OneSoft Solutions Inc.
TSX VENTURE : OSS

OneSoft Solutions Inc.

June 08, 2015 16:00 ET

OneSoft Solutions Inc. Reports Financial Results for Fourth Quarter and Year Ended February 28, 2015

EDMONTON, ALBERTA--(Marketwired - June 8, 2015) - OneSoft Solutions Inc. (the "Company" or "OSS") (TSX VENTURE:OSS), a North American developer of cloud-based business solutions announces its financial results for the fourth quarter and year ended February 28, 2015.

Financial results are summarized as follows:

(in $,000)'s, per share in $ Three months ended February 28 Year ended February 28
2015 2014 Increase /
(Decrease)
2015 2014 Increase /
(Decrease)
$ % $ %
Continuing Operations
Revenue 87 25 245.5 174 73 138.4
Net loss (548 ) (908 ) (39.7 ) (2,101 ) (2,436 ) (13.7 )
Discontinued operations:
Net income (loss) 310 (250 ) (224.0 ) 10,622 388 2,640.5
Consolidated net (loss) income (238 ) (1,158 ) (79.5 ) 8,521 (2,048 ) (516.0 )
Weighted average common shares outstanding - basic and fully diluted (OOO)'s 15,194 14,448 14,567 14,448
Per share:
Continuing operations - loss (0.04 ) (0.06 ) (42.7 ) (0.14 ) (0.17 ) (17.6 )
Discontinued operations - income (loss) 0.02 (0.02 ) (217.9 ) 0.73 0.03 2,333.3
Consolidated net income (loss) (0.02 ) (0.08 ) (80.5 ) 0.59 (0.14 ) (521.4 )

Fiscal Year Highlights

On July 28, 2014, the Company, then operating as Serenic Corporation, completed the sale of its operating subsidiaries (the "Sale Transaction") to Sylogist Ltd. which netted gross proceeds of $7,991,000. On August 29, 2014, the Company paid a return of capital distribution totaling $3,951,000 ($0.26 per share), and on September 12, 2014, the Company paid a special dividend totaling $2,887,000 ($0.19 per share) to its shareholders. Upon closing of the Sale Transaction, the Company changed its name to OneSoft Solutions Inc., which retained the intellectual property and assets associated with its cloud technology and products.

Subsequent to the Sale Transaction, the Company re-organized, which included establishing new US and Canadian operating subsidiaries. Randy Keith retired as the CEO on July 31, 2014, and he now continues to serve as a Director. Dwayne Kushniruk assumed the President and CEO position effective August 1, 2014. Brandon Taylor, one of the original employees of Serenic Software Inc., was appointed President of the U.S. subsidiary and has assumed the role of Chief Operating Officer for all company operations. All key individuals who had worked on the cloud technology and products were retained by OneSoft following the Sale Transaction.

Management has pursued strategies to build the new cloud business, with the objective of increasing revenues through organic growth, collaborative joint marketing arrangements and potential M&A scenarios. With respect to organic growth, the Company developed, and continues to refine, its marketing initiatives, website and on-line sales tools, and has engaged several third party companies to assist with lead generation and provision of services. Several joint marketing arrangements involving companies with large client bases were investigated. As announced on April 16th, 2015, the Company has entered into an arrangement with TechSoup Global to offer the Company's cloud based solutions to eligible non-profit organizations, charities, and public libraries served by TechSoup Global. TechSoup Global has assembled a worldwide network of close to 600,000 organizations, of which more than 70,000 are considered to be ideally suited, based on financial and organizational metrics, to adopt and implement Company products utilizing the OneNFP brand. The Company will continue to pursue similar partnerships with other such vendors with large client bases who represent target markets for the Company's cloud based products.

From a technical perspective, our development teams focused on transitioning our current cloud based fundraising and financial software applications to the newest versions of Dynamics NAV and CRM Online that have been released by Microsoft. This included the porting of our solutions to tablet and mobile devices, which will enable users to access our solutions on any Internet-capable device. Our objective is to achieve a high volume of customers and revenue, in accordance with Microsoft's Cloud strategies which address volume SMB target markets.

Revenue from continuing operations increased over the comparable period last year, due to the increase in the early adopter customers who have purchased subscriptions and licenses to use our software. The loss from continuing operations of $2,101,000, which decreased as compared to the prior year, was anticipated by Management, as revenues and gross profit are not yet sufficient to offset the expenses of the Company. OneSoft is still in the start-up phase of implementing its cloud subscription business model, wherein expenses are expected to exceed revenue and gross margin for a period of time.

Income from discontinued operations was $10,622,000, comprised of net income of the discontinued operations of $956,000 and the gain from the Sale Transaction of $9,666,000.

Subsequent to year end, on March 27, 2015, the Company announced the completion of a Private Placement financing, for gross proceeds of $1,000,000. The Private Placement proceeds will be used to fund sales and marketing activities, invest in new product development and for general working capital. Exercise of the warrants associated with this financing may provide additional funding of up to $2,000,000, should holders choose to exercise their warrants prior to their expiry on March 27, 2018.

Fourth Quarter Highlights

The consolidated net loss for the quarter was $238,000, as compared to the loss of $1,158,000 recorded for the same quarter last year. The loss from continuing operations was $548,000 compared to the loss of $908,000 in the fourth quarter last year. This occurred primarily because of a reduction in impairment charges and related depreciation, but also because of several other factors including an increase in cloud product revenues year over year, increased costs for personnel and benefits and reduced general and administrative costs. Net income from discontinued operations was $310,000 in this quarter due to expenses related to the Sale Transaction being adjusted in the quarter. The loss from discontinued operations for the fourth quarter last year was $250,000, which included an impairment charge of $421,000 related to internally developed software no longer in use. Cash at year ended was $1,377,966, prior to the Company' receipt of the additional funds generated from the Private Placement that was closed on March 27, 2015.

Legal action involving Sylogist Ltd.

On February 13, 2015 the Company filed a Statement of Claim against Sylogist Ltd. ("Sylogist"), to recover approximately $529,000 owed to OneSoft, this being the balance of the purchase price as calculated by OneSoft pursuant to the terms of the Share Purchase Agreement ("SPA") that governed the Sale Transaction. Sylogist subsequently filed a Statement of Defense whereby Sylogist denies OneSoft's claim, and claimed that approximately $335,000 is owed to Sylogist for financial losses that Sylogist allegedly incurred subsequent to the closing of the Sale Transaction. Sylogist also filed a counterclaim for $1,750,000 against OneSoft and three of its senior management personnel (the "Individuals") for alleged breaches of the SPA (the "Counterclaim"). OneSoft and the Individuals, through their counsel, have filed a Statement of Defense to Sylogist's Counterclaim, wherein Sylogist's allegations are denied. We believe that Sylogist's Statement of Defense and Counterclaim, or alternatively, portions thereof, disclose no reasonable claim or defence to a claim, and are frivolous, irrelevant and improper. OneSoft will vigorously defend these matters, take all appropriate steps to protect our interests, and pursue collection of the balance of the purchase price believed to be owed by Sylogist. The Company has Director's and Officer's Insurance which it believes will defray the costs of the defence and against a loss, should it materialize. Copies of the Statements of Claim, Defences and Counterclaim can be read in OneSoft's Material Change Report filed on May 1, 2015 on SEDAR (www.sedar.com) or by reviewing the public court documents filed in the Court of Queen's Bench, Edmonton Judicial Centre, action number 1503-02555.

OUTLOOK

The Sale Transaction provided shareholders the opportunity to monetize a portion of their investment in the Company and allowed management to re-set the Company to potentially capitalize on the vision and success that Microsoft envisions with respect to next-generation cloud computing opportunities. Management believes that embracement of the Microsoft Cloud strategy that commenced in Serenic and now continues in OneSoft has positioned the Company for unprecedented growth, providing that Microsoft's Cloud business model is pursued and execution thereof ultimately proves to be successful.

OneSoft is currently being managed as an entrepreneurial start-up, during which time the Company is operating with only key personnel. Our strategy is, firstly, to provide accounting and fundraising solutions to non-profit organizations ("NPOs") because we are already in a position to leverage our products for NPO target markets that we understand. This strategy involves entering into joint venture projects with organizations who already have established client groups and, through cross-marketing of our products, accelerating growth of our customer and revenue bases, rather than building our client base one customer at a time. Secondly, we intend to seek opportunities outside our historical NPO market space, to leverage our expertise to transition other software applications to the Microsoft Cloud platform. To this end, we intend to continue to pursue a number of corporate development initiatives, including joint venture and potential M&A projects.

OneSoft's Board of Directors and Management intend to focus on revenue growth and cash generation by leveraging the Cloud business strategies and by managing risk factors, with the over-riding objective of delivering maximum value to shareholders. Management believes the Company has sufficient cash to operate on a negative EBITDA basis for approximately four quarters, and anticipates that additional capital may be raised from the exercise of outstanding warrants attached to the Private Placement to provide sufficient capital to sustain the Company until it can ultimately generate positive EBITDA basis on a monthly or quarterly basis. The Company will also contemplate other equity financing alternatives should circumstances require it to do so.

The Company invites readers to review the Company's Management's Discussion and Analysis and Financial Statement for the year ended February 28, 2015 on SEDAR (www.sedar.com) for more detailed information regarding the Company's results and Outlook.

ON BEHALF OF THE BOARD OF DIRECTORS

ONESOFT SOLUTIONS INC.

Douglas Thomson, Chair

Forward-looking Statements

This news release contains forward-looking statements relating to the future operations and profitability of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects", "believe", "will", "intends", "plans" and similar expressions. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.

In respect of the forward-looking information and statements the Company has placed reliance on certain assumptions that it believes are reasonable at this time, including expectations and assumptions concerning, among other things: interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; the success of growth projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material development or other costs related to current growth projects or current operations. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which the Company operates in general such as: costs and expenses; interest rate and exchange rate fluctuations; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws.

Readers are cautioned that the foregoing list of factors is not exhaustive. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.

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

Contact Information