Cortex Business Solutions Reports Strong Q2 Fiscal 2018 Financial Results

Continued positive cash flows from operations and record increase of 272% Adjusted EBITDA(1)

CALGARY, Alberta, March 06, 2018 (GLOBE NEWSWIRE) -- Cortex Business Solutions Inc. (TSXV:CBX), a North American network-as-a-service e-invoicing solutions provider, today announces its three and six months ended January 31, 2018 (“Q2 F2018”) Management’s Discussion and Analysis and Consolidated Financial Statements.

“As represented by our year to date 20% increase in total revenue and record Adjusted EBITDA(1) along with a flat cost line, Cortex’s strategy to grow and to add shareholder value has been successful in the first half of fiscal 2018. We will continue to focus on these key metrics and to execute on our growth strategy,” said Joel Leetzow, President and CEO of Cortex Business Solutions. “In what has now been another year of uncertainty across the Canadian energy sector, we have more often than not been the benefactor of asset changes and company transactions across Canada, but this quarter we recently lost two Cortex clients in Calgary due to the purchase and consolidation of certain Canadian assets. That said, our programs for diversifying our revenue are working. Because of this, Cortex is positioned to sustain and build on these record results.

This quarter has also been a major shift for me personally regarding where I am able to focus my time with the addition of Jason Baird as our CFO. I have been able to transfer many of my former day-to-day operating activities of the company over to Jason and this has allowed me to work closer with the Cortex commercial teams on growing revenue.”

“Cortex continues to deliver consistent positive results each quarter and has achieved its highest quarterly Adjusted EBITDA(1) of $0.6 million in the history of the company. Furthermore, the six months ended Adjusted EBITDA(1) of $1.1 million is already greater than the entire fiscal 2017,” said Jason Baird, VP, Finance & CFO of Cortex Business Solutions. “I am very excited to be completing my first quarter at Cortex and witnessing first-hand the successful implementation of our corporate strategy translating into increased shareholder value. With a strong balance sheet showing $6.7 million in cash and no debt, Cortex is on track to take its business to the next stage.”

Cortex would also like to thank Scott Lamacraft and Greg Mark for their commitment and valuable service as Directors to the Company and wish them well in future endeavors.

Q2 F2018 Financial Highlights

Three months ended January 31, 2018 compared to January 31, 2017

  • Adjusted EBITDA(1) increased 272% or by $0.4 million to $0.6 million from $0.2 million
  • Positive cash flow from operating activities increased 230% to $0.1 million from negative cash flows from operating activities of $(0.1) million
  • Overall revenue increased 11% or by $0.3 million to $3.0 million from $2.7 million
  • Access and usage fees increased 19% or by $0.5 million to $2.9 million from $2.4 million
  • Gross profit improved 14% or by $0.3 million to $2.2 million from $1.9 million
  • Net income improved 264% or by $0.5 million to $0.3 million from $(0.2) million


Six months ended January 31, 2018 compared to January 31, 2017

  • Adjusted EBITDA(1) increased 418% or by $0.9 million to $1.1 million from $0.2 million
  • Positive cash flow from operating activities increased 294% to $0.5 million from negative cash flows from operating activities of $(0.2) million
  • Overall revenue increased 20% or by $1.1 million to $6.3 million from $5.2 million
  • Access and usage fees increased 20% or by $0.9 million to $5.6 million from $4.7 million
  • Gross profit improved 29% or by $1.0 million to $4.6 million from $3.6 million
  • Net income improved 310% or by $0.9 million to $0.6 million from $(0.3) million

Cash Position

The overall cash position of Cortex improved 7% to $6.7 million at January 31, 2018 from $6.2 million at July 31, 2017 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 January 31, 2018 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, March 7, 2018
Time: 11:00 a.m. Eastern time (9:00 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 March 14, 2018.

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 6644640#

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.

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

January 31
2018
July 31
2017
Assets
Current Assets
Cash and cash equivalents $6,675,340 $6,248,176
Short-term investments 60,000 60,000
Accounts receivable 1,363,850 1,220,442
Prepaid expenses 95,014 180,710
8,194,204 7,709,328
Long-term receivable 134,046 98,761
Deposits 99,978 35,061
Property and equipment 108,673 178,118
Intangible assets 25,515 30,018
$8,562,416 $8,051,286
Liabilities
Current Liabilities
Accounts payable and accrued liabilities$1,088,992 $1,834,471
Deferred revenue 498,408 423,734
Current income tax payable 17,917 9,203
Current portion of obligations under finance lease 22,867 -
1,628,184 2,267,408
Deferred rent 159,845 -
Obligations under finance lease 25,262 -
1,813,291 2,267,408
Shareholders' Equity
Share capital 60,651,418 60,562,286
Accumulated other comprehensive income 541,906 591,752
Contributed surplus 9,843,688 9,526,341
Deficit (64,287,887) (64,896,501)
6,749,125 5,783,878
$8,562,416 $8,051,286

Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Income (Loss) and Comprehensive Income (Loss)
For the three and six months ended January 31, 2018 and 2017
(Prepared in Canadian Dollars)
(Unaudited)

Three months ended
January 31
Six months ended
January 31
2018 2017 2018 2017
Revenue
Access and usage fees $ 2,853,893 $ 2,398,153 $ 5,663,805 $ 4,735,813
Integration fees 50,683 82,475 137,244 100,599
Project management and other
revenue
114,379 241,048 452,579 354,332
3,018,955 2,721,676 6,253,628 5,190,744
Cost of
Sales
789,504 772,442 1,621,804 1,595,980
Gross Profit 2,229,451 1,949,234 4,631,824 3,594,764
Expenses
Sales and
marketing
484,593 584,152 1,174,562 1,044,061
Research and
development
459,143 462,159 936,730 902,690
General and
administrative
971,726 1,014,480 1,769,145 1,816,337
Severance and
termination
2,762 70,233 158,684 91,621
1,918,224 2,131,024 4,039,121 3,854,709
Income (loss) before finance
income
311,227 (181,790) 592,703 (259,945)
Finance income 13,065 429 20,161 438
Income tax expense (2,142) (15,024) (4,250) (29,665)
Net income (loss) $ 322,150 $ (196,385) $ 608,614 $ (289,172)
Other comprehensive
earnings
Items that may be reclassified subsequently to net income (loss):
Foreign exchange loss on
foreign operations
(63,782) (100,826

)
(49,846) (27,449)
Comprehensive income (loss) $ 258,368 $ (297,211) $ 558,768 $ (316,621)
Net income (loss) per share – basic
and diluted


$


0.04


$


(0.02


)


$


0.07


$


(0.03


)


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 - - - - (289,172) (289,172)
Translation of foreign
operations
- - (27,449) - - (27,449)
Compensation units & stock
options exercised

3,491

18,368

-

(11,386


)

-

6,982
Deferred share units issued- - - 200,000 - 200,000
Stock based compensation - - - 75,566 - 75,566
Balance – January 31, 2017 8,988,195 60,309,883 612,783 9,391,128 (64,770,359) 5,543,435
Balance - July 31, 2017 9,069,983 60,562,286 591,752 9,526,341 (64,896,501) 5,783,878
Net income - - - - 608,614 608,614
Translation of foreign operations - - (49,846) - - (49,846)
Compensation units & stock options exercised
27,163

89,132

-

(31,051


)

-

58,081
Deferred share units issued- - - 200,000 - 200,000
Stock based compensation - - - 148,398 - 148,398
Balance – January 31, 2018 9,097,146 $ 60,651,418 $ 541,906 $ 9,843,688 $ (64,287,887)$ 6,749,125


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three and six months ended January 31, 2018 and 2017
(Prepared in Canadian Dollars)
(unaudited)

Three months ended
January 31
Six months ended
January 31
2018 2017 2018 2017
Cash provided by (used in)
Operating activities
Net income (loss) $ 322,150 $ (196,385) $ 608,614 $ (289,172)
Items not affecting cash
Stock-based compensation 282,451 276,055 348,398 351,621
Amortization 8,167 25,030 158,461 49,885
Deferred Rent 79,922 - 159,845 -
Accretion on rebate provision - 2,154 - 4,307
Loss on disposal of equipment - 1,012 - 1,012
Long term receivables (9,311) (26,577) (35,285) (53,034)
Changes in non-cash working capital (541,926) (190,044) (784,717) (299,622)
Net cash provided by (used in)
operating
activities

141,453

(108,755


)

455,316

(235,003


)
Financing activities
Proceeds on exercise of compensation
units
& stock options

11,831

6,982

58,081

6,982
Finance lease payments (5,683) - (18,676) -
Net cash provided by financing
activities
6,148 6,982 39,405 6,982
Investing Activities
Acquisition of property and
equipment
(1,478) (2,340) (17,709) (2,340)
Net cash used in investing
activities
(1,478) (2,340) (17,709) (2,340)
Effect of exchange rate changes
on cash
and cash equivalents held in
foreign
currency
(63,781) (106,529) (49,848) (27,350)
Cash inflow (outflow) 82,342 (210,642) 427,164 (257,711)
Cash, beginning of
period
6,592,998 5,574,766 6,248,176 5,621,835
Cash, end of period $ 6,675,340 $ 5,364,124 $ 6,675,340 $ 5,364,124


Investor Relations Contacts:

Joel Leetzow Jason Baird
President and CEO VP, Finance & CFO
jleetzow@cortex.net jbaird@cortex.net
403-219-2838 403-219-2838

Source:Cortex Business Solutions Inc.