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Cortex Business Solutions Reports Fiscal 2017 Financial Results

Positive annual cash flows from operations for the first time. 

CALGARY, ALBERTA – October 24, 2017 -  Cortex Business Solutions Inc. (TSXV: CBX), a North American network-as-a-service e-invoicing solutions provider, today announces its three months ended July 31, 2017 (“Q4 F2017”) and year ended July 31, 2017 (“F2017”) Management’s Discussion and Analysis and Consolidated Financial Statements. 

“Fiscal 2017 marks a historic and significant inflection point for the company as the transformative activities taken in the previous years have propelled Cortex to its first ever positive net cash provided by operating activities” 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 assured to sustain and build on results from this year and achieve continued growth”.

“Cortex continues to deliver improved results for the year and for the latest quarter” said Henry Pham, Interim CFO of Cortex Business Solutions.  “With a shored up balance sheet, extinguishment of the rebate provision and no debt, the pivot towards sustained profitability is well underway.  Had it not been for the recognition of an onerous contract pertaining to the Company’s previous head office lease in Calgary that expires in January 2018, Cortex would have reported positive Q4 2017 net income; building on similar results from Q3 2017.  We will look to build on the results of F2017 and assure to our existing and prospective customers alike, that Cortex is here to stay and to help deliver value from the Cortex brand.”

F2017 Financial Highlights:

  • Position cash flow from operating activities increased 144% to $0.5 million from negative cash flows from operating activities of $(1.2) million
  • Overall revenue increased 13% to $11.1 million from $9.8 million
  • Access and usage fees increased 6% to $10.0 million from $9.4 million
  • Gross profit improved 80% to $7.8 million from $4.4 million
  • Net loss improved 85% to $(0.4) million from $(2.7) million
  • Adjusted EBITDA(1)  increased 290% to $0.6 million from $(0.3) million

Q4 F2017 Financial Highlights (as compared to Q4 2016):

  • Position cash flow from operating activities increased 218% to $0.5 million from negative cash flows from operating activities of $(0.4) million.
  • Overall revenue increased 31% to $2.9 million from $2.2 million
  • Access and usage fees increased 22% to $2.6 million from $2.2 million
  • Gross profit improved 141% to $2.2 million from $0.9 million
  • Net loss improved 79% to $(0.1) million from net loss of $(0.7) million
  • Adjusted EBITDA(1)  increased 233% to $0.2 million from $(0.1) million 

Cash Position

The overall cash position of Cortex improved 11% to $6.2 million at July 31, 2017 from $5.6 million driven predominantly from strong net cash provided by operating activities. 

(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 year ended July 31, 2017 for further information on the Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to Net loss.

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, October 25, 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 November 1, 2017

Toll-free replay number:     1-800-408-3053

Toll replay number:     1-905-694-9451

Replay ID:     5459208#

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.

Investor Relations Contacts:

Joel Leetzow Henry Pham Andrew Stewart
President and CEO Interim CFO Director, Marketing & Investor Relations
jleetzow@cortex.net hpham@cortex.net   astewart@cortex.net
403-219-2838 403-219-2838 403-219-2838

 

Cortex Business Solutions Inc.

Consolidated Statements of Financial Position

(Prepared in Canadian dollars)

 


July 31

 

July 31

 

 

2017

 

 

2016

 

 

Assets

 

Current assets

Cash                                                                                                                       

 

 

 

$           6,248,176

 

 

 

 

$           5,621,835

 

Short‑term investments                                                                                                                           

                      60,000

 

                      60,000

 

Accounts receivable                                                                                                                           

                 1,220,442

 

                     866,142

 

Prepaid expenses                                                                                                       

                      180,710

 

                     145,823

 

 

                  7,709,328

 

                 6,693,800

 

 

Long term receivables                                                                                                           

                        98,761

 

                  -                  

 

Deposits                                                                                                                     

                        35,061

 

                        35,061

 

Property and equipment                                                                                                                                  

                       178,118

 

                     292,791

 

Intangible assets                                                                                                                                  

                        30,018

 

                      42,882

 

 

$           8,051,286

 

$           7,064,534

 

 

Liabilities

 

Current liabilities

Accounts payable and accrued liabilities                                                                                                                                  

 

 

 

 

$           1,834,471

 

 

 

 

 

$           1,086,380

 

Deferred revenue                                                                                                                 

                     423,734

 

                      46,854

 

Rebate provision                                                                                                                                  

                  -                  

 

                     294,145

 

Current income tax payable                                                                                                                 

                         9,203

 

                       59,647

 

 

                 2,267,408

 

                  1,487,026

 

Shareholders' Equity

Share capital                                                                                                                                  

 

              60,562,286

 

 

                60,291,515

 

Accumulated other comprehensive income                                                                                                                  

                     591,752

 

                    640,232

 

Contributed surplus                                                                                                                                  

                  9,526,341

 

                 9,126,948

 

Deficit                                                                                                                          

            (64,896,501)

 

              (64,481,187)

 

 

                  5,783,878

 

                 5,577,508

 

 

$           8,051,286

 

$           7,064,534

 

 

Cortex Business Solutions Inc.

Consolidated Statements of Loss and Comprehensive Loss

For the years ended July 31, 2017 and 2016

(Prepared in Canadian dollars) 

 


2017

 

 

2016

 

Revenue

 

 

 

Access and usage fees                                                                                                                            

$              9,964,212

 

$             9,376,298

Integration fees                                                                                                                            

                           268,579

 

                           404,062

Project management and other revenue                                                                                                                    

                            826,501

 

                               43,158

 

                       11,059,292

 

                         9,823,518

 

Cost of Sales

                         3,217,622

 

                       5,462,248

 

Gross Profit

                         7,841,670

 

                         4,361,270

 

Expenses

 

 

 

Sales and marketing                                                                                                                

                        2,382,665

 

                         1,429,838

Research and development                                                                                                          

                        1,869,596

 

                          1,990,361

General and administrative                                                                                                        

                        3,676,862

 

                         3,412,059

Severance and termination charges                                                                                                                     

                             138,897

 

                            213,445

Onerous contract                                                                                                                                     

                             217,638

 

                     -                    

 

                       8,285,658

 

                         7,045,703

Loss before finance income (expense)                                                                                                                        

                         (443,988)

 

                      (2,684,433)

Finance income (expense)                                                                                                                                            

                                6,546

 

                              (7,249)

 

 

 

 

Income tax recovery (expense)                                                                                                                                            

                              22,128

 

                            (12,987)

 

Net loss                                                                                                                                    

 

$              (415,314)

 

 

$           (2,704,669)

 

Other comprehensive (loss) earnings

             Items that may be reclassified subsequently to net loss:

Foreign exchange gain (loss) on foreign operations                                                                                                                      

                           (48,480)

 

                              59,730

 

Comprehensive loss                                                                                                                                    

 

$              (463,794)

 

 

$           (2,644,939)

 

 

Net loss per share ‑ basic and diluted                                                                                                                                            

 

$                    (0.05)

 

 

$                   (0.31)

 

Cortex Business Solutions Inc.

Consolidated Statements of Changes in Shareholders' Equity

(Prepared in Canadian dollars)

 


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

            -             

               -               

            -             

            -             

              -              

                  -                  

        (2,704,669)

          (2,704,669)

Issued during the period

       1,558,355

               3,116,710

            -             

            -             

              -              

                  -                  

              -               

                3,116,710

Issuance cost

            -             

             (364,366)

            -             

            -             

              -              

                  -                  

              -               

              (364,366)

Translation of foreign operations

            -             

               -               

            -             

            -             

              -              

                        59,730

              -               

                   59,730

Stock based compensation

            -             

               -               

            -             

            -             

             196,226

                  -                  

              -               

                 196,226

Expiration of Warrants

            -             

               -               

       (447,580)

       (980,941)

             980,941

                  -                  

              -               

                -                

Compensation units issues in conjunction with private placement

            -             

              (101,222)

            -             

            -             

              101,222

                  -                  

              -               

                -                

Balance ‑ July 31, 2016

      8,984,704

          60,291,515

            -             

            -             

          9,126,948

                     640,232

       (64,481,187)

             5,577,508

Net loss

            -             

               -               

            -             

            -             

              -              

                  -                  

             (415,314)

                (415,314)

Translation of foreign operations

            -             

               -               

            -             

            -             

              -              

                    (48,480)

              -               

                (48,480)

Compensation units & stock options exercised

            85,279

                 270,771

            -             

            -             

           (100,480)

                  -                  

              -               

                  170,291

Stock based compensation

            -             

               -               

            -             

            -             

             499,873

                  -                  

              -               

                 499,873

 

 

 

 

 

 

 

 

 

Balance ‑ July 31, 2017

      9,069,983

$60,562,286

            -             

$-             

$  9,526,341

$         591,752

$(64,896,501)

$    5,783,878

 

Cortex Business Solutions Inc.

Consolidated Statements of Cash Flows

For the years ended July 31, 2017 and 2016

(Prepared in Canadian dollars)

 


2017

 

2016

Cash provided by (used in)

 

 

 

 

Operating activities

 

 

 

Net loss                                                                                                                                             

$      (415,314)

 

$   (2,704,669)

Items not affecting cash                                                                                                              

 

 

 

Stock‑based compensation                                                                                                  

                 499,873

 

                 196,226

Amortization                                                                                                                              

                   139,051

 

                1,841,521

Long term receivables                                                                                                            

                  (98,761)

 

                -               

Accretion on rebate provision                                                                                              

                      7,896

 

                    15,924

Loss on disposal of equipment                                                                                            

                      1,096

 

                      3,494

Rebate payment

               (302,041)

 

              (494,543)

Changes in non‑cash working capital                                                                                     

                 685,343

 

                  (34,719)

 

Net cash provided by (used in) operating activities

 

                   517,143

 

 

             (1,176,766)

Financing activities

 

 

 

Proceeds from issuance of shares                                                                                      

                -               

 

               3,102,750

Share issuance costs                                                                                                               

                -               

 

               (364,366)

Proceeds on exercise of compensation units & stock options                                   

                   170,291

 

                    13,960

 

Net cash provided by financing activities

 

                   170,291

 

 

              2,752,344

 

Investing activities

 

 

 

Acquisition of property and equipment                                                                            

                  (12,610)

 

                   (2,924)

 

Net cash used in investing activities

 

                  (12,610)

 

 

                   (2,924)

Effect of exchange rate changes on cash and cash equivalents held in foreign currency

                 (48,483)

 

                    62,231

 

Cash inflow                                                                                                                                      

 

                  626,341

 

 

              1,634,885

Cash, beginning of year                                                                                                               

              5,621,835

 

             3,986,950

Cash, end of year                                                                                                                           

$     6,248,176

 

$      5,621,835

 

 

 

 

                                                                                                                                                             

 

 

 

Supplemental cash flow information:                                                                                     

 

 

 

Interest received during the year                                                                                        

$          14,442

 

$            8,675

 

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