Cortex Business Solutions Reports Fiscal 2017 Financial Results

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CALGARY, Alberta, Oct. 24, 2017 (GLOBE NEWSWIRE) -- Cortex Business Solutions Inc. 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)
        

 

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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, 20157,426,349 $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 period1,558,355    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, 20168,984,704  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, 20179,069,983 $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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