N@N

Serenic reports considerable improvement in its financial results for first quarter, 2010

^{Published on 2009-07-28 13:40:21, Last Modified on 2009-07-28 13:40:28 - Market Wire}
 

 EDMONTON, July 28 /CNW/ - Serenic Corporation (the "Company" or "Serenic") (TSX-V: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 months ended May 31, 2009. Financial results are summarized as follows: ------------------------------------------------------------------------- (Unaudited) Increase Three months ended May 31 (decrease) ------------------------------------------------------------------------- 2009 2008 % ------------------------------------------------------------------------- $ $ ------------------------------------------------------------------------- Revenue 2,746,377 1,973,313 39.2 ------------------------------------------------------------------------- Loss for the period (114,701) (550,842) 79.2 ------------------------------------------------------------------------- Basic and diluted loss per share (0.01) (0.04) 75.0 ------------------------------------------------------------------------- EBITDA(1) 36,745 (410,645) 108.9 ------------------------------------------------------------------------- EBITDA as a % of sales 1.9% (20.8)% 109.1 ------------------------------------------------------------------------- Weighted average common shares outstanding 15,185,458 15,176,940 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) EBITDA represents earnings before interest, taxes, depreciation, amortization, and stock based compensation. Please review the Serenic Management Discussion and Analysis for the quarter May 31, 2009 for more information. Highlights of the First Quarter - Revenue for the quarter increased by 39.2% to total $2,746,377, up from $1,973,313 recorded in the comparable period last year. Factors responsible for this change were software license sales of $903,650, up 15.5% over Q1 last year; client services revenue of $1,026,782, up 105.6% from Q1 last year; and recurring maintenance and other revenue of $789,035, up 18.1% from Q1 last year. - Gross profit increased by $516,856 or 35.2% over Q1 of the prior year, while the gross margin percentage as a function of revenue declined marginally to 72.3%, from 74.4% in the prior year. - Expenses in Q1 decreased overall by 4.6%, down to $1,978,816, from $2,074,619 as recorded in Q1 last year. Despite a foreign exchange rate 20.7% higher than in Q1 of last year, which inflated a significant portion of the Company's expenses that were transacted in U.S. dollars, overall expenses declined due to measures taken by management during the past two quarters to streamline operations. - Expense reduction of $113,785 resulted from the capitalization of product development costs invested to enhance the Company's products in concert with Microsoft's strategy to advance its Dynamics NAV technologies to a 3-tier architecture. This will provide future capability for Serenic's solutions to be optimized as "software as a service" applications utilizing thin client technology. - The strengthening Canadian dollar at quarter-end had a large impact on other income and expense. While interest income declined due to lower interest rates paid by the financial institutions, a foreign exchange loss of $164,285 was recorded in Q1 this year, as compared to the foreign exchange gain of $4,603 recorded in same period last year. This occurred because the stronger Canadian dollar eroded the book value of the Company's assets which are predominantly recorded in U.S. dollars. - The net loss decreased significantly from $550,842 in Q1 of last year to $114,701 in the current quarter, due to the higher revenue and gross profit, and lower expenses. - Commensurate with higher revenue and lower costs, EBITDA improved significantly to $36,745, as compared to a loss of $(410,645) in Q1 of the prior year. Please refer to the financial statements and Management Discussion and Analysis for the quarter ended May 31, 2009 filed at [ www.sedar.com ] for more detailed information. QUARTER REVIEW AND HIGHLIGHTS As discussed in our most recent MD&A for the year ended February 28 2009, several challenges are anticipated to occur during the coming year, including a decrease from historical funding levels for nonprofit and public sector organizations, and strong competition from several much larger software companies who compete in Serenic's markets. The Company addressed these challenges during the past two quarters by optimizing staffing levels, reducing travel, marketing, and corporate expenses wherever possible, and by reducing its overall committed expenditure levels. The consequences of management's actions were very positive during the quarter, and it appears that a correct balance was struck regarding defensive and aggressive measures taken by management. Revenue for the last two quarters increased by 19% and 39% respectively over the prior year and the small loss incurred in Q1 this year was a significant improvement over the large loss recorded in Q1 last year. The Company operated at near break-even and recorded positive EBITDA. The Company announced several new well-known customers in Q1, including Family and Children's Services of Guelph, whose cause is deliver safe environments for children; the Arbor Day Foundation, a nonprofit conservation organization with a mission to inspire people to plant, nurture and celebrate trees; and the American Wildlife Foundation, the global leading conservation organization focused solely on African countries. Serenic continued to work in close collaboration with its reseller partners and Microsoft in pursuit of North American and international opportunities. The pipeline of prospective customers continued to grow during Q1, and Serenic continued to enhance its position as a major contender in the nonprofit and public sector market niches in which the Company competes. Additionally, the Company continued to enhance its products during Q1, in accordance with Microsoft's strategy to advance its Dynamics NAV technologies. OUTLOOK Management is mindful of the difficult economy in which we are currently operating, and will continue to take proactive actions as necessary for the Company to continue to operate prudently. Budget challenges are evident within our customer and prospect base due to reductions in their funding levels, which may affect revenues from software licenses, maintenance contracts, consulting services and classroom training. From an operational perspective, marketing and other discretionary expenditures will be cautiously increased over the next few quarters in efforts to continue to increase the sales pipeline, and to pursue new software license sales. Administrative spending will need to be increased during the next few quarters to prepare to convert accounting procedures to International Financial Reporting Standards, as will be required for all Canadian publicly traded companies by 2011. The Company will continue to invest in its products in concert with Microsoft's strategy to advance its Dynamics NAV platform. Through both its direct sales and reseller partner channels, the Company expects to continue expanding its presence globally, particularly in North America, Europe and Africa, and broadening its collaboration with Microsoft throughout the world. Recurring maintenance revenue is anticipated to increase commensurate with the growth of the client base over time. Client services revenue is also expected to grow, primarily in step with new direct license sales, and will be augmented by upgrade services and assisting partners on multinational implementation projects. While competition is intense, Serenic expects to continue to enhance its position as a strong global contender in its chosen markets. With respect to corporate development, 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 regarding merger and acquisition opportunities to assess accretive acquisition candidates, as well as other potential scenarios that might serve Serenic's long term objectives will also be continued. With $3 million of cash on hand and no long term debt, the Corporation is adequately financed to sustain operations as anticipated. 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. Serenic was named the "ISV (Industry Solutions Vendor) Partner of the Year" by Microsoft for 2007 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. 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. 

For further information: Dwayne Kushniruk (dkushniruk@serenic.com) or Paul Johnston, CFO (pjohnston@serenic.com), Phone: 1-877-426-5385 x 509; Investor Relations, The Dollarton Group Inc., Nick Waddell or Kit Spence (ir@serenic.com), Phone: (877) 737-3642 x144