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Cortex Business Solutions Reports Fiscal 2016 Second Quarter Financial Results

CALGARY, ALBERTA – March 15, 2016 - Cortex Business Solutions Inc. (TSXV: CBX), an online business-to-business, network as a service, that helps companies reduce invoice processing times by connecting and interacting with each other, today announces its Q2 F2016 results.

“It has been an incredibly difficult time in the oil and gas market over the past several months. The continued instability in the market has made it imperative for some companies to look at drastic cost cutting measures in an attempt to weather the storm.” said Joel Leetzow, President and CEO of Cortex. “In our last market update, I spoke of the difficult decisions Cortex had made to right-size the business, and improve our internal processes as part of our commitment to shareholders. Through those actions, we find ourselves in a stable position where we can maintain our support of customers in the energy sector, while pushing ahead with our vertical expansion strategy.

I continue to be proud of the results we have achieved, and although we have seen a slight decrease in total revenue, it was not unexpected given the considerable downturn in the oil and gas market. Our improved cash position and financial results provide the stability and ability to not only weather the economic storm, but to focus on growing the business by offering savings to our current and future customers.”

Q2 F2016 Operational Highlights:

Operational highlights for the three months ended January 31, 2016 compared to the three months ended January 31, 2015 are summarized below:

  • The cash used in operating activities improved to $400,319 compared to $2,149,741.
  • The net loss improved 73% to $619,256 from $2,281,109.
  • Total revenue declined 9%.
  • Adjusted EBITDA of $(100,089).
  • Billable transactions declined 21% while active suppliers increased 2%.
  • Total expenses declined 38% or $1,930,832.
  • Working capital of $5,939,187 at January 31, 2016.

Operational highlights for the six months ended January 31, 2016 compared to the six months ended January 31, 2015 are summarized below:

  • The cash used in operating activities improved to $538,840 from $3,154,537.
  • The net loss improved to $1,428,391 from $4,215,507.
  • Total revenue declined 5% or $268,884.
  • Adjusted EBITDA of $(368,248)
  • Billable transactions declined 20% over the six month period.
  • Total expenses declined 32% or $3,084,383.

Three months ended January 31, 2016

Revenue

96% of the total revenue of the Company comes from access and usage fees. Although these fees declined 2% Q2 F2016 over Q2 F2015, this says a lot about the value our Customers see in the Cortex Network. During cost cutting times, our customers are renewing their contracts with Cortex as they see the value even when their transaction volumes are down due to the downturn in the energy sector.

  • Access fees were $1,391,036 in Q2 F2016 ($1,133,768 – Q2 F2015) an increase of 23%.
  • Usage fees were $1,052,938 ($1,372,462 – Q2 F2015) a decrease of 23%.
  • Integration and set-up fees revenue declined Q2 F2016 over Q2 F2015 by 26%, or $39,264 (Q2 F2016 - $110,729; Q2 F2015 - $149,993).
  • Project management fees decreased 98%, or $162,990, Q2 F2016 compared to Q2 F2015.

Gross Profit and Cost of Sales

Cost of sales, as reported, decreased 9% Q2 F2016 over Q2 F2015 resulting in gross profit, as reported, remaining at 45% of total revenue . There was some restructuring in the delivery organization at the end of Q2 F2016, which will further reduce costs in Q3 F2016 forward.

Other Expenses

  • Sales and marketing declined 70% Q2 F2016 over Q2 F2015.
  • Research and development declined 49% Q2 F2016 over Q2 F2015.
  • General and administrative expenses declined 32% Q2 F2016 over Q2 F2015.
  • Severance and termination charges declined 60% Q2 F2016 over Q2 F2015.

Cash Position

At January 31, 2016, Cortex Business Solutions Inc. held $6,479,876 in cash and $60,000 in short-term investments, compared to $3,986,950 and $60,000, respectively, at July 31, 2015.

  • Cash used in operating activities was $400,319 in Q2 F2016 compared to $2,149,741 in Q2 F2015.

Six months ended January 31, 2016

Revenue – six month period

96% of the total revenue of the Company comes from access and usage fees. These fees were flat for the six months ended January 31, 2016 compared to the six months ended January 31, 2015.

  • Access fees for the six month period ended January 31, 2016 were $2,731,694 ($2,165,730 – six months ended January 31, 2015) an increase of 26%.
  • Usage fees for the six month period ended January 31, 2016 were $2,228,574 ($2,770,728 – six months ended January 31, 2015) a decrease of 20%.
  • Integration and set-up fees revenue for the six month period ended January 31, 2016 were $208,785 down 29% from the six month period ended January 31, F2015 of $292,569.
  • Project management fees for the six month period ended January 31, 2016 were $16,792 down 93% from the six month period ended January 31, F2015 of $225,702.

Gross Profit and Cost of Sales – six month period

Cost of sales, as reported, decreased 13% for the six month period ended January 31, 2016 over the six month period ended January 31, F2015 resulting in gross profit, as reported, improving 8% to 45% of total revenue .

Other Expenses – six month period

  • Sales and marketing declined 67%.
  • Research and development declined 30%.
  • General and administrative expenses declined 27%.
  • Severance and termination charges declined 39%.

Cash Position– six month period

At January 31, 2016, Cortex Business Solutions Inc. held $6,479,876 in cash and $60,000 in short-term investments, compared to $3,986,950 and $60,000, respectively, at July 31, 2015.

  • Cash used in operating activities was $538,840 compared to $3,154,537.

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Investor Relations Contacts:

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