OneSoft Solutions Inc.

January 29, 2015 19:50 ET

OneSoft Solutions Inc. Reports Financial Results for Three and Nine Months Ended November 30, 2014

EDMONTON, ALBERTA--(Marketwired - Jan. 29, 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 three and nine months ended November 30, 2014.

Financial results are summarized as follows:

Three months ended November 30 Nine months ended November 30
2014 2013 Incr-
2014 2013 Incr-
$ $ % $ $ %
Continuing operations:
Revenue 43,600 20,956 108.1 87,497 47,990 82.3
Net loss (334,566) (629,416) (46.8) (1,553,785) (1,527,647) 1.7
Discontinued operations
Net (loss) income (126,683) 245,263 (151.7) 10,312,407 637,670 1,517.2
Consolidated net income (loss) (461,249) (384,153) 20.1 8,758,622 (889,977) (1,084.1)
Weighted average common shares outstanding - basic and fully diluted 15,149,458 14,415,280 14,361,567 14,527,437
Continuing operations - loss per share (0.02) (0.05) (62.7) (0.11) (0.10) 15.6
Discontinued operations - income per share (0.01) 0.02 (150.0) 0.72 0.04 1,700.0
Consolidated income per share (0.03) (0.03) - 0.61 (0.06) (1,116.7)


On July 28, 2014, Serenic Corporation ("Serenic") sold its three wholly-owned operating subsidiaries, Serenic Software, Inc., Serenic Canada Inc. and Serenic Software (EMEA) Limited (collectively the "Subsidiaries") to Sylogist Ltd. ("Sylogist") of Calgary, Alberta (the "Sale Transaction"). The aggregate purchase price paid by Sylogist, less the estimated net liabilities assumed by Sylogist and a cash holdback, yielded cash of $7,911,471 to Serenic. After the subsequent and related transactions were complete (including dividends paid to shareholders as detailed later in this report), the Company had approximately $2.1 million cash on hand. It will be used to fund the continuing operations of the Company including further development of the Company's Cloud technology business strategies and for payment of estimated income tax expenses.

Following the Sale Transaction, the name of Serenic Corporation was changed to OneSoft Solutions Inc. ("OneSoft" or "the Company" or "OSS"). OneSoft has retained the technology, assets, intellectual property ("IP") and personnel associated with the Cloud-associated business operations, and will continue to advance the Cloud business on a go-forward basis through two new wholly‐owned subsidiary companies: Canadian based Cloudco Solutions Inc., and U.S. based OneCloudCo Limited (collectively "Cloudcos"). The Serenic operating companies that were sold to Sylogist have granted a royalty bearing original equipment manufacturer ("OEM") license involving certain of the Subsidiaries products (principally, Serenic Navigator) to the Cloudcos, who intend to re‐brand and market Cloud solutions to new customer segments that the Subsidiaries have not historically pursued, on a non‐competitive basis with the Subsidiaries.


In regards to the sale of the Company's Serenic Subsidiaries reported last quarter, the finalization of the Subsidiaries net working capital deficiency as at the Closing date of the sale was scheduled to be completed on or about November 7, 2014. This was expected to have resulted in the release of the holdback of $240,000 as well as the reimbursement of approximately $289,000 in working capital adjustments, pursuant to the terms of the Share Purchase Agreement. Both the Company and the Purchaser have presented their calculations of the working capital deficiency to each other; however, due to material differences, the parties have not yet been able to resolve their differences. Discussions are ongoing to resolve this issue. In the event a satisfactory outcome is not reached shortly, we intend to take any actions necessary to collect the funds we believe are owed to the Company.

During the quarter ended November 30, 2014 ("Q3"), Management focused on pursuit of our strategies to significantly increase revenues through organic growth, collaborative joint marketing arrangements, and investigation of potential M&A scenarios. With reference to organic growth, the Company continued to refine its marketing initiatives, website and tools, by engaging several third party companies to assist with lead generation, sales and services. Several potential joint marketing arrangements that involve companies with large client bases were investigated, with the expectation that some of these scenarios may begin to materialize in the next quarter. From a technical perspective, our development teams focused on transitioning our current fundraising and financial software applications to the newest versions of Dynamics NAV 2015 and CRM 2015 released by Microsoft in October, 2014. 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 ready-state for a high volume sales scenario, in accordance with Microsoft's Cloud strategies to address volume SMB target markets.

During the quarter, the Company paid the previously-declared dividend of $0.19 per share totaling $2,886,947 that it had announced during Q2.

Management has continued to refine and analyze appropriate go-forward strategies and alternatives regarding financial and business plans for the Company. This includes corporate development considerations to determine the most viable alternative of providing maximum value to shareholders on a go-forward basis. Alternatives to be further investigated include seeking potential joint venture relationships with business processing organizations that already serve the NFP markets, other Dynamics NAV potential opportunities and selected non-NAV associated potential opportunities that could benefit by transitioning to Microsoft's Cloud platform. Our key objective is to capitalize upon our products, technological know-how and intellectual property to create and maximize value for our shareholders.


To better understand Management's view of the future opportunity for Company shareholders, we believe it helpful to review the factors over the Company's history that contributed to create the opportunity that OneSoft now has. Readers of our Q2, 2015 report will note that the Outlook that follows is essentially unchanged from the Q2 report, as management strategy and beliefs have not changed.

Shortly after learning of Microsoft's intention to acquire the Navision group of global operations in 2002, the founders of OneSoft's predecessor organization decided to take the then private company public in order to set up an appropriate corporate structure to provide growth capital for the then unknown, but anticipated growth opportunity that was expected to occur for vendors within the Microsoft ERP global eco-system. After becoming a public company in 2002, OneSoft's predecessor company acquired Serenic Software, Inc. in 2004, to (a) acquire a USA presence and management; and, (b) to catapult the existing revenue base, which was less than $1 mm at the time. That acquisition was funded solely by the issuance of new shares, and consolidated revenues increased from less than $1 million annually to approximately $3.5 million annually as a result of the Serenic acquisition. Serenic then embarked upon an organic growth path, wherein revenues increased organically from approximately $3.5 million to $12.0 million between 2004 and 2013, which was funded primarily using cash generated from operations. During the entire Serenic history, only two financings were conducted to provide additional working capital - a $0.5 million private placement in 2004 and a $1.6 million private placement in 2007.

Serenic began investing in Microsoft's Cloud strategy in 2011, as Management believed that the impending transition to Cloud products, in alignment with Microsoft's vision, would likely occur during the next few years. Since then, Serenic invested in excess of $3 million in the development of its own Cloud products and strategies, which fully align with Microsoft's vision and strategies. While this investment directly impacted Serenic's EBITDA negatively during this time, Management believes the investment was highly valuable to OneSoft's go-forward business plans.

The Sale Transaction allowed Management (a) to re-set the Company to pursue the next generation Cloud business model; and, (b) to allow many shareholders to monetize a significant portion of their investment in the Company, while still retaining the opportunity to capitalize on the next phase of its business growth and future potential success. Management believes the embracement of the Microsoft Cloud strategy positions the Company for unprecedented growth if pursuit of Microsoft's Cloud business model is continued and if the business model and execution proves to be successful.

With cash of approximately $1.5 million to fund go-forward operations, OneSoft will be managed as an entrepreneurial start-up and we expect to retain only minimal personnel in the initial stages of company development. Management's intent is to focus on corporate development initiatives and to seek and engage various third party organizations who provide accounting services to NFPs and thus already address and cater to our target markets. Our objective is to increase revenues and market presence using highly scalable, leveraged growth that will be assisted by conducting joint marketing and sales activities with third parties, rather than solely expend resources to build a client base one customer at a time. In short, the plan is to collaborate with partners for mutual benefit by offering OneSoft's new technology and products to established client groups.

As with most entrepreneurial leading-edge initiatives, OneSoft's Cloud project is not without risks. Technological change often occurs at a rate that exceeds the pace at which customers are willing to adopt and pay for better ways to address their requirements, thus the benefits of Cloud versus legacy solutions may be slow to be realized. Regardless, Management believes that despite a potentially slow adoption rate of cloud computing by many potential customers, the eventual move to Microsoft's Cloud strategy is probable and inevitable. The associated risk herein is that general market acceptance of new Cloud products may take a long time to occur, which would result in OneSoft having to remain being financed by investors until revenues can support operations and fund growth to make OneSoft an economically viable company. Also, although Management's revenue and profit forecasts in the longer term appear to be both high and achievable, the Company will likely require additional capital to attain the revenue objectives. Future funding initiatives are inherently risky, as they may be highly dilutive or may create other scenarios that may be disadvantageous to current shareholders.

OneSoft's Board of Directors and Management intend to continue to evolve our strategies while we conduct ongoing research and investigation over the next two quarters. The focus will be on scaling operations and opportunities by accelerating and 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 as envisioned, on a negative EBITDA basis, for approximately three quarters. Announcements outlining future strategies can be anticipated during the next few quarters, as more information is obtained, analyzed and actioned.



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.

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