Positive annual cash flows from operations for the first time

CALGARY, Alberta, Oct. 24, 2017 (GLOBE NEWSWIRE) -- 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		pham@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