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Cortex Business Solutions Announces Q4 and Full Year Fiscal 2018 Financial Results

Cortex Completes Strong Fiscal 2018 with Record Adjusted EBITDA(1) and cash flows from operations 

CALGARY, ALBERTA – October 23, 2018 - Cortex Business Solutions Inc. (“Cortex”) (TSXV: CBX), a North American network-as-a-service complete document management & e-invoicing solutions provider, today announces its three and twelve months ended July 31, 2018 (“Q4 F2018”) Management’s Discussion and Analysis (“MD&A”) and Consolidated Annual Financial Statements (“F/S”).  The MD&A and F/S are available at www.sedar.com.

“I believe these results are just the beginning of the momentum that we are building at Cortex.  Our team has delivered our strongest results yet in F2018 while remaining focused on helping our customers to deliver their own successful results and savings with our ever-expanding service.  With our most recent acquisition we are able to work with customers on many new levels by adding new product breadth and supply chain value.  I could not be more excited with the trajectory that Cortex is on and look forward to another year of growth and expansion” said Joel Leetzow, President and CEO.

“The strong financial results including revenue which increased organically year over year by 13% and record Adjusted EBITDA of $2.1 million for fiscal 2018 continue to show that Cortex is adding consistent value for its shareholders.” said Jason Baird, VP, Finance & CFO.

“Cortex completed a transformational fiscal year with the recent strategic acquisition of Powervision Software Inc. (“Powervision”) which is estimated to not only increases Cortex’s revenue, Adjusted EBITDA, margins and cash flows, but has also improved the solutions that Cortex can offer our customers as a network-as-a service”

Q4 F2018 and F2018 Financial Highlights

Three months ended July 31, 2018 compared to July 31, 2018

  • Adjusted EBITDA(1)  increased 136% or by $0.2 million to $0.4 million from $0.2 million
  • Cash flow from operating activities increased 32% or by $0.2 million to $0.7 million from $0.5 million
  • Overall revenue increased 5% or by $0.2 million to $3.1 million from $2.9 million
  • Access and usage fees increased 14% or by $0.4 million to $3.0 million from $2.6 million
  • Access fees increased 34% to $2.1 million from $1.6 million
  • Gross profit improved 3% or by $0.1 million to $2.2 million
  • Net income improved by $3.2 million to $3.1 million from a net loss of $0.1 million

Fiscal 2018 compared to Fiscal 2017

  • Adjusted EBITDA(1)  increased 282% or by $1.6 million to $2.2 million from $0.6 million
  • Cash flow from operating activities increased 281% or by $1.5 million to $2.0 million from $0.5 million
  • Overall revenue increased 13% or by $1.4 million to $12.5 million from $11.1 million
  • Access and usage fees increased 16% or by $1.6 million to $11.6 million from $10.0 million
  • Access fees increased 28% to $7.7 million from $6.0 million
  • Gross profit improved 17% or by $1.3 million to $9.2 million from $7.8 million
  • Net income improved by $4.7 million to $4.3 million from a net loss of $0.4 million

Cash Position

The overall cash position of Cortex improved 31% to $8.2 million at July 31, 2018, 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.  The cash position of Cortex provided the flexibility to prudently use $4.7 million in the acquisition of Powervision in September 2018.

(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 MD&A for the quarter and year ended July 31, 2018 for further information on the Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to Net Income.

Cortex’s 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 24th, 2018

Time:                                                              10:00 a.m. Eastern time (8:00 a.m. Mountain time) 

Toll-free dial-in number:                          1-800-273-9672

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 at 403 219-2838.

A replay of the conference call will be available after the call through October 31, 2018. 

 

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

Toll replay number:                                   1-905-694-9451

Replay ID:                                                     7332117#

About Cortex

Cortex is a service-centric, digital transformation solutions provider focused on revolutionizing B2B document exchange. We help businesses save time and money by replacing traditional paper-based manual systems with AP and AR invoice automation. Companies on the Cortex Network are positioned for success with solutions that offer the scalability and flexibility needed to evolve with their unique business needs. Cortex specializes in the development and delivery of integrated electronic document intake and management solutions using flexible connection methods that leverage existing technologies and processes.

Cortex is currently enabling digital transformation in over 11,000 companies in the Oil & Gas, Mining, Manufacturing and Sports & Entertainment industries.  For more information, please visit www.cortex.net.

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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

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

Cortex Business Solutions Inc.
Consolidated Statements of Financial Position

(Prepared in Canadian Dollars)

 

 

 

 

 

 

July 31

2018

 

July 31

2017

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

 $      8,197,785

 

 $     6,248,176

 

Short-term investments

           60,000

 

           60,000

 

Accounts receivable

 

          907,108

 

        1,220,442

 

Prepaid expenses

 

 

           167,822

 

           180,710

 

 

 

 

 

 

 

 

 

 

 

 

 

         9,332,715

 

        7,709,328

 

 

 

 

 

 

 

 

Long-term receivable

 

 

            131,785

 

             98,761

Deposits

 

 

 

             32,379

 

             35,061

Property and equipment

           148,479

 

            178,118

Intangible assets

 

             21,012

 

            30,018

Deferred tax assets

 

        2,758,000

 

                     -

 

 

 

 

 

 

 

 

 

 

 

 

 

 $   12,424,370

 

 $     8,051,286

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

 $      1,197,295

 

 $      1,834,471

 

Deferred revenue

 

 

          309,967

 

           423,734

 

Current income tax payable

 

            20,858

 

              9,203

 

Current portion of obligations under finance lease

            22,923

 

                     -

 

 

 

 

 

 

 

 

 

 

 

 

 

         1,551,043

 

       2,267,408

 

 

 

 

 

 

 

 

Deferred rent

 

 

            141,035

 

                     -

Obligations under finance lease

             13,801

 

                     -

 

 

 

 

 

 

 

 

 

 

 

 

 

        1,705,879

 

       2,267,408

Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

       60,771,418

 

     60,562,286

Accumulated other comprehensive income

          620,433

 

           591,752

Contributed surplus

 

 

        9,881,276

 

        9,526,341

Deficit

 

 

 

     (60,554,636)

 

     (64,896,501)

 

 

 

 

 

 

 

 

 

 

 

 

 

       10,718,491

 

        5,783,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 $   12,424,370

 

 $     8,051,286

Cortex Business Solutions Inc.
Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)

For the years ended July 31, 2018 and 2017

(Prepared in Canadian Dollars)

 

 

 

 

 

 

 

Years ended

July 31

 

 

 

 

 

 

2018

 

2017

 

Revenue

 

 

 

 

 

 

 

 

 

 

Access and usage fees

 

 $        11,562,518

 

 $        9,964,212

 

 

Integration fees

 

 

             240,227

 

             268,579

 

 

Project management and other revenue

              651,035

 

              826,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         12,453,780

 

         11,059,292

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

 

 

          3,287,242

 

           3,217,622

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

           9,166,538

 

           7,841,670

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

          2,248,966

 

          2,382,665

 

 

Research and development

          1,900,089

 

           1,869,596

 

 

General and administrative

          3,276,424

 

          3,676,862

 

 

Severance and termination

                184,911

 

              138,897

 

 

Onerous contract

 

                          -

 

              217,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           7,610,390

 

          8,285,658

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before finance income

            1,556,148

 

          (443,988)

 

 

 

 

 

 

 

 

 

 

 

 

Finance income

 

 

                 36,481

 

                 6,546

 

 

 

 

 

 

 

 

 

 

Income tax (expense) recovery - current

                (8,764)

 

                22,128

 

Income tax recovery - deferred

          2,758,000

 

                          -

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

 $        4,341,865

 

 $          (415,314)

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss) on foreign operations

                28,681

 

             (48,480)

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

 

 $        4,370,546

 

 $        (463,794)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Basic

  Diluted

 Basic

Diluted

Net income (loss) per share

$0.48

$ 0.47

 

$(0.05)

$(0.05)

 

                           

 

Cortex Business Solutions Inc.
Consolidated Statement of Changes in Shareholders’ Equity

(Prepared in Canadian Dollars)                 

 

 

Number of Common Shares

Share Capital

Accumulated Other Comprehensive Income

Contributed Surplus

Deficit

Total 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

                   -

                   -

                        -

                     -

         (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

Deferred share units issued

                   -

                   -

                        -

        200,000

                    -

           200,000

Stock based compensation

                   -

                   -

                        -

          299,873

                    -

             299,873

 

 

 

 

 

 

 

Balance – July 31, 2017

     9,069,983

 $60,562,286

 $           591,752

 $     9,526,341

 $(64,896,501)

 $        5,783,878

 

 

 

 

 

 

 

Net income

                   -

                   -

                        -

                     -

       4,341,865

           4,341,570

Translation of foreign operations

                   -

                   -

               28,681

                     -

                    -

               28,681

Compensation units & stock options exercised

           27,163

          89,132

                        -

            (31,051)

                    -

               58,081

Deferred share units exercised for shares

          40,554

       120,000

                        -

        (120,000)

                    -

                        -

Deferred share units issued

 

 

 

        200,000

 

           200,000

Stock based compensation

                   -

                   -

                        -

          305,986

                    -

             305,986

 

 

 

 

 

 

 

Balance – July 31, 2018

      9,137,700

 $ 60,771,418

 $          620,433

 $     9,881,276

 $(60,554,636)

 $       10,718,491

 

Cortex Business Solutions Inc.
Consolidated Statement of Cash Flows

For the years ended July 31, 2018 and 2017

(Prepared in Canadian Dollars)

 

 

 

 

 

 

 

Years ended

July 31

 

 

 

 

 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

Cash provided by (used in)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

Net income (loss)

 

 

 $ 4,341,865

 

 $   (415,314)

 

Items not affecting cash

 

 

 

 

 

 

Recovery for deferred taxes

 

  (2,758,000)

 

             -

 

 

Stock-based compensation

 

      505,986

 

     499,873

 

 

Amortization

 

 

       183,624

 

      139,051

 

 

Deferred Rent

 

 

       141,035

 

                -

 

 

Accretion on rebate provision

                 -

 

         7,896

 

 

Loss on disposal of equipment

            868

 

         1,096

 

Long term receivables

 

 

       (33,024)

 

       (98,761)

 

Rebate Payment

 

 

 

 

    (302,041)

 

Changes in non-cash working capital

     (410,384)

 

     685,343

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

     1,971,970

 

       517,143

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds on exercise of compensation units & stock options

         58,081

 

      170,291

 

Finance lease payments

 

       (30,081)

 

                -

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

       28,000

 

      170,291

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

Acquisition of property and equipment

       (79,043)

 

       (12,610)

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

       (79,043)

 

       (12,610)

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

    held in foreign currency

 

28,682

 

 

(48,483)

 

 

 

 

 

 

 

 

 

Cash inflow

 

 

 

   1,949,609

 

      626,341

 

 

 

 

 

 

 

 

 

 

Cash, beginning of year

 

    6,248,176

 

   5,621,835

 

 

 

 

 

 

 

 

 

 

Cash, end of year

 

 

 $ 8,197,785

 

 $6,248,176