Serenic Corporation
TSX VENTURE : SER

Serenic Corporation

January 24, 2014 18:19 ET

Serenic Reports Financial Results for Three and Nine Months Ended November 30, 2013 and Cantech Communications Inc. to Provide Investor Relations Services

EDMONTON, ALBERTA--(Marketwired - Jan. 24, 2014) - Serenic Corporation (the "Company" or "Serenic") (TSX VENTURE:SER), an international software developer specializing in integrated financial management and human capital management ("HCM") solutions for Non-Profit organizations, government agencies and Microsoft Dynamics NAV users, announces its financial results for the three and nine months ended November 30, 2013.

Financial results are summarized as follows:

Three months ended November 30 Nine months ended November 30
2013 2012 Increase/
(Decrease)
2013 2012 Increase/
(Decrease)
$ $ % $ $ %
Revenue 2,914,908 2,410,529 20.9 8,474,365 8,166,610 3.8
Net loss (384,153) (191,186) 100.9 (889,977) (536,526) 65.9
Basic and diluted loss per share (0.03) (0.01) 200.0 (0.06) (0.04) 50.0
EBITDA (1) (291,091) (100,092) (190.8) (629,778) (230,998) (172.6)
EBITDA as % of sales (10.0) (4.2) (140.5) (7.4) (2.8) (162.7)
Weighted average common shares outstanding - basic 14,415,280 14,817,260 14,527,437 14,804,713
Weighted average common shares outstanding - diluted 14,415,280 14,817,260 14,527,437 14,804,713
(1) EBITDA represents earnings before interest, taxes, depreciation, amortization, and stock based compensation. Please review the Serenic Management Discussion and Analysis ("MD&A") for the Three and Nine months ended November 30, 2013 for more information

Quarter Highlights

Revenues for the current quarter exceeded the revenue of Q3 in the prior year by 20.9% and generated gross profits that exceeded those of Q3 in fiscal 2013 by $282,669 or 16.8%. Expenses increased by $474,278 or 25.3% resulting in the net loss in the quarter to be $384,153 versus $191,186 in Q3 in the prior year.

With respect to on-premise sales of Serenic Navigator software licenses, Serenic closed several direct sales to new clients who are primarily faith based organizations. Sales also included the successful referral of a new third party donor management product targeted to that market. Our reseller partner channel sales for Q3 were on par with those recorded in Q3 last year. Sales of HCM products included the sale of a new third party advanced human resource information system ("HRIS") product, which contributed to HCM revenues almost doubling Q3's of last year. Revenue from client services declined in the quarter and year over year due, in part, to the adoption of the Serenic Total Care Plan during the quarter, as is more fully explained later in this report. Expenses exceeded those of Q3 of the prior year due to the hiring of additional staff and expending of resources to progress the HCM and Cloud initiatives, which have not yet generated sufficient revenue and gross profit to neutralize their impact on the net loss. One initiative for HCM involved development to integrate the HRIS solution with Serenic's payroll products for both Navigator and Dynamics NAV users, pursuant to an OEM arrangement entered into earlier in this fiscal year and which will be put into general release in March, 2014.

With respect to the new Cloud based solutions being developed to align with Microsoft's Global Road to Repeatability ("GR2R") volume strategies, we continued to progress this initiative for new volume markets that Serenic has not historically addressed. Webcasts to sell Serenic Navigator on-premise and Cloud solutions continued during the quarter and in management's opinion yielded good attendance and interest. Our sales team was successful in completing the first sale of a prescriptive version of Serenic Navigator, which will utilize a fixed-price and streamlined implementation methodology. This product/implementation combination is necessary to support the volume sales strategy envisioned for the future. As previously disclosed, Serenic Navigator Express was released on December 5, 2013, which allows new customers to initiate a new installation of the entry-level Navigator solution on Microsoft's new Azure cloud platform, with no or very limited assistance from Serenic personnel.

During the quarter, management continued to actively explore strategic corporate alternatives, with the objective being to potentially increase shareholder value. As well, the Company purchased 275,000 of its shares for cancellation under its Normal Course Issuer Bid.

Cash resources as at November 30, 2013 were $3,516,293, a reduction of $357,191 from cash resources of $3,873,484 as at August 31, 2013 due to the net loss and this quarter's sales not being collected until after the period close. Management believes the cash resources continue to be adequate for the Company to operate in its anticipated manner.

Outlook

Serenic is progressing in accordance with its plan to become a major solution provider within Microsoft's global eco-system of accounting vendors who align with Microsoft's strategy to pursue higher volume sales envisioned by Microsoft's Cloud and GR2R initiatives. We will continue to promote our historical on-premise license products to customers with expanded needs while concurrently advancing new volume strategies to address the much larger market of organizations that require less complex software solutions.

Although much of our recent work involved investment and innovative re-development of our products, we anticipate that Serenic can ultimately realize significant future benefits by being a pioneering provider of solutions that operate on Microsoft's Cloud platforms. Serenic has enjoyed a close and beneficial working relationship with Microsoft for more than ten years, and expenditures to adopt Microsoft's Cloud strategies approximated $1.5 million for the nine month period in Fiscal 2014. Management believes this scenario is not easily repeatable by or feasible for most small software companies to pursue, particularly by those who had not committed to Cloud strategies a few years ago and are now behind companies like Serenic from a technology perspective.

Management believes that much of this development project is behind us and that Serenic has the competitive ability to generate improved operational results and value for shareholders going forward. While research and development will be continually ongoing, the foundational work to transition to Cloud-deployed products has essentially been completed. As we transition through the final quarter of Fiscal 2014 and into Fiscal 2015, work will be driven by prospects' response to Cloud marketing and our sales experience, as the strategies and products are configured to optimize results and efficiencies. We will review our product line on an on-going basis and will write-down the value of intangible assets and adjust our cost profile as necessary to reflect new market realities.

Looking forward to Fiscal 2015, we expect to operate with three conceptualized business units - those are: Enterprise Not for Profit ("NFP"), HCM, and Software as a Service ("SaaS") Solutions. The Enterprise NFP division is essentially our legacy NFP operation that will continue to cater to larger non-profit organizations by providing Serenic Navigator in both on-premise and SaaS configurations. HCM is also a legacy operational division that will be expanded to include the provision of Cloud-deployed solutions, and greatly enhanced HRIS functionality. These two business divisions will commence Fiscal 2015 with more than $6 million in recurring revenues derived from stable client bases, and we believe they can deliver profitability on a go-forward basis.

The SaaS Solutions component is still developing, and our marketing and sales methodologies will evolve in response to customer demand and sales successes. While Serenic is substantially ready to address these new volume markets from a technology perspective, success of this initiative will ultimately depend upon many factors, including the rate at which organizations in our markets are prepared to embrace cloud based accounting solutions. While the Fiscal 2015 consolidated strategic plan contemplates positive EBITDA and earnings overall, the actual adoption rate by new customers of Serenic's new Cloud products in Fiscal 2015 and beyond will be a significant factor in determining future organic revenue and earnings growth.

Concurrent to conducting the Cloud initiatives, Serenic is also expanding its product offerings through collaboration with other software vendors, including an alliance with a U.S. based organization that focuses on donor management for faith based organizations and an advanced HR offering that is in the process of being integrated to Serenic's payroll products, pursuant to an OEM arrangement. Both of these offerings have yielded initial success in Fiscal 2014 and management believes they bode well for future opportunity to increase revenues and profits.

The corporate development objectives of optimizing shareholder value remain unchanged. Management continues to strongly believe that the market capitalization and share price of the Company does not adequately reflect Serenic's fair value. Management remains confident that our course of action regarding the investment to develop our Cloud strategy and products will ultimately assist in generating greater revenue growth and value for our shareholders over the longer term.

CanTech Communications Inc. to continue to provide for Investor Relations services

Serenic also announced today the continued engagement of Cantech Communications ("Cantech") to provide certain investor relation and corporate communication services for the Corporation. Cantech specializes in assisting private and public Canadian companies with an array of investor relations services. During the 12-month term of the agreement, Cantech will be compensated with a monthly retainer fee of $2,400 (two thousand four hundred dollars), plus a grant of 50,000 (fifty thousand) options to purchase Serenic shares. The options shall have an exercise price of $0.30 and shall vest as to one-fourth on each of April 21, 2014, July 21, 2014, October 21, 2014 and January 21, 2015. Pursuant to the terms of the agreement, either party may terminate the agreement, or alternatively change the scope of services to be provided by Cantech, upon 30 days' notice. Options shall expire thirty (30) days following termination of the agreement if not exercised by Cantech, and shares acquired on exercise shall be subject to a 4 month hold period. Unexercised options which have vested shall expire 30 days after the agreement has been terminated. The stock options issued are in accordance with policies of the Corporation's stock option plan and the TSX Venture Exchange.

About Serenic Corporation

Serenic Corporation publishes mission-critical software products for not-for-profits, 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. Serenic has offices in Edmonton, Alberta and Denver, Colorado and staff located in Canada, England, Africa and throughout the USA.

ON BEHALF OF THE BOARD OF DIRECTORS

SERENIC CORPORATION

Dwayne Kushniruk, Chairman

Forward-Looking Statements

This release contains forward-looking information within the meaning of applicable securities laws ("forward-looking statements") that relate to Serenic's products and potential benefits derived therefrom; and other matters. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the factors and assumptions discussed in the section entitled, "Risks and Uncertainties" in Managements' Discussion and Analysis filed with the Alberta and British Columbia Securities Commissions. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based.

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
    Chairman
    dkushniruk@serenic.com

    Serenic Corporation
    Paul Johnston
    CFO
    1-877-426-5385 x 509

    Cantech Communications
    Nick Waddell
    Investor Relations
    Toll free: (877) 737-3642 x144
    ir@serenic.com