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CAMEROON PROJECTS UPDATE – JUNE 21, 2016
JUNE 22, 2016 CARDINALRESOURCESCDNL LEAVE A COMMENT
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Updates can be hard to write when deep in the middle of the revenue generating projects and new contracts, as well as the administrative projects that we have at Cardinal Resources Inc. At the same time, stepping back we see that this is an exciting transition time for the Company. While many steps remain to reach our goals, we are working on a combination of exciting revenue generating projects and seeing significant progress on the opportunity front. The important work on catching up on the critical filings is moving ahead and with the addition of key staff we are striving to never be in the catch up mode of filings again.
This update focuses on a slice of the revenue generating work that we have been receiving the most questions about that is on-going at Cardinal Resources Inc. We will update our US services and systems projects, our China work and a new contract in Europe later in the month.
As discussed in past updates, Cardinal Resources Inc. (CDNL) has three projects in Cameroon. Two of these projects are related, while the Cameroon Pesticide project, presented in the June 10, 2016 update, is separate. This update covers the status of these three key projects including how revenue is recognized on the projects. Our financials are based on two revenue recognition models as we generate revenue through a combination of services and systems. For services our revenue is recognized as it is invoiced to the customer, while the revenue from system sales is recognized on a cost-to-cost percentage of completion (POC) basis. As a result invoicing on projects and recognized revenues may not match during the course of a contract or project that includes systems.
Cameroon Pesticide Project – Underway
This capacity building project is continuing to move forward with the analysis of the soil samples and the evaluation of the results. The objective is to use the data to determine sites that may require additional work or remedial action. It is too early in the process to tell which sites may require clean up and the size of any clean-up will vary. Revenue from this contract is recognized as the customer is invoiced.
For example, in our Midwest remediation project that we reported on previously, the soil investigation indicated a rather limited extent of contamination. However as the field work wraps up the size of the project is well over $1.0 million. As on the pesticide project, the revenue from the Midwest remediation project is recognized as it is invoiced.
Feasibility Studies and Environmental Assessments (FS/EA) – Underway
As previously reported this work is a new requirement tied to the original $28.8 million CAMWATER contract for providing our patented Red Bird System, tanks, piping, mobile laboratory and supporting engineering work. The purpose of the FS/EAs in this case is to document the economic sustainability and technical feasibility at each site while documenting that the systems can be installed and operated with minimum environmental impact. A similar analysis was also provided to the U.S. Export Import Bank (EXIM) as part of the application process for the funding. In their review EXIM concluded, that the project was environmentally sound and feasible. The reason that Cameroon is undertaking similar studies is that it is part of a new documentation procedure that covers externally financed projects.
Much of the field work associated with this project has been completed, and we are beginning to finalize the necessary reporting. We do have some new sites to review, but this will not hold up implementation of the original contract. This work which is directly funded and does not require Export Credit Agency (ECA) funding. As a consulting project revenue recognition is based on invoicing to the customer.
CAMWATER $28.8 million Contract – Finance pending
Anticipated to be completed by the end of June, the funding proposals are still being evaluated by the Ministry of Economy, Planning, and Regional Development (MINEPAT). While it has been a slow process, progress is being made and with recent changes at CAMWATER and Ministry of Water Resources and Energy (MINEE) the pace of work is increasing. The lack of clean water in the major cities as well as the countryside is in the news daily further increasing the pressure for the agencies to move forward.
We are continuing to meet in person and electronically with key people to provide any assistance we can to move this forward. From our perspective, whichever finance package meets Cameroon’s needs and can be implemented the fastest is the best.
This project combines the two methods of revenue recognition. Tasks that are invoiced monthly through the contract generate revenue that is recognized as invoiced. Revenue from Red Bird Systems and other goods like tanks is recognized using the percentage of completion method.
Forward-Looking Statements
Certain statements in this presentation constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, such as business and political conditions in the geographic areas in which we sell our products, weather and natural disasters, changing interpretations of generally accepted accounting principles; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments, requirements or changes adversely affecting the businesses in which we are engaged.
The information set forth herein should be read in light of such risks. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this presentation and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company¹s expectations.
Company Contact:
Kevin Jones, CEO
412-374-0989
