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Cortex Business Solutions Announces Q3 F2017 Positive Net Income

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CALGARY, Alberta, June 13, 2017 (GLOBE NEWSWIRE) -- Cortex Business Solutions Inc. ("Cortex", "The Company"), (TSXV:CBX), a North American network-as-a-service e-invoicing solutions provider, today announces its three and nine months ended April 30, 2017 ("Q3 F2017") Management's Discussion and Analysis and Condensed Interim Consolidated Financial Statements. 

Joel Leetzow, the President and CEO of Cortex Business Solutions, said, "As Cortex Business Solutions Inc. celebrates its 10th year trading on the TSX.V, as CBX, we also celebrate what I believe are far greater and more significant milestones; positive net income and positive cashflow from operations.  By achieving these milestones, we have become a legitimate business by anyone's measure for the first time in our Company's history.  Reaching these goals speaks volumes towards the dedication and hard work put in by a streamlined Cortex team, as well as the continued faith our shareholders have shown us, which has helped us to build a strong future for Cortex.

"The growth in the commitment, drive and abilities of the individuals working for Cortex are driving forces in the results we are presenting today."

The Company achieved positive cashflow from operations of $241,456, positive net income of $19,847 and income before finance income and income tax of $35,725. 

One of the more interesting trends in the quarter was the recovery of usage fees, which grew 26% in the quarter; compared to a decline of 4% for the nine month period.  This trend is in line with the Company's billable transaction increase of 24% in the quarter compared to 4% during the nine months.  This growth occurred in spite of one month of spring breakup in the quarter.  The Network is seeing an increase in the volume of transactions as new buyers go live on the Network as well as stabilization in the energy sector. 

The total expenses declined 3% during the quarter and 13% during the nine months ended April 30, 2017.  The Company does not expect the large reductions like those seen in fiscal 2016 compared to fiscal 2015 as the Company has normalized its spending.  This decline occurred despite the rebuilding of the sales organization resulting in a 77% increase in sales and marketing during the three month period and 62% during the nine month period. 

The continued improvement in the speed at which the team is moving buyers from contract stage to live on the Network resulted in 96 active buyers at April 30, 2017 compared to 91 active at April 30, 2016.  This materializes through increased monthly access and usage fees which contributed 64% of the total revenue growth in the quarter. 

A summary of the percentage changes in the quarter are included below.

Q3 F2017 Highlights:

Cash provided by (used in) Operations

  Three months ended April 30, 2017 compared to April 30, 2016

  • The cash provided by (used in) operating activities improved to $241,456 during Q3 F2017 compared to $(205,502) during the three months ended April 30, 2016. 

  Nine months ended April 30, 2017 compared to April 30, 2016

  • The cash provided by (used in) operating activities improved to $6,453 compared to $(744,342) during the nine months ended April 30, 2017 and 2016 respectively.

Net Income (loss)

  Three months ended April 30, 2017 compared to April 30, 2016

  • The net income (loss) improved to $19,847 during Q3 F2017 compared to $(564,981) during the three months ended April 30, 2016. 

  Nine months ended April 30, 2017 compared to April 30, 2016

  • The net loss improved to $269,325 compared to $1,993,372 during the nine months ended April 30, 2017 and 2016 respectively.

Revenue

  Three months ended April 30, 2017 compared to April 30, 2016

  • Total revenue improved 22% to $2,930,726 Q3 F2017 compared to Q3 F2016 of $2,403,314.
  • Access and usage fees were up 15%:
  • Integration and set up fees were down 6%, and
  • Project management fees were up 1517%.
  • Billable transactions improved 24% while active suppliers decreased 4%.

  Nine months ended April 30, 2017 compared to April 30, 2016

  • Total revenue was increased to $8,121,470 compared to $7,589,159 during the nine months ended April 30, 2017 and 2016 respectively.
  • Access and usage fees were up 2%:
  • Integration and set up fees were down 34%, and
  • Project management fees were up 1797%.
  • Billable transactions were up 4%.

Expenses

  Three months ended April 30, 2017 compared to April 30, 2016

  • Total expenses declined 3%.

  Nine months ended April 30, 2017 compared to April 30, 2016

  • Total expenses declined 13%

"Q3 F2017 was a monumental quarter," said Sandra Fawcett, CFO of Cortex. "The Company was successful in achieving both income and positive cashflow in the quarter.  Also for the nine month period the Company had positive cash flow from operations.  With a gross profit of 71%, the ability to further improve these metrics is within reach.  Having been with Cortex for 12 years, I have been privileged to see its entire evolution, and I can say that we are well positioned for continued success in the future."

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, June 14, 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 June 21, 2017.

Toll-free replay number:  1-800-408-3053
Toll replay number:  1-905-694-9451 
Replay ID:  1523103#

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

  

Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Financial Position
(Prepared in Canadian dollars)
(Unaudited)
 
 
April 30
  July 31
    2017       2016  
Assets              
               
Current assets              
Cash $ 5,707,921     $ 5,621,835  
Short‑term investments   60,000       60,000  
Accounts receivable   1,115,770       866,142  
Prepaid expenses   276,605       145,823  
    7,160,296       6,693,800  
               
Long term receivables   79,551       -  
Deposits   35,061       35,061  
Property and equipment   229,426       292,791  
Intangible assets   33,234       42,882  
  $ 7,537,568     $ 7,064,534  
               
Liabilities              
               
Current liabilities              
Accounts payable and accrued liabilities $ 1,307,285     $ 1,086,380  
Deferred revenue   28,945       46,854  
Rebate provision   300,605       294,145  
Income tax payable   90,667       59,647  
    1,727,502       1,487,026  
               
Shareholders' Equity              
Share capital   60,318,006       60,291,515  
Accumulated other comprehensive income   710,705       640,232  
Contributed surplus   9,531,867       9,126,948  
Deficit   (64,750,512 )     (64,481,187 )
    5,810,066       5,577,508  
  $ 7,537,568     $ 7,064,534  


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Net Income (Loss) and Comprehensive Loss
For the three and nine months ended April 30, 2017 and 2016
(Prepared in Canadian dollars)
(unaudited)
 
  Three months ended April 30 Nine months ended April 30
    2017     2016     2017     2016  
Revenue        
Access and usage fees  $   2,603,932   $   2,263,485   $   7,339,745   $   7,223,753  
Integration fees and set‑up fees      119,792       127,025       220,391       335,810  
Project management fees      207,002       12,804       561,334       29,596  
      2,930,726       2,403,314       8,121,470       7,589,159  
                         
Cost of Sales     853,057       1,319,152       2,449,037       4,128,834  
                         
Gross Profit     2,077,669       1,084,162       5,672,433       3,460,325  
         
Expenses        
Sales and marketing      596,473       336,405       1,640,534       1,009,993  
Research and development costs      500,338       434,426       1,403,028       1,509,674  
General and administrative      908,697       846,457       2,725,034       2,722,685  
Severance and employee termination costs       36,436       46,862       128,057       208,596  
      2,041,944       1,664,150       5,896,653       5,450,948  
Income (loss) before finance income      35,725       (579,988 )     (224,220 )     (1,990,623 )
Finance income (expense)      921       702       1,359       (3,793 )
                         
Current tax recovery (expense)      (16,799 )   14,305      (46,464 )   1,044  
 
Net Income (loss) 
$ 19,847   $  (564,981 ) $  (269,325 ) $ (1,993,372 )
Other comprehensive earnings                        
Items that may be reclassified subsequently to net loss:                        
Foreign exchange gain (loss) on foreign operations      97,922       (216,076 )     70,473       (70,214 )
                         
Comprehensive income (loss)  $ 117,769   $  (781,057 ) $   (198,852 ) $   (2,063,586 )
Net loss per share‑basic and diluted $   0.00   $   (0.06 ) $   (0.03 ) $   (0.23 )


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity
(Prepared in Canadian dollars)
(unaudited)
 
  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   -      -      -        -        -        -        (1,993,372 )     (1,993,372 )
Issued during the period   1,551,375     3,102,750     -        -        -        -        -        3,102,750  
Issuance cost   -      (364,366 )   -        -        -        -        -        (364,366 )
Translation of foreign operations   -      -      -        -        -        (70,214 )     -        (70,214 )
Stock based compensation   -      -      -        -        161,409       -        -        161,409  
Compensation units issued in conjunction with private placement   -      (101,222 )   -        -        101,222       -        -        -   
Expiration of warrants   -      -      (447,580 )     (980,941 )     980,941       -        -        -   
Balance ‑ April 30, 2016  8,977,724 $  60,277,555     -    $   -    $   9,092,131   $   510,288   $ (63,769,890 ) $   6,110,084  
                 
Balance ‑ July 31, 2016  8,984,704 $  60,291,515     -    $   -    $   9,126,948   $   640,232   $ (64,481,187 ) $   5,577,508  
Net loss   -      -      -        -        -        -        (269,325 )     (269,325 )
Compensation units & stock options exercised   6,158     12,049     -        -        -        -        -        12,049  
Compensation units contributed surplus   -      14,442     -        -        (14,442 )     -        -        -   
Translation of foreign operations   -      -      -        -        -        70,473       -        70,473  
Stock based compensation   -      -      -        -        219,361       -        -        219,361  
Deferred share units issued   -      -      -        -        200,000       -        -        200,000  
Balance ‑ April 30, 2017  8,990,862 $  60,318,006     -    $   -    $   9,531,867   $   710,705   $ (64,750,512 ) $   5,810,066  
 
See accompanying notes


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three and nine months ended April 30, 2017 and 2016
(Prepared in Canadian dollars)
(unaudited)
 
                         
  For the three months ended
April 30
For the nine months ended 
April 30
    2017     2016     2017     2016  
Cash provided by (used in)
Operating activities
       
Net Income (loss)  $   19,847   $   (564,981 ) $   (269,325 ) $ (1,993,372 )
Items not affecting cash         
Stock‑based compensation      67,740       39,620       419,361       161,409  
Amortization     25,004       460,301       74,889       1,380,899  
Long term receivables     (26,517 )     -        (79,551 )     -   
Accretion on rebate provision     2,153       1,245       6,460       10,874  
Loss on disposal of equipment     -        -        1,012       2,811  
    88,227       (63,815 )     152,846       (437,379 )
Changes in non‑cash working capital     153,229       (141,687 )     (146,393 )     (306,963 )
Net cash provided by (cash used) in operating activities     241,456       (205,502 )     6,453       (744,342 )
Financing activities        
Proceeds from issuance of shares     -        -        -        3,102,750  
Share issuance costs     -        -        -        (364,366 )
Proceeds from exercise of compensation units & stock options     5,067       -        12,049       -   
                         
 Net cash from financing activities     5,067       -       12,049       2,738,384  
         
Investing activities        
Acquisition of property and equipment     (548 )     -        (2,888 )     (1,189 )
                         
Effect of exchange rate changes on cash and cash equivalents held in foreign currency $ 97,822   $  (377,756 ) $ 70,472   $   (83,185 )
                         
Cash inflow (outflow)    343,797      (583,258 )    86,086     1,909,668  
Cash, beginning of period     5,364,124       6,479,876       5,621,835       3,986,950  
Cash, end of period  $ 5,707,921   $ 5,896,618   $ 5,707,921   $ 5,896,618  

 

Investor Relations Contacts:

Joel Leetzow	
President and CEO	
jleetzow@cortex.net
403-219-2838	

Sandra Fawcett		
CFO			
sfawcett@cortex.net
403-219-2838		

Andrew Stewart
Director, Marketing & Investor Relations
astewart@cortex.net
403-219-2838

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