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Cortex Business Solutions Reports Strong Q1 Fiscal 2018 Financial Results

Positive cash flows from operations and record Adjusted EBITDA(1)

CALGARY, Alberta, Dec. 05, 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 October 31, 2017 (“Q1 F2018”) Management’s Discussion and Analysis and Consolidated Financial Statements. 

“As represented by our successful quarter over quarter growth of 31% in top line revenue and a relatively flat cost line, Cortex’s push to grow revenue and Adjusted EBITDA(1) with our current team is working. We will continue to focus on these metrics and to improve them to grow our business,” 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 positioned to sustain and build on results from this quarter and achieve continued growth and value for its stakeholders”.

“Cortex continues to deliver improved results each quarter and has achieved its highest Adjusted EBITDA(1) in the history of the company,” said Jason Baird, VP, Finance & CFO of Cortex Business Solutions.  “I am very excited to be joining Cortex at this stage of its development and growth. With a strong balance sheet, $6.6 million in cash and debt free, Cortex is on track to grow its business”. 

Q1 F2018 Financial Highlights (as compared to Q1 F2017)

  • Positive cash flow from operating activities increased 349% to $0.3 million from negative cash flows from operating activities of $(0.1) million
  • Overall revenue increased 31% or by $0.7 million to $3.2 million from $2.5 million
  • Access and usage fees increased 20% or by $0.5 million to $2.8 million from $2.3 million
  • Gross profit improved 46% or by $0.8 million to $2.4 million from $1.6 million
  • Net income improved 409% or by $0.5 million to $0.4 million from $(0.1) million
  • Adjusted EBITDA(1)  increased 895% or by $0.6 million to $0.5 million from $0.1 million

Cash Position

The overall cash position of Cortex improved 6% to $6.6 million at October 31, 2017 from $6.2 million driven predominantly from an increase in net cash provided by operating activities mainly from higher access and usage fees and project management revenues. 

(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 quarter ended October 31, 2017 for further information on the Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to Net Income.

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, December 6, 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 December 13, 2017

Toll-free replay number:   1-800-408-3053  
Toll replay number:   1-905-694-9451   
Replay ID:    5405733#  


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, Manufacturing and Sports & Entertainment industries, with a focused expansion into additional verticals.

For more information, please visit www.cortex.net.

Investor Relations Contacts:

Joel Leetzow    Jason Baird    Andrew Stewart
President and CEO   VP, Finance & CFO   Director, Marketing & Investor Relations
jleetzow@cortex.net    jbaird@cortex.net    astewart@cortex.net 
403-219-2838   403-219-2838    403-219-2838


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Financial Position
   
(Prepared in Canadian Dollars)    
(Unaudited)    
               
          October 31
2017
  July 31
2017
Assets            
               
Current Assets          
  Cash and cash equivalents   $   6,592,998     $   6,248,176  
  Short-term investments       60,000         60,000  
   Accounts receivable     1,445,604         1,220,442  
  Prepaid expenses         178,521         180,710  
               
              8,277,123         7,709,328  
               
Long-term receivable         124,735         98,761  
Deposits           99,978         35,061  
Property and equipment       113,112         178,118  
Intangible assets         27,766         30,018  
               
          $   8,642,714     $   8,051,286  
               
Liabilities            
               
Current Liabilities          
  Accounts payable and accrued liabilities $   1,805,570     $   1,834,471  
  Deferred revenue         495,200         423,734  
  Current income tax payable       11,734         9,203  
  Current portion of obligations under finance lease     22,812         -  
               
              2,335,316         2,267,408  
               
Deferred rent         79,923         -  
Obligations under finance lease     31,000         -  
               
              2,446,239         2,267,408  
Shareholders' Equity          
               
Share capital         60,632,576         60,562,286  
Accumulated other comprehensive income     605,688         591,752  
Contributed surplus         9,568,248         9,526,341  
Deficit           (64,610,037 )       (64,896,501 )
               
              6,196,475         5,783,878  
               
          $   8,642,714     $   8,051,286  
                       


 
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Income (Loss) and Comprehensive Income (Loss)
For the three months ended October 31, 2017 and 2016
(Prepared in Canadian Dollars)
(Unaudited)
 
          Three months ended
          October 31
2017
  October 31
2016
Revenue            
  Access and usage fees   $   2,809,912     $   2,337,660  
  Integration fees         86,561         18,124  
  Project management and other revenue     338,200         113,284  
               
              3,234,673         2,469,068  
               
Cost of Sales           832,300         823,538  
               
Gross Profit           2,402,373         1,645,530  
               
Expenses            
  Sales and marketing         689,969         459,909  
  Research and development       477,587         440,531  
  General and administrative       797,419         801,857  
  Severance and termination charges     155,922         21,388  
               
              2,120,897         1,723,685  
               
Income (loss) before finance income       281,476         (78,155 )
               
Finance income         7,096         9  
               
Income tax expense         (2,108 )       (14,641 )
               
Net income (loss)     $   286,464     $   (92,787 )
               
               
Other comprehensive earnings        
  Items that may be reclassified subsequently to net income (loss):    
               
  Foreign exchange gain on foreign operations     13,936         73,377  
               
Comprehensive income (loss)   $   300,400     $   (19,410 )
               
Net income (loss) per share – basic and diluted $   0.03     $   (0.01 )
               


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity
(Prepared in Canadian Dollars)
(Unaudited) 
 
  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   -       -       -       -           (92,787 )       (92,787 )
Translation of foreign operations   -       -       73,377       -           -         73,377  
Stock based compensation   -       -       -       75,566           -         75,566  
               
Balance – October 31, 2016   8,984,704       60,291,515       713,609       9,202,514           (64,573,974 )       5,633,664  
               
Balance - July 31, 2017   9,069,983       60,562,286       591,752       9,526,341           (64,896,501 )       5,783,878  
               
Net income   -       -       -       -           286,464         286,464  
Translation of foreign operations   -       -       13,936       -           -         13,936  
Compensation units & stock options exercised  
21,158
     
 70,290
     
  -
      (24,040 )        
-
       
46,250
 
Stock based compensation   -       -       -       65,947           -         65,947  
                 
Balance – October 31, 2017   9,091,141   $   60,632,576   $   605,688   $   9,568,248     $     (64,610,037 )   $   6,196,475  


 
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three months ended October 31, 2017 and 2016
(Prepared in Canadian Dollars)
(unaudited)
 
          Three months ended
          October 31
2017
  October 31
2016
               
Cash provided by (used in)        
               
Operating activities          
Net income (loss)     $   286,464     $   (92,787 )
Items not affecting cash          
  Stock-based compensation       65,947         75,566  
  Amortization         150,294         24,855  
  Deferred Rent         79,923         -  
  Accretion on rebate provision       -         2,153  
  Loss on disposal of equipment       -         -  
Long term receivables         (25,974 )       -  
Changes in non-cash working capital     (242,791 )       (136,035 )
               
Net cash provided by (used in) operating activities     313,863         (126,248 )
               
Financing activities          
Proceeds on exercise of compensation units & stock options    
46,250
        -  
Finance lease payments         (12,993 )       -  
               
Net cash provided by financing activities     33,257         -  
               
Investing Activities          
Acquisition of property and equipment     (16,231 )       -  
               
Net cash used in investing activities       (16,231 )       -  
               
Effect of exchange rate changes on cash
and cash equivalents held in foreign currency       13,933         79,179  
               
Cash inflow (outflow)         344,822         (47,069 )
               
Cash, beginning of period       6,248,176         5,621,835  
               
Cash, end of period     $   6,592,998     $   5,574,766  

 

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