Serenic Reports Pending Sale of Serenic Subsidiaries and Its Financial Results for the Year Ended February 28, 2014

Serenic Reports Pending Sale of Serenic Subsidiaries and Its Financial Results 
for the Year Ended February 28, 2014 
FOR: Serenic Corporation 
JUNE 26, 2014 
Serenic Reports Pending Sale of Serenic Subsidiaries and Its Financial Results
for the Year Ended February 28, 2014 
EDMONTON, ALBERTA--(Marketwired - June 26, 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 ("NFP")
organizations, government agencies and Microsoft Dynamics NAV users, reports
the pending sale of Serenic subsidiaries and announces its financial results
for the three months and year ended February 28, 2014. 
On June 26, 2014, the Company entered into a definitive agreement to sell the
shares of Serenic Canada Inc., Serenic Software Inc. and Serenic Software
(EMEA) Limited (collectively, the "SOC's") to Sylogist Ltd. The
aggregate purchase price to be paid by Sylogist for the purchased shares is
$11,880,431 less net liabilities of these subsidiaries to be assumed by
Sylogist which are estimated to be approximately $3,880,431 to yield estimated
cash of $8,000,000 to Serenic. The estimated net liabilities will be adjusted
to actual on the closing date, which is forecasted to be July 25, 2014. Serenic
will retain all cash and cash equivalents on the closing date which is
estimated to be $11,000,000 including the proceeds from the sale. The use of
this cash has not yet been made final; however, it is contemplated that an
estimated aggregate amount of $7,500,000 (or approximately $0.45 per share on a
fully diluted basis) would be distributed to shareholders. This would consist
of an amount estimated to be $4,000,000 or approximately $0.24 per common share
to be paid through a reduction of the paid-up capital of the Corporation,
subject to TSX Venture Exchange approval; and an amount estimated to be
$3,500,000 or approximately $0.21 per common share held, to be paid as a
special dividend, subject to TSX Venture Exchange approval. The balance of the
funds, net of costs associated with closing of the transaction and estimated
income tax expense, would be retained in Serenic to fund further development of
Serenic's Cloud business, which is not part of the assets being sold to
Sylogist. A further press release will be issued with respect to the timing and
procedure of the cash distribution. Serenic intends to maintain its listing on
the TSX Venture Exchange, subject to maintaining the Continuing Listing
Closing of the transaction is subject to the approval of the Serenic
shareholders to be voted upon at the Annual General and Special.
Shareholders' meeting to be held on July 22, 2014, the receipt of all
necessary regulatory and stock exchange approvals and satisfaction of certain
other closing conditions which are customary in transactions of this nature.
Please see the Press Release "Sylogist to Acquire Serenic Operating
Companies" dated June 26, 2014 as filed on SEDAR for further details of
this transaction. 
Serenic intends to rebrand and form a new operating division referred to as
"Cloudco", which will retain the SOC's existing intellectual
property associated with Serenic's cloud technology. Sylogist will grant a
royalty bearing OEM license involving certain of the SOC's products to
Cloudco. Cloudco will re-brand and market these solutions to new customers
segments that the SOCs have not historically pursued. The parties intend to
work non-competitively to pursue new volume markets for mutual benefit.  
Financial results are summarized as follows:  
Three months ended February 28          
Increase / 
2014            2013      (Decrease) 
$               $               %
Revenue                            2,858,758       3,905,255          (26.8)
Net (loss) income                (1,158,329)         575,636         (301.2)
Basic and diluted (loss)                                                    
 income per share                     (0.08)            0.04         (300.0)
Adjusted EBITDA (1)                (600,144)         778,151           177.1
Adjusted EBITDA as % of                                                     
 sales                                (21.0)            19.9           205.4
Weighted average common                                                     
 shares outstanding - basic       14,448,208      14,511,647                
Weighted average common                                                     
 shares outstanding -                                                       
 diluted                          14,448,208      14,518,081                
Year ended February 28              
Increase / 
2014            2013      (Decrease) 
$               $               %
Revenue                           11,333,123      12,071,865           (6.1)
Net (loss) income                (2,048,306)          39,110       (5,337.3)
Basic and diluted (loss)                                                    
 income per share                     (0.14)            0.00      (14,100.0)
Adjusted EBITDA (1)              (1,230,928)         547,153           325.0
Adjusted EBITDA as % of                                                     
 sales                                (10.9)             4.5           339.6
Weighted average common                                                     
 shares outstanding - basic       14,448,208      14,732,450                
Weighted average common                                                     
 shares outstanding -                                                       
 diluted                          14,448,208      14,815,670                
(1) Adjusted EBITDA represents earnings before interest, taxes, depreciation,
amortization, stock option expense and impairment provisions. Please review the
Serenic Management Discussion and Analysis ("MD&A") for the Three
months and Year ended February 28, 2014 for more information. 
Although Serenic's business continued to operate as a consolidated entity
during Fiscal 2014, management believes it is useful to review Serenic's
financial information from the perspective of divisional profit centers. This
is the measurement being adopted in Fiscal 2015 and which was not previously
used to assess performance and allocate resources. Serenic has reorganized its
business into three operational, profit-center business-units for Fiscal 2015: 
1.  the NFP business unit that provides on-premise perpetual license 
solutions for mid to large enterprise level not-for-profit organizations 
and certain public sector organizations; 
2.  the HCM business unit that provides on-premise human capital management
license products to small and medium business ("SMB") customers that
not-for-profit, public sector and for-profit organizations; and 
3.  the "Cloud" business unit that is developing versions of the
software solutions for deployment as Software as a Service ('SaaS") 
solutions, in alignment with Microsoft's volume and Cloud strategies.  
Serenic's Cloud division has developed technology that enables
applications based on the Microsoft's Dynamics NAV ERP and CRM platforms
to operate on Microsoft's new Cloud technology platform known as Azure.
Cloud technology facilitates access and use of computer applications by any
computer device that is browser-capable, without the requirement for such
programs and data to be installed on the device. Serenic's Cloud solutions
can include integration with Microsoft Office 365 and other cloud products.  
Whereas the NFP and HCM divisions are mature businesses that management expects
to continue to operate profitably, the Cloud division is still in a pre-revenue
stage, and will sustain operating losses until software subscription fees paid
by new customers for the new products offset the expenses being funded from the
Company's cash. The two mature divisions both currently realize greater
than 50% of their revenues from recurring software maintenance contracts, which
are purchased by customers to obtain software updates and associated services
to keep their software solutions current. Although total revenue growth
declined in Fiscal 2014 from the prior year by about 6%, the compound annual
revenue growth rate as measured over the past eight years remains positive, and
is indicative of a growing business.  
The following table represents the financial results of the Company's
three business units during Fiscal 2014, using the perspective of divisional
business units which is being adopted in Fiscal 2015 and which was not
previously used by management to measure performance and to allocate resources. 
Serenic Corporation Fiscal                                                  
 2014                                            HCM                     NFP
Revenue                      $             1,694,448 $             9,811,046
Direct costs                                 291,163               3,909,632 
Gross Profit                               1,403,285               5,901,414 
 Personnel                                 1,041,633               4,021,029
 Marketing                                    39,708                 450,820
 General and administrative                  159,854                 584,435 
Total expenses                             1,241,195               5,056,284
Corporate expenses                                                           
Adjusted EBITDA (1)          $               162,090 $               845,130 
Serenic Corporation Fiscal                    Consolidation                 
 2014                                 Cloud     adjustments     Fiscal 2014 
Revenue                      $       73,130  $     (245,501) $   11,333,123 
Direct costs                         51,838        (245,501)      4,007,132  
Gross Profit                         21,292               -       7,325,991  
 Personnel                        1,411,702               -       6,474,364 
 Marketing                          300,547               -         791,075 
 General and administrative         174,387               -         918,676  
Total expenses                    1,886,636               -       8,184,115 
Corporate expenses                                                  372,804  
Adjusted EBITDA (1)          $   (1,865,344) $            -  $   (1,230,928) 
The legacy HCM and NFP divisions contributed positively to the overall
financial results. We continued to derive revenue from the legacy divisions by
increasing new customer adds, and by providing updates, maintenance and support
services to our customer base. Recurring revenue from existing customers
accounted for more than half of the gross revenue recorded in Fiscal 2014;
however, the Company's significant investment into the Cloud project
during Fiscal 2014 greatly reduced EBITDA and earnings, and resulted in the
loss recorded for the year.  
Revenues for the current year were $11,333,123 a decline of 6% from revenue of
$12,071,865 in Fiscal 2013. Gross profit was $7,325,991 versus $8,209,696 in
the prior fiscal year, primarily due to decreased license sales revenue from
Serenic's reseller partner channel. In the current year, HCM license sales
grew by 22.7%, as a result of the typically consistent pace of payroll and
other HCM product licenses and sales pertaining to the new advanced human
resource information system ("HRIS") solution. An initiative was
launched during the year to integrate an OEM-licensed HRIS solution with
Serenic's payroll products for both Serenic Navigator and Dynamics NAV
users, with the expectation that the fully integrated solution will be released
to market in June, 2014.  
While revenue from Cloud products was nominal during the year, we started to
showcase our Cloud solutions during Fiscal 2014 in various webinars which have,
in management's opinion, yielded good attendance and interest. Our sales
team successfully completed the first sale of a prescriptive version of Serenic
Navigator, which will be implemented using a fixed-price, streamlined
methodology. This lean Cloud deployment methodology is different from the
highly consultative sale and implementation methodology that typifies
Serenic's historical Enterprise level business and it is considered
essential to allow Serenic to be competitive in the SMB volume markets. The
first of the new Cloud ERP products targeted at the SMB space, Navigator
Express, was released in December, 2013. The objective is to allow new
customers to self-initiate a trial installation of the entry-level Navigator
solution on an Azure cloud server using a "Click-Try-Buy" process,
import their own financial records, work with the trial version for a period of
time, and subsequently purchase the product - all of which can be accomplished
with little or no interaction with Serenic personnel.  
In Fiscal 2014, the Company recorded a non-cash impairment charge of $421,376
related to certain of its intellectual properties, and capitalized $169,257
less costs than in Fiscal 2013. Expenses included certain costs associated with
the reorganization to operate as segmented business units in Fiscal 2015,
including reduction in personnel, the engagement of independent vendors
contracted to work on Cloud initiatives, and for legal and other matters. The
combination of the reduced gross profit and increased expenses resulted in the
Company recording a net loss of $2,048,306 in Fiscal 2014 compared to the net
income of $39,110 earned in the prior year  
Management also continued to actively explore strategic corporate alternatives,
with the objective being to potentially increase and unlock shareholder value.
During the year, the Company purchased 536,500 of its shares for cancellation
under its Normal Course Issuer Bid.  
Cash resources as at February 28, 2014 were $3,318,602, a reduction of
$1,013,976 from cash resources of $4,332,578 as at February 28, 2013. The net
loss was primarily responsible for the reduction of cash. Management believes
the cash resources continue to be adequate for the Company to operate in its
anticipated manner. 
Total revenue for the quarter was $2.9 million, a decrease of 26.8% from
revenue of $3.9 million in the same quarter last year. Software license sales
decreased by $1.3 million due to a large sale having been recorded in Q4 of
2013 and no sales of similar magnitude being recorded in this fiscal year. HCM
license sales were on par with last year. Services revenue increased $100,000
or 15.1% as the combination of the HRIS system implementations, Total Care Plan
amortization and an increase in SaaS or cloud monthly fees boosted revenues.
Software maintenance contract revenue increased by 13.9% to $200,000 due to
high contract renewal rates with existing customers and new clients being
added. In total, revenues were assisted by a strengthening U.S. dollar which
had the effect of increasing revenues by approximately $206,000.  
Gross profit decreased by $996,224 due to the decrease in software license
revenues and their related gross margin.  
Expenses increased by $822,990 or 39.5%. A non-cash impairment charge of
$421,376 was recorded in the quarter due to the non-cash impairment charge
related to the write down in value of internally generated software. The higher
U.S. dollar increased this cost category by approximately $114,000. At
year-end, as the Company reorganized to implement its Fiscal 2015 strategies,
the Company reduced its work force and a severance provision was accrued.
Incentive pay reduced sharply in the period and sales and marketing costs were
flat quarter over quarter.  
Due to the reduced sales and gross profit, the increase in expenses, and the
non-cash impairment charge, the net income of $575,636 recorded in the fourth
quarter of 2013 reduced to a net loss of $1,158,329 in the current quarter.
Adjusted EBITDA decreased by $1,378,295 due to the net loss experienced this
For Fiscal 2015, Serenic's operational teams have been reorganized into
the legacy NFP and HCM business units in order to optimize their financial
performance and provide adequate funding for development of the Cloud unit.
Notwithstanding the continued investment in Cloud, Management and the Board
have budgeted for a significant improvement in financial performance and EBITDA
contribution on a consolidated basis during Fiscal 2015. The legacy business
units have been streamlined to operate more efficiently and profitably, and as
much of the foundational work in the Cloud division has been completed, greater
revenue generation from Cloud division is anticipated to occur during the
latter portion of Fiscal 2015, which we anticipate will reduce the losses
incurred by the Cloud project.   
Serenic will continue to nurture and grow its traditional niche market
customers by selling and deploying enhanced versions of historical products to
those organizations that wish to continue to embrace on-premise perpetual
license solutions. Concurrently, we will provide a bridge to the SaaS world for
those NFP and HCM customers who choose to transition to Cloud-deployed
solutions. As well, we intend to investigate new volume niche markets that are
now addressable with our new Cloud products, essentially using Click-Try-Buy
and other volume-enabling features.   
Other potential opportunities with Cloud may be investigated, including the
provision of Serenic's underlying Cloud technology to other Dynamics NAV
vendors who require technology to migrate their ERP solutions to the Microsoft
Cloud. Serenic has enjoyed a close and beneficial working relationship with
Microsoft for more than ten years, and expenditures to adopt Microsoft's
Cloud strategies have given Serenic a competitive advantage and are estimated
to have exceeded $3 million to date. Management believes that developing this
bridge to Microsoft Cloud is not easily repeatable by or feasible for most
small software companies to pursue, particularly by those who had not yet
committed to this development strategy and are now lagging from a technology
The Company 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. This donor
management application and the HRIS offering have both yielded initial success
in Fiscal 2014 and management believes they bode well for future opportunity to
increase revenues and contribution.  
Regarding corporate development matters, management continues to believe that
the market capitalization and share price of the Company does not adequately
reflect Serenic's fair value, particularly considering the results of our
mature software divisions, the solid value of our loyal customer base, the high
ratio of recurring revenue we experience, and our technological leadership with
respect to Cloud for Dynamics NAV products. If the pending sale of Serenic
subsidiaries noted above does not close, we intend to continue to investigate
and pursue potential alternatives to optimize and unlock shareholder value, and
remain confident that our strategies will ultimately generate greater value for
our shareholders.  
Interested parties are urged to read Serenic's audited consolidated
Financial Statements and Management's Discussion and Analysis for the year
ended February 28, 2014 which can be located on  
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. 
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 as those related to the pending sale of Serenic subsidiaries. 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. 
Serenic Corporation
Dwayne Kushniruk
Serenic Corporation
Paul Johnston
1-877-426-5385 x 509
Investor Relations
Cantech Communications
Nick Waddell
Toll free: (877) 737-3642 x144 
INDUSTRY:  Computers and Software - Software 
-0- Jun/26/2014 21:15 GMT
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