Cortex Business Solutions Reports Strong Q1 Fiscal 2018 Financial Results

CALGARY, Alberta, Dec. 05, 2017 (GLOBE NEWSWIRE) -- Cortex Business Solutions Inc. (TSXV:CBX), a North American network-as-a-service e-invoicing solutions provider, today announces its three months ended October 31, 2017 (“Q1 F2018”) Management’s Discussion and Analysis and Consolidated Financial Statements.

“As represented by our successful quarter over quarter growth of 31% in top line revenue and a relatively flat cost line, Cortex’s push to grow revenue and Adjusted EBITDA(1) with our current team is working. We will continue to focus on these metrics and to improve them to grow our business,” said Joel Leetzow, President and CEO of Cortex Business Solutions. “With substantial milestones achieved in our product, a repeatable business model, the implementation of a proven sales strategy combined with the delivery of set-up and integration services, Cortex is positioned to sustain and build on results from this quarter and achieve continued growth and value for its stakeholders”.

“Cortex continues to deliver improved results each quarter and has achieved its highest Adjusted EBITDA(1) in the history of the company,” said Jason Baird, VP, Finance & CFO of Cortex Business Solutions. “I am very excited to be joining Cortex at this stage of its development and growth. With a strong balance sheet, $6.6 million in cash and debt free, Cortex is on track to grow its business”.

Q1 F2018 Financial Highlights (as compared to Q1 F2017)

  • Positive cash flow from operating activities increased 349% to $0.3 million from negative cash flows from operating activities of $(0.1) million
  • Overall revenue increased 31% or by $0.7 million to $3.2 million from $2.5 million
  • Access and usage fees increased 20% or by $0.5 million to $2.8 million from $2.3 million
  • Gross profit improved 46% or by $0.8 million to $2.4 million from $1.6 million
  • Net income improved 409% or by $0.5 million to $0.4 million from $(0.1) million
  • Adjusted EBITDA(1) increased 895% or by $0.6 million to $0.5 million from $0.1 million

Cash Position

The overall cash position of Cortex improved 6% to $6.6 million at October 31, 2017 from $6.2 million driven predominantly from an increase in net cash provided by operating activities mainly from higher access and usage fees and project management revenues.

(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, non-recurring charges and share based payments. Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other reporting issuers. This measure assists the Company in evaluating the Company’s operating performance against its expectations and against other entities. Please refer to the Company’s management’s discussion and analysis for the quarter ended October 31, 2017 for further information on the Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to Net Income.

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, December 6, 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 December 13, 2017

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 5405733#


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, Manufacturing and Sports & Entertainment industries, with a focused expansion into additional verticals.

For more information, please visit www.cortex.net.

Investor Relations Contacts:

Joel Leetzow Jason Baird Andrew Stewart
President and CEO VP, Finance & CFO Director, Marketing & Investor Relations
jleetzow@cortex.net jbaird@cortex.net astewart@cortex.net
403-219-2838 403-219-2838 403-219-2838


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Financial Position
(Prepared in Canadian Dollars)
(Unaudited)
October 31
2017
July 31
2017
Assets
Current Assets
Cash and cash equivalents $ 6,592,998 $ 6,248,176
Short-term investments 60,000 60,000
Accounts receivable 1,445,604 1,220,442
Prepaid expenses 178,521 180,710
8,277,123 7,709,328
Long-term receivable 124,735 98,761
Deposits 99,978 35,061
Property and equipment 113,112 178,118
Intangible assets 27,766 30,018
$ 8,642,714 $ 8,051,286
Liabilities
Current Liabilities
Accounts payable and accrued liabilities$ 1,805,570 $ 1,834,471
Deferred revenue 495,200 423,734
Current income tax payable 11,734 9,203
Current portion of obligations under finance lease 22,812 -
2,335,316 2,267,408
Deferred rent 79,923 -
Obligations under finance lease 31,000 -
2,446,239 2,267,408
Shareholders' Equity
Share capital 60,632,576 60,562,286
Accumulated other comprehensive income 605,688 591,752
Contributed surplus 9,568,248 9,526,341
Deficit (64,610,037) (64,896,501)
6,196,475 5,783,878
$ 8,642,714 $ 8,051,286


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Income (Loss) and Comprehensive Income (Loss)
For the three months ended October 31, 2017 and 2016
(Prepared in Canadian Dollars)
(Unaudited)
Three months ended
October 31
2017
October 31
2016
Revenue
Access and usage fees $ 2,809,912 $ 2,337,660
Integration fees 86,561 18,124
Project management and other revenue 338,200 113,284
3,234,673 2,469,068
Cost of Sales 832,300 823,538
Gross Profit 2,402,373 1,645,530
Expenses
Sales and marketing 689,969 459,909
Research and development 477,587 440,531
General and administrative 797,419 801,857
Severance and termination charges 155,922 21,388
2,120,897 1,723,685
Income (loss) before finance income 281,476 (78,155)
Finance income 7,096 9
Income tax expense (2,108) (14,641)
Net income (loss) $ 286,464 $ (92,787)
Other comprehensive earnings
Items that may be reclassified subsequently to net income (loss):
Foreign exchange gain on foreign operations 13,936 73,377
Comprehensive income (loss) $ 300,400 $ (19,410)
Net income (loss) per share – basic and diluted$ 0.03 $ (0.01)


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity
(Prepared in Canadian Dollars)
(Unaudited)
Number of
Common
Shares
Share
Capital
Accumulated Other
Comprehensive Income
Contributed
Surplus
DeficitTotal
Shareholders’
Equity
Balance – July 31, 2016 8,984,704 $ 60,291,515 $ 640,232 $ 9,126,948 $ (64,481,187) $ 5,577,508
Net loss - - - - (92,787) (92,787)
Translation of foreign operations - - 73,377 - - 73,377
Stock based compensation - - - 75,566 - 75,566
Balance – October 31, 2016 8,984,704 60,291,515 713,609 9,202,514 (64,573,974) 5,633,664
Balance - July 31, 2017 9,069,983 60,562,286 591,752 9,526,341 (64,896,501) 5,783,878
Net income - - - - 286,464 286,464
Translation of foreign operations - - 13,936 - - 13,936
Compensation units & stock options exercised
21,158

70,290

-
(24,040)
-

46,250
Stock based compensation - - - 65,947 - 65,947
Balance – October 31, 2017 9,091,141 $ 60,632,576 $ 605,688 $ 9,568,248 $ (64,610,037) $ 6,196,475


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three months ended October 31, 2017 and 2016
(Prepared in Canadian Dollars)
(unaudited)
Three months ended
October 31
2017
October 31
2016
Cash provided by (used in)
Operating activities
Net income (loss) $ 286,464 $ (92,787)
Items not affecting cash
Stock-based compensation 65,947 75,566
Amortization 150,294 24,855
Deferred Rent 79,923 -
Accretion on rebate provision - 2,153
Loss on disposal of equipment - -
Long term receivables (25,974) -
Changes in non-cash working capital (242,791) (136,035)
Net cash provided by (used in) operating activities 313,863 (126,248)
Financing activities
Proceeds on exercise of compensation units & stock options
46,250
-
Finance lease payments (12,993) -
Net cash provided by financing activities 33,257 -
Investing Activities
Acquisition of property and equipment (16,231) -
Net cash used in investing activities (16,231) -
Effect of exchange rate changes on cash
and cash equivalents held in foreign currency 13,933 79,179
Cash inflow (outflow) 344,822 (47,069)
Cash, beginning of period 6,248,176 5,621,835
Cash, end of period $ 6,592,998 $ 5,574,766


Source:Cortex Business Solutions Inc.