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Cortex Business Solutions Announces Q3 F2017 Positive Net Income

Growth Exceeds Pace of Oil and Gas Industry Recovery  -  CALGARY, ALBERTA – June 13, 2017 -  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 a77% 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 position 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.

Download full release including financials

Visit Investor Relations Page

Investor Relations Contacts:

Joel Leetzow Sandra Fawcett                          Andrew Stewart
President and CEO CFO Director, Marketing & Investor Relations
jleetzow@cortex.net                  sfawcett@cortex.net astewart@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 Warrants

Warrants Value

Contributed Surplus

Accumulated Other Comprehensive Income

Deficit

Total 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                 For the nine months ended

                                                                                                      April 30                                                    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