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Centrinity Reports Sharp Increase In Second Quarter Revenue As Market
Markham, Ontario--
Centrinity Inc. (CDNX: CTI), a world leader in unified messaging
and collaborative software, today reported a five-fold increase
in revenues in the second quarter of fiscal 2000, as demand for
its educational and business connectivity solutions continued to
accelerate.
Revenues in the second quarter totalled $2.5 million, more than
400% higher than the same period last year. For the fiscal year
to date, revenues were $5 million, up from $0.9 million for the
first six months of fiscal 1999. Second quarter revenues remained
essentially constant with Centrinity's record first quarter
fiscal 2000 results, and represented a more than 25% increase
over pro-forma sales for second quarter of fiscal 1999 for
Centrinity and the subsidiaries it has subsequently acquired.
Four factors driving growth
"The sharp increase in revenue reflects four factors," said Myles
McGovern, Centrinity's President and Chief Executive Officer.
"First, we have successfully integrated the operations of
acquisitions made in the last year, which have added considerably
to Centrinity's revenue, market position and potential. Second,
there is extraordinary demand for our solutions on a global
basis. Third, we have been very successful in our first round of
upgrading existing customers to our new FirstClass(R) Gold
solution. In fact, since the beginning of this fiscal year,
500,000 users have been upgraded - nearly 40% of all user
licenses sold in the preceding two years. Fourth, we have begun
to capitalize on our new model of building recurring revenue
rather than one-time sales."
Net loss for the quarter was $3.2 million ($0.16 cents per
share), down a cent from the first quarter of the year. Net loss
in the second quarter of fiscal 1999 was $0.6 million ($0.05
cents per share).
Net loss for the first half was $5.4 million ($0.33 cents per
share). Net loss in the first half of fiscal 1999 was $1.0
million ($0.10 cents per share).
An approximately 20% increase in second quarter operating
expenses, from the first quarter 2000, reflects the continued
expansion of Centrinity's sales and marketing capabilities and
the initial investments made by Centrinity in product development
and marketing of unified messaging. Centrinity now employs over
150 people, up from approximately 95 at the end of the last
quarter.
Fiscal 2000 second quarter sales and marketing expenses were $2.1
million, versus $0.6 million spent in the comparable quarter of
fiscal 1999 and ahead of the $1.6 million allocated in the first
quarter of fiscal 2000. Research and development expenses were
$0.7 million, compared to $0.2 million in the same quarter a year
ago and $0.5 million in the first quarter of this fiscal year.
During the second and early third quarters of fiscal 2000,
Centrinity completed a number of initiatives that will support
continued growth.
Recent highlights
* In February, the Company completed a $25 million financing
to expand sales, marketing, research and development
activities, particularly for unified messaging. The Company
also raising net proceeds of $1.2 million in connection with
exercised warrants and stock options.
* Late in the second quarter, Centrinity completed the
acquisition of FC Sweden AB, a distribution and development
partner in the Scandinavian region where Centrinity enjoys
a leading share of the groupware market. In a related
transaction, Norway's Telenor Venture AS, the venture
capital subsidiary of the world's sixth largest
telecommunications company and FC Sweden's previous parent,
made a significant investment in Centrinity.
* In April, Centrinity sold its first FirstClass unified
messaging solution to British Columbia's Richmond School
District.
* Late in the second quarter, Centrinity announced a strategic
partnership with DMR Canada - an international provider of
management consulting and information technology and a
strategic member of the Fujitsu family of companies - to
accelerate time-to-market for UM.
* In April, Centrinity announced a partnership with
MorningStar Systems and GemStone Systems to build
business-to-business digital marketplace communities.
* In April, Centrinity acquired the rights to database
integration software that enables FirstClass users to
quickly create online information systems that feature
customized access to existing databases.
* The Company's new name -- Centrinity -- was adopted at the
annual meeting in March, to better reflect its broader scope
and capabilities in telecommunications, corporate,
educational and institutional markets.
Centrinity also announced that it has received conditional
approval for the listing of its shares on The Toronto Stock
Exchange. Subject to the fulfilment of normal regulatory filing
requirements, Centrinity should commence trading on the TSE
within the next few weeks.
Outlook
Mr. McGovern said "Our current efforts are focused on positioning
FirstClass unified messaging solutions among telecommunications
providers and enterprise customers. Over the next year we will
enhance this platform's capabilities while starting to capture
some of its revenue potential. So, while we still expect solid
revenue growth, our bottom line performance for the balance of
fiscal 2000 will reflect this early market development activity.
The real payoff will begin to show up in our next fiscal year."
Outstanding Share Capital
The outstanding share capital of the Corporation at March 31,
2000 was 18,223,466 common shares, 2,500,000 special warrants,
918,273 common share purchase warrants (expiring June 21, 2001
and with an exercise price of $3.50 per share), 136,542
compensation options (expiring June 21, 2001 and with an exercise
price of $2.75 per share) and 1,483,866 options outstanding to
directors, employees and consultants (exercisable at prices
ranging from $1.00 to $3.40).
Quarterly Conference Call
Myles McGovern, President and CEO, and Brian Mitchell, Chief
Financial Officer, will host a conference call to discuss
Centrinity's second quarter fiscal 2000 financial results on
Monday, May 29, 2000 at 11:00 a.m. (eastern). The call-in number
is 1-888-209-3787.
About Centrinity Inc.
Servicing over 6 million users in more than 8,000 organizations
in 55 countries, Centrinity is a leading designer, marketer and
distributor of collaborative and unified messaging software to
markets worldwide. The company's products include FirstClass
Intranet Server Gold, FirstClass Collaborative Classroom Gold and
Zebu, which are widely used in commercial and education markets.
Centrinity Inc. is listed on the Canadian Venture Exchange (CDNX:
symbol CTI). Its corporate Website is located at
www.centrinity.com.
For more information, please contact:
Myles M. McGovern
President & CEO
Centrinity Inc.
Toll Free: 1.800.763.8272
Phone: 905.415.7000
Email: myles_mcgovern@centrinity.com
For investor information, please contact:
Natasha A. Sorobey
Corporate Secretary
Centrinity Inc.
Toll Free: 1.888.448.4424
Phone: 403.203.4748
Email: natasha_sorobey@centrinity.com
- 30-
No regulatory authorities or similar body have approved or
disapproved the information contained herein. The Corporation
relies on litigation protection for forward-looking statements.
FirstClass is a registered trademark of SoftArc Inc., a wholly
owned subsidiary of Centrinity Inc. Centrinity, the Centrinity
logo and Zebu are trademarks of Centrinity Inc. All other
trademarks are the property of their respective owners.
March 31, 2000 Centrinity Inc. Financial Statements
Consolidated Balance Sheets
(Unaudited - prepared by management)
As at March 31, September 30,
2000 1999
---------------------------------------------------------------
Assets
Current assets
Cash and short-term investments $ 26,252,273 $ 3,390,435
Accounts receivable 2,342,417 1,581,718
Inventory 155,538 103,747
Income taxes recoverable 366,668 316,738
Investment tax credits receivable 37,190 559,457
Prepaid expenses and deposits 542,213 202,693
---------------------------------------------------------------
29,696,299 6,154,788
Capital assets, net of accumulated
amortization 1,410,642 1,054,086
Intangible assets, net of accumulated
amortization 10,564,640 10,631,421
---------------------------------------------------------------
$ 41,671,581 $ 17,840,295
---------------------------------------------------------------
Liabilities
Current liabilities
Accounts payable and accrued
liabilities 2,291,493 1,249,052
Deferred revenue 612,817 226,067
Notes payable - 1,500,000
---------------------------------------------------------------
2,904,310 2,975,119
Deferred income taxes 38,623 38,623
---------------------------------------------------------------
2,942,933 3,013,742
---------------------------------------------------------------
Shareholders' Equity
Share capital 52,130,135 22,848,684
Deficit (13,401,487) (8,022,131)
---------------------------------------------------------------
38,728,648 14,826,553
---------------------------------------------------------------
$ 41,671,581 $ 17,840,295
---------------------------------------------------------------
March 31, 2000 Centrinity Inc. Financial Statements
Consolidated Statements of Operations and Deficit
(Unaudited - prepared by management)
For the three months ended For the six months ended
March 31 March 31
2000 1999 2000 1999
---------------------------------------------------------------
Revenue $ 2,492,204 $ 471,078 $ 5,022,960 $ 903,672
Direct cost
of inventory
sold 210,029 $ - 309,762 -
---------------------------------------------------------------
Gross profit 2,282,175 471,078 4,713,198 903,672
---------------------------------------------------------------
Expenses
Sales and
marketing 2,049,414 581,580 3,628,720 1,098,747
Research and
development 646,947 212,200 1,155,365 336,033
General and
administr-
ative 1,019,297 205,137 1,957,721 373,822
Amortization of
capital
assets 150,708 31,328 262,845 51,708
---------------------------------------------------------------
3,866,366 1,030,245 7,004,651 1,860,310
---------------------------------------------------------------
Loss before
undernoted
items (1,584,191) (559,167) (2,291,453) (956,638)
Amortization of
intangibles other
than good-
will 1,268,136 - 2,536,910 -
---------------------------------------------------------------
Loss before
amortization of
goodwill (2,852,327) (559,167) (4,828,363) (956,638)
Amortization of
goodwill 300,993 - 550,993 _
---------------------------------------------------------------
Net loss for
the period (3,153,320) (559,167) (5,379,356) (956,638)
---------------------------------------------------------------
Deficit, beginning
of period (10,248,167) (3,643,037) (8,022,131) (3,245,566)
Net loss for
the period (3,153,320) (559,167) (5,379,356) (956,638)
---------------------------------------------------------------
Deficit, end of
period (13,401,487) (4,202,204) (13,401,487) (4,202,204)
---------------------------------------------------------------
Net loss per
share before
amortization of
goodwill (0.15) (0.05) (0.29) (0.10)
---------------------------------------------------------------
Net loss per
share (0.16) (0.05) (0.33) (0.10)
---------------------------------------------------------------
Weighted average
number of common
shares
outstanding 19,571,685 11,183,340 16,385,676 9,566,380
---------------------------------------------------------------
March 31, 2000 Centrinity Inc. Financial Statements
Consolidated Statements of Cash Flows
Unaudited - prepared by management
For the six months ended March 31 2000 1999
---------------------------------------------------------------
Cash from (used in) operations
Net loss for the period $ (5,379,356) $ (956,638)
Items not involving cash:
Amortization of fixed assets
and intangibles 3,350,748 51,708
---------------------------------------------------------------
(2,028,608) (904,930)
Net change in non-cash working
capital balances
Accounts receivable (472,892) (578,397)
Inventory 1,055 -
Income taxes recoverable 15,311 -
Investment tax credits receivable 522,267 (8,931)
Prepaid expenses and deposits (140,513) 11,531
Accounts payable and accrued
liabilities (71,554) 88,202
Deferred revenue 309,938 -
---------------------------------------------------------------
(1,864,996) (1,392,525)
---------------------------------------------------------------
Cash used in (from)
investing activities
Acquisition of fixed
assets, net (413,865) (109,259)
---------------------------------------------------------------
Acquisition of subsidiaries,
net of cash acquired of $854,870 (2,640,752)
Less: shares issued as consideration 3,560,000
---------------------------------------------------------------
919,248
---------------------------------------------------------------
505,383 (109,259)
---------------------------------------------------------------
Cash from financing activities
Repayment of notes payable (1,500,000) -
Issuance of shares and warrants,
net of share issue costs 25,721,451 222,777
---------------------------------------------------------------
24,221,451 222,777
---------------------------------------------------------------
Increase (decrease) in cash
during period 22,861,838 (1,279,007)
Cash and short-term investments,
beginning of period 3,390,435 1,590,916
---------------------------------------------------------------
Cash and short-term investments, end
of period $ 26,252,273 $ 311,909
---------------------------------------------------------------
Interest received $ 147,472 $ 22,643
Interest paid 75,959 - |
