statement
Certain statements contained herein regarding Wavefront and its operations constitute "forward-looking statements" within the meaning of Canadian securities laws and the United States Private Securities Litigation Reform Act of 1995. All statements that are not historical facts, including statements regarding future estimates, plans, objectives, assumptions or expectations or future performance, are "forward-looking". In some cases, forward-looking statements can be identified by terminology such as ''may'', ''will'', ''should'', ''expect'', ''plan'', ''anticipate'', ''believe'', ''estimate'', ''predict'', ''potential'', "believe", ''continue'', "working towards" or the negative of these terms or other comparable terminology. We caution that such "forward-looking statements" involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Such factors include fluctuations in the acceptance rates of Wavefront's Powerwave and Primawave Processes, demand for products and services, fluctuations in the market for oil and gas-related products and services, the ability of Wavefront to attract and maintain key personnel, technology changes, global political and economic conditions, and other factors that were described in further detail in Wavefront's continuous disclosure filings, available on SEDAR at www.sedar.com. Wavefront disclaims any obligation to update any "forward-looking statements" other than as required by law.
©2022 Wavefront Technology Solutions Inc. All rights reserved. From Bit To Last Drop®, WaveAxe®, Powerwave® and Primawave® are registered trademarks of Wavefront Technology Solutions Inc., or its subsidiaries, or affiliates.
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