Preo Software Inc.
TSX VENTURE : PKM

Preo Software Inc.

August 25, 2011 09:00 ET

Preo Software Inc.: Richard Groome Elected Director

First Half 2011 Software License Revenues Increase By 117%

CALGARY, ALBERTA--(Marketwire - Aug. 25, 2011) - PREO SOFTWARE INC. (the "Corporation") (TSX VENTURE:PKM). The Corporation is pleased to announce that at the annual and special meeting of shareholders held on August 23, 2011, along with the incumbent directors, Richard Groome was elected as a director of the Corporation. Mr. Groome is the Managing Partner of Notre-Dame Capital Inc., specializing in equity financings for small and mid-size emerging growth companies in the the technology, oil and gas, manufacturing and mining sectors.

The Corporation also announces that it has granted 30,000 options at an exercise price of $0.15 to Mr. Groome. The options are subject to the terms of the Corporation's Stock Option Plan and approval of the TSX Venture Exchange Inc.

"We are absolutely thrilled to have someone of Mr. Groome's stature join our board", said Gary McCone, President and CEO.

The Corporation is pleased to report the following summary highlights for the three and six months ended June 30, 2011:

  • A 77% increase in second quarter revenues and a 117% increase in year to date revenues generated from Software Licenses as compared to the same period last year.
  • Gross Margins improved to 89% during the six months ended June 30, 2011.
  • Net Loss during Q2 2011 was 65% lower than Q2 2010 ($199,466 vs $563,836) and 43% lower on a year to date basis. The decrease was the result of higher revenues, higher margins and receipt of AVAC funding which offset research and development as well as sales and marketing expenses incurred during the current quarter.
  • During the first half of the year, the Corporation closed on a private placement of convertible debentures for gross proceeds of $1,200,000.
  • The Corporation's gross cash and cash equivalents totaled $909,560 at June 30, 2011, an increase of $466,559 over the $443,001 available at December 31, 2010. Working capital was $706,523 (current ratio of 2.38:1) at June 30, 2011 compared to a negative working capital position of $(787,350) (current ratio of 0.21:1) at June 30, 2010.
  • During the quarter, the Corporation entered into an agreement to license Preo's Printelligence MPS technology to a major office solutions company.

"As we shift to an entirely indirect channel strategy, there is no doubt that we will forgo some short term direct revenue opportunities during our transition, but given the size and quality of partners and interest we are able to generate, I am convinced this decision is the right one", said Gary McCone, President and CEO.

The following is the Corporation's second quarter statement of financial position and statement of comprehensive income:

June 30 , December 31 , January 1 ,
2011 2010 2010
(unaudited ) (unaudited ) (unaudited )
Assets
Current assets
Cash and cash equivalents $ 909,560 $ 443,001 $ 337,098
Accounts and other receivables 218,737 365,515 310,360
Prepaid expenses 89,779 94,779 6,396
1,218,076 903,295 653,854
Non-current assets
Property and equipment 45,414 44,663 43,189
Intangible assets 7,846 8,967 11,209
53,260 53,630 54,398
Total assets $ 1,271,336 $ 956,925 $ 708,252
Liabilities and Equity
Current liabilities
Accounts and other payables $ 294,033 $ 370,174 $ 233,525
Deferred revenue 217,520 363,106 280,428
511,553 733,280 513,953
Convertible debenture 957,355 - 709,245
Total liabilities 1,468,908 733,280 1,223,198
Shareholders' Equity (deficiency)
Share capital issued and outstanding 9,284,781 9,282,753 6,748,699
Warrants 126,730 183,509 118,891
Equity portion of convertible debenture 50,171 - 106,182
Contributed surplus 978,370 743,987 312,002
Deficit (10,637,624 ) (9,986,604 ) (7,800,720 )
Total equity (197,572 ) 223,645 (514,946 )
Total liabilities and equity $ 1,271,336 $ 956,925 $ 708,252
Three months ended Six months ended
June 30 , June 30 , June 30 , June 30 ,
2011 2010 2011 2010
Revenue
Software licenses $ 256,315 $ 145,201 $ 534,370 $ 246,367
Consulting services - 37,954 - 132,877
256,315 183,155 534,370 379,244
Cost of sales 34,473 26,863 61,257 60,727
Gross profit 221,842 156,292 473,113 318,517
Expenses
Research and development 4,990 217,283 237,256 449,129
General and administration 238,775 229,658 451,784 421,091
Sales and marketing 28,469 179,118 224,599 384,819
Amortization 8,513 9,698 15,750 19,737
Stock-based compensation 71,192 43,891 127,239 91,510
Foreign exchange loss 5,498 1,778 8,268 13,498
357,437 681,426 1,064,896 1,379,784
Finance expense
Accretion 34,698 29,452 45,186 68,643
Interest 29,173 9,250 36,099 9,250
63,871 38,702 81,285 77,893
Net (loss) (199,466 ) (563,836 ) (673,068 ) (1,139,160 )
Future tax recovery - - 22,047 -
Total comprehensive income
/ (loss) $ (199,466 ) $ (563,836 ) $ (651,021 ) $ (1,139,160 )
Earnings per share
Basic and diluted earnings
per share $ (0.01 ) $ (0.03 ) $ (0.02 ) $ (0.06 )

About Preo Software Inc.

Preo Software Inc. is the market leader in providing Print Knowledge Management Systems (PKMS) to enterprises, select OEM's, and Managed Print Services providers around the world. Printelligence, the company's award winning flagship SaaS (Software as a Service) offering empowers corporate clients to optimize their print assets, reduce print volumes, all the while yielding significant cost savings and reducing the environmental footprint.

Preo maintains offices in both Canada and the United States with products deployed in over three thousand organizations worldwide.

Printelligence™ MPS is a SaaS based print knowledge management system that is licensed to select Original Equipment Manufacturers (OEM's) and Managed Print Providers to seamlessly integrate into their MPS business processes. Printelligence™ MPS is an enterprise application that empowers knowledge-workers by promoting accountability, awareness and positive behavioral change to maximize value and reduce the cost of print …without negatively affecting end-user productivity.

This news release contains forward looking statements. Actual results may vary significantly.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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