Serenic Corporation
TSX VENTURE : SER

Serenic Corporation

January 27, 2010 19:14 ET

Serenic Reports Strong Third Quarter for Three Months Ended November 30, 2009

EDMONTON, ALBERTA--(Marketwire - Jan. 27, 2010) - Serenic Corporation (the "Company" or "Serenic") (TSX VENTURE:SER), an international software developer specializing in integrated financial management and HCM solutions for Non-Profit organizations, government agencies, and Microsoft Dynamics NAV users, is pleased to announce its financial results for the three and nine months ended November 30, 2009.


Financial results are summarized as follows:

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Statement of
 Operations                  (Unaudited)                 (Unaudited)
 Information             Three months ended:         Nine months ended:
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                      Nov 30,    Nov 30,          Nov 30,     Nov 30,
                        2009       2008      %      2009        2008      %
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                           $          $                $           $
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Revenue            2,588,602  2,278,695   13.6 8,292,794   6,650,532   24.7
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Income (loss) for
 the period          154,064   (385,817) 139.9   451,940  (1,016,685) 144.4
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Basic and diluted
 income (loss) per
 share                  0.01      (0.03) 133.0      0.03       (0.07) 142.9
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EBITDA (1)           277,448   (221,736) 225.1   845,994    (560,414) 250.9
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EBITDA as a % of
 revenue                10.7       (9.7) 210.3      10.2        (8.4) 221.4
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Weighted average
 common shares
 outstanding         #          #
 (basic)          15,185,458 15,185,458       15,185,458  15,182,819
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1. EBITDA represents earnings before interest, taxes, depreciation,
   amortization, and stock based compensation. Please review the Serenic
   Management Discussion and Analysis for the quarter ended November 30,
   2009 for more information.

FINANCIAL HIGHLIGHTS

- Revenue for the quarter increased by 13.6% to total $2,588,602, up from $2,278,695 recorded in the comparable period last year. Factors responsible for this change were software license sales of $1,011,351, up 37.4% over Q3 last year; client services revenue of $802,855, up 7.4% from Q3 last year; and recurring maintenance and other revenue of $774,396 down 2.6% from Q3 last year.

- Gross profit was flat at $1,770,531 for Q3 of this year versus $1,778,598 of Q3 last year. Incremental expenses of consulting subcontractors and sales referral fees offset the gross profit increases provided by the higher revenue and caused the gross margin percentage as a function of revenue to decline to 68.4% from 78.1% in the same quarter last year.

- Expenses in Q3 decreased overall by 31.0%, down by $706,510 to $1,571,669, from $2,278,179 as recorded in Q3 last year. Measures taken by management earlier this year to reduce expense were augmented by a lower foreign exchange rate and the capitalization of salary expense related to development of the new version of Serenic's flagship product, Serenic Navigator released on November 12, 2009

- Net income for the quarter improved to $154,064 from a loss of $385,817 in Q3 of last year. The generation of gross profit the same as last year and the very significant reduction in expenses augmented by the salary capitalizations were responsible for the dramatic change in net income.

- Commensurate with the higher net income, EBITDA improved to $277,448 or 10.7% of revenue as compared to an EBITDA loss of $221,736 or 9.7% of revenue in Q3 of the prior year.

- Year-to-date revenue was $8,292,794, 24.7% ahead of last year's figure of $6,650,532. International sales of software licenses plus continued success in North American markets has increased the nine month software revenue to $3,240,972, 22.3% ahead of last year's comparable figure of $2,650,452. Client services revenue is up 44.5% and software maintenance other revenue is up 10.4% on a period over period-basis. Gross profit has increased by 16.1% to $5,903,389 from $5,082,562. Net income for the nine month period is $451,940 versus a loss of $1,016,685 at this time last year. In concert with these results, EBITDA has also been positively impacted, having increased to $845,994 in the current nine-month period as compared to an EBITDA loss of $560,414 for the nine month period ending November 30, 2008.

- Revenue for the past five quarters has increased by 14% 22%, 30%, 39% and 23% over their comparable periods in the prior year. Despite the challenging economy in North America and other parts of the word, Serenic continues to be able to successfully place product and deliver services at an increasing pace.

Please refer to the financial statements and Management Discussion and Analysis for the quarter ended November 30, 2009 filed at www.sedar.com for more detailed information.

QUARTER REVIEW

Serenic's strong performance continued through the third quarter of fiscal 2010. Revenues were up by 14% over the comparable quarter last year and the growth occurred in the Company's revenue streams of software licenses, client services and consulting while revenue from maintenance contracts and other revenue declined due to training revenue being less than the same period last year. Software licenses sales increased by 37.4% to $1,011,351. Both our direct sales team and the reseller partner channel were very active in the U.S.A. and Africa with sales being made into several niche markets including native bands, a humanitarian organization and the finance department of an African country. Revenue for the past five quarters has increased by 14%, 22%, 30%, 39% and 23% over their comparable periods in the prior year. While we are very pleased to report this sales performance at a time when many companies are reporting declines in revenues and recording net losses, we fail to be content with these gains and are continuing to look for new ways to continue to grow revenue.

Early in the current fiscal year, management took action to reduce expenses in order to ensure that costs would be properly matched with expected revenues for this fiscal year. While revenues are up on a year to date basis by 24.7%, the actions taken continued through the third quarter. All major categories of expense are less than the same quarter last year which was essential for the Company to avoid the large loss posted in this quarter last year. The Company was assisted in this regard by a more favorable foreign exchange rate; however, that also caused us to record a foreign exchange loss as our net U.S. dollar monetary assets lost value with the decrease in the exchange rate.

During the quarter, Serenic invested a further $177,808 into the development of its new version of its flagship software product, Serenic Navigator and on November 12, 2009, the Company announced it had been put into general commercial release and was being made available to our new and existing customers. This new product has many technological advances gained from working closely with Microsoft in Copenhagen and Serenic is very excited about marketing and selling this new product.

Through the continued growth in sales and control being exerted over expenses, the Company recorded net income of $154,187 in the quarter, a significant improvement over the loss of $385,817 reported at this time last year. The net income positively affected EBITDA which totalled $277,448 for the quarter. On a year to date basis, net income has risen to $451,940, a sharp contrast to the loss of $1,016,685 for the nine months concluding November 30, 2009. On a similar note, year to date EBITDA is $845,994 versus an EBITDA loss of $560,414 for the same period last year.

While we were very pleased with revenue, net income and EBITDA, we were disappointed that our cash balances reduced by $376,904 in the quarter. Several customers chose to pay their invoices late for a variety of reasons which caused the level of investment in accounts receivable to rise by $191,293 when a reduction in those assets had been sought. On a similar note, deferred revenue decreased by $136,832 which was a reversal of the usual trend of a continual increase and being a provider of cash. Management will continue to focus on these key areas in order to increase its cash balances in order to be prepared to take advantage of new business opportunities as they arise.

OUTLOOK

Our outlook is essentially unchanged from prior quarters in that we continue to be vigilant of the current global Serenic's outlook remains essentially unchanged from that stated in the past year. Fortunately, during the current fiscal year, Serenic has been able to avoid many of the negative consequences of the economic recession and its associated uncertainties. Notwithstanding our success, however, we intend to maintain prudent operational strategies throughout Fiscal 2010 and continue to be mindful that the malaise of the economy may still impact our clientele in a more negative way than we have experienced to date. In short, we intend to remain vigilant to take swift corrective action if warranted by any change in circumstances.

Growth initiatives will be implemented where warranted, including the recruitment of additional training and sales personnel for both domestic and international operations. Expansion into international markets, which has been very beneficial in allowing us to deliver improved results, is expected to continue. Administrative spending will continue at an increased level in order to prepare for conversion of accounting procedures to International Financial Reporting Standards, as will be required for all Canadian publicly traded companies by 2011. Marketing costs may be elevated, as necessary to support the roll-out of the new Navigator products and to supplement their sales success.

Although development of the new Serenic products has just concluded, the Company continues to investigate potential integrations of synergistic products and services that fulfill new niche market opportunities, either by acquisition or through further internal development efforts. To this end, management will continue to seek out partnerships with other organizations to better leverage opportunities in current markets and/or to engage in new markets. Investigation of accretive merger and acquisition opportunities and other potential scenarios that might better serve long term objectives will continue to be pursued.

Serenic continues to maintain its strong cash position, with no debt. Sales and revenue growth has sustained for the past five quarters, and the Company has made excellent progress in both its domestic and international niche markets. We continue to be very optimistic about Serenic's success and look forward to meeting the objectives of all stakeholders in the near future.

About Serenic Corporation

Serenic Corporation publishes mission-critical software products for not-for-profits (NFP), educational institutions and governments. The Company's products are based on leading application and technology platforms from Microsoft, including Dynamics NAV, SQL Server, and .NET, and are distributed in North America and internationally through value-added resellers and a direct sales organization. Serenic Corporation is the exclusive developer of human resource management and payroll products for Microsoft Dynamics NAV ERP users in North America. In October, 2009, Serenic was ranked 29th in the Deloitte Technology Canada Fast 50 and 256th in the Deloitte North America Fast 500, the second year in a row it had its name placed on these prestigious lists. Serenic was named the "ISV (Industry Solutions Vendor) Partner of the Year" by Microsoft for North America in 2009 and is a member of Microsoft's President Club and Inner Circle, the latter being an elite group of sixty-seven members representing the top 1% of Microsoft partners world-wide. Serenic has offices in Edmonton, Alberta and Denver, Colorado and staff located throughout the USA and Canada and has a Sales Manager resident in Europe.

ON BEHALF OF THE BOARD OF DIRECTORS

By: Dwayne Kushniruk, Chairman

SERENIC CORPORATION

Forward Looking Statements

Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "anticipate", "believe", "will", and similar expressions and statements relating to matters that are not historical facts, are forward looking statements. Such forward looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Serenic Corporation to be materially different from any future results, performances or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, software industry risks, general business risks, foreign currency risks, economic dependence risks, and credit risks.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Serenic Corporation
    Dwayne Kushniruk
    1-877-426-5385 x 509
    dkushniruk@serenic.com
    or
    Serenic Corporation
    Paul Johnston
    CFO
    1-877-426-5385 x 509
    pjohnston@serenic.com
    or
    The Dollarton Group Inc.
    Investor Relations
    Nick Waddell
    (877) 737-3642 x144
    or
    The Dollarton Group Inc.
    Investor Relations
    Kit Spence
    (877) 737-3642 x144
    ir@serenic.com