×

Cortex Business Solutions Announces Q3 F2017 Positive Net Income

CALGARY, Alberta, June 13, 2017 (GLOBE NEWSWIRE) -- Cortex Business Solutions Inc. (“Cortex”, “The Company”), (TSXV:CBX), a North American network-as-a-service e-invoicing solutions provider, today announces its three and nine months ended April 30, 2017 (“Q3 F2017”) Management’s Discussion and Analysis and Condensed Interim Consolidated Financial Statements.

Joel Leetzow, the President and CEO of Cortex Business Solutions, said, “As Cortex Business Solutions Inc. celebrates its 10th year trading on the TSX.V, as CBX, we also celebrate what I believe are far greater and more significant milestones; positive net income and positive cashflow from operations. By achieving these milestones, we have become a legitimate business by anyone’s measure for the first time in our Company’s history. Reaching these goals speaks volumes towards the dedication and hard work put in by a streamlined Cortex team, as well as the continued faith our shareholders have shown us, which has helped us to build a strong future for Cortex.

"The growth in the commitment, drive and abilities of the individuals working for Cortex are driving forces in the results we are presenting today.”

The Company achieved positive cashflow from operations of $241,456, positive net income of $19,847 and income before finance income and income tax of $35,725.

One of the more interesting trends in the quarter was the recovery of usage fees, which grew 26% in the quarter; compared to a decline of 4% for the nine month period. This trend is in line with the Company’s billable transaction increase of 24% in the quarter compared to 4% during the nine months. This growth occurred in spite of one month of spring breakup in the quarter. The Network is seeing an increase in the volume of transactions as new buyers go live on the Network as well as stabilization in the energy sector.

The total expenses declined 3% during the quarter and 13% during the nine months ended April 30, 2017. The Company does not expect the large reductions like those seen in fiscal 2016 compared to fiscal 2015 as the Company has normalized its spending. This decline occurred despite the rebuilding of the sales organization resulting in a 77% increase in sales and marketing during the three month period and 62% during the nine month period.

The continued improvement in the speed at which the team is moving buyers from contract stage to live on the Network resulted in 96 active buyers at April 30, 2017 compared to 91 active at April 30, 2016. This materializes through increased monthly access and usage fees which contributed 64% of the total revenue growth in the quarter.

A summary of the percentage changes in the quarter are included below.

Q3 F2017 Highlights:

Cash provided by (used in) Operations

Three months ended April 30, 2017 compared to April 30, 2016

  • The cash provided by (used in) operating activities improved to $241,456 during Q3 F2017 compared to $(205,502) during the three months ended April 30, 2016.

Nine months ended April 30, 2017 compared to April 30, 2016

  • The cash provided by (used in) operating activities improved to $6,453 compared to $(744,342) during the nine months ended April 30, 2017 and 2016 respectively.

Net Income (loss)

Three months ended April 30, 2017 compared to April 30, 2016

  • The net income (loss) improved to $19,847 during Q3 F2017 compared to $(564,981) during the three months ended April 30, 2016.

Nine months ended April 30, 2017 compared to April 30, 2016

  • The net loss improved to $269,325 compared to $1,993,372 during the nine months ended April 30, 2017 and 2016 respectively.

Revenue

Three months ended April 30, 2017 compared to April 30, 2016

  • Total revenue improved 22% to $2,930,726 Q3 F2017 compared to Q3 F2016 of $2,403,314.
  • Access and usage fees were up 15%:
  • Integration and set up fees were down 6%, and
  • Project management fees were up 1517%.
  • Billable transactions improved 24% while active suppliers decreased 4%.

Nine months ended April 30, 2017 compared to April 30, 2016

  • Total revenue was increased to $8,121,470 compared to $7,589,159 during the nine months ended April 30, 2017 and 2016 respectively.
  • Access and usage fees were up 2%:
  • Integration and set up fees were down 34%, and
  • Project management fees were up 1797%.
  • Billable transactions were up 4%.

Expenses

Three months ended April 30, 2017 compared to April 30, 2016

  • Total expenses declined 3%.

Nine months ended April 30, 2017 compared to April 30, 2016

  • Total expenses declined 13%

“Q3 F2017 was a monumental quarter,” said Sandra Fawcett, CFO of Cortex. “The Company was successful in achieving both income and positive cashflow in the quarter. Also for the nine month period the Company had positive cash flow from operations. With a gross profit of 71%, the ability to further improve these metrics is within reach. Having been with Cortex for 12 years, I have been privileged to see its entire evolution, and I can say that we are well positioned for continued success in the future.”

Cortex management will host a conference call, followed by a question and answer period.

The details of the conference call are as follows:

Date: Wednesday, June 14, 2017
Time: 10:00 a.m. Eastern time (8:00 a.m. Mountain time)
Toll-free dial-in number: 1-800-377-0758
International dial-in number: 1-416-340-2216

Please call the conference telephone number ten minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Cortex Business Solutions at 403-219-2838.

A replay of the conference call will be available after the call through June 21, 2017.

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 1523103#

About Cortex Business Solutions

Cortex’s strategy is to revolutionize B2B document exchange by replacing traditional paper-based manual systems with automated e-invoicing. This positions companies with the scalability and flexibility needed to meet the demands of today’s business. Cortex offers a B2B network that enables electronic invoicing for buying and supplying organizations using flexible connection methods to leverage existing customer technologies and processes. Access to the Cortex Network enhances the exchange of documents allowing companies to connect and interact with each other to grow their businesses.

Cortex is currently delivering e-invoicing services to over 10,000 Trading Partners in Oil & Gas, Mining, and Sports & Entertainment industries, with a focused expansion into additional verticals.

For more information, please visit www.cortex.net

Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Financial Position
(Prepared in Canadian dollars)
(Unaudited)

April 30
July 31
2017 2016
Assets
Current assets
Cash$5,707,921 $5,621,835
Short‑term investments 60,000 60,000
Accounts receivable 1,115,770 866,142
Prepaid expenses 276,605 145,823
7,160,296 6,693,800
Long term receivables 79,551 -
Deposits 35,061 35,061
Property and equipment 229,426 292,791
Intangible assets 33,234 42,882
$7,537,568 $7,064,534
Liabilities
Current liabilities
Accounts payable and accrued liabilities$1,307,285 $1,086,380
Deferred revenue 28,945 46,854
Rebate provision 300,605 294,145
Income tax payable 90,667 59,647
1,727,502 1,487,026
Shareholders' Equity
Share capital 60,318,006 60,291,515
Accumulated other comprehensive income 710,705 640,232
Contributed surplus 9,531,867 9,126,948
Deficit (64,750,512) (64,481,187)
5,810,066 5,577,508
$7,537,568 $7,064,534


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Net Income (Loss) and Comprehensive Loss
For the three and nine months ended April 30, 2017 and 2016
(Prepared in Canadian dollars)
(unaudited)
Three months ended April 30 Nine months ended April 30
2017 2016 2017 2016
Revenue
Access and usage fees $ 2,603,932 $ 2,263,485 $ 7,339,745 $ 7,223,753
Integration fees and set‑up fees 119,792 127,025 220,391 335,810
Project management fees 207,002 12,804 561,334 29,596
2,930,726 2,403,314 8,121,470 7,589,159
Cost of Sales 853,057 1,319,152 2,449,037 4,128,834
Gross Profit 2,077,669 1,084,162 5,672,433 3,460,325
Expenses
Sales and marketing 596,473 336,405 1,640,534 1,009,993
Research and development costs 500,338 434,426 1,403,028 1,509,674
General and administrative 908,697 846,457 2,725,034 2,722,685
Severance and employee termination costs 36,436 46,862 128,057 208,596
2,041,944 1,664,150 5,896,653 5,450,948
Income (loss) before finance income 35,725 (579,988) (224,220) (1,990,623)
Finance income (expense) 921 702 1,359 (3,793)
Current tax recovery (expense) (16,799) 14,305 (46,464) 1,044

Net Income (loss)
$19,847 $ (564,981)$ (269,325)$(1,993,372)
Other comprehensive earnings
Items that may be reclassified subsequently to net loss:
Foreign exchange gain (loss) on foreign operations 97,922 (216,076) 70,473 (70,214)
Comprehensive income (loss) $117,769 $ (781,057)$ (198,852)$ (2,063,586)
Net loss per share‑basic and diluted$ 0.00 $ (0.06)$ (0.03)$ (0.23)


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity
(Prepared in Canadian dollars)
(unaudited)
Number of
Common
Shares
Share Capital Number of WarrantsWarrants ValueContributed SurplusAccumulated
Other
Comprehensive Income
DeficitTotal
Shareholders' Equity
Balance ‑ July 31, 2015 7,426,349$ 57,640,393 447,580 $ 980,941 $ 7,848,559 $ 580,502 $(61,776,518)$ 5,273,877
Net loss - - - - - - (1,993,372) (1,993,372)
Issued during the period 1,551,375 3,102,750 - - - - - 3,102,750
Issuance cost - (364,366) - - - - - (364,366)
Translation of foreign operations - - - - - (70,214) - (70,214)
Stock based compensation - - - - 161,409 - - 161,409
Compensation units issued in conjunction with private placement - (101,222) - - 101,222 - - -
Expiration of warrants - - (447,580) (980,941) 980,941 - - -
Balance ‑ April 30, 2016 8,977,724$ 60,277,555 - $ - $ 9,092,131 $ 510,288 $(63,769,890)$ 6,110,084
Balance ‑ July 31, 2016 8,984,704$ 60,291,515 - $ - $ 9,126,948 $ 640,232 $(64,481,187)$ 5,577,508
Net loss - - - - - - (269,325) (269,325)
Compensation units & stock options exercised 6,158 12,049 - - - - - 12,049
Compensation units contributed surplus - 14,442 - - (14,442) - - -
Translation of foreign operations - - - - - 70,473 - 70,473
Stock based compensation - - - - 219,361 - - 219,361
Deferred share units issued - - - - 200,000 - - 200,000
Balance ‑ April 30, 2017 8,990,862$ 60,318,006 - $ - $ 9,531,867 $ 710,705 $(64,750,512)$ 5,810,066
See accompanying notes


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three and nine months ended April 30, 2017 and 2016
(Prepared in Canadian dollars)
(unaudited)
For the three months ended
April 30
For the nine months ended
April 30
2017 2016 2017 2016
Cash provided by (used in)
Operating activities
Net Income (loss) $ 19,847 $ (564,981)$ (269,325)$(1,993,372)
Items not affecting cash
Stock‑based compensation 67,740 39,620 419,361 161,409
Amortization 25,004 460,301 74,889 1,380,899
Long term receivables (26,517) - (79,551) -
Accretion on rebate provision 2,153 1,245 6,460 10,874
Loss on disposal of equipment - - 1,012 2,811
88,227 (63,815) 152,846 (437,379)
Changes in non‑cash working capital 153,229 (141,687) (146,393) (306,963)
Net cash provided by (cash used) in operating activities 241,456 (205,502) 6,453 (744,342)
Financing activities
Proceeds from issuance of shares - - - 3,102,750
Share issuance costs - - - (364,366)
Proceeds from exercise of compensation units & stock options 5,067 - 12,049 -
Net cash from financing activities 5,067 - 12,049 2,738,384
Investing activities
Acquisition of property and equipment (548) - (2,888) (1,189)
Effect of exchange rate changes on cash and cash equivalents held in foreign currency$97,822 $ (377,756)$70,472 $ (83,185)
Cash inflow (outflow) 343,797 (583,258) 86,086 1,909,668
Cash, beginning of period 5,364,124 6,479,876 5,621,835 3,986,950
Cash, end of period $5,707,921 $5,896,618 $5,707,921 $5,896,618


Investor Relations Contacts: Joel Leetzow President and CEO jleetzow@cortex.net 403-219-2838 Sandra Fawcett CFO sfawcett@cortex.net 403-219-2838 Andrew Stewart Director, Marketing & Investor Relations astewart@cortex.net 403-219-2838

Source:Cortex Business Solutions Inc.