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Cortex Business Solutions Reports Strong Q2 Fiscal 2018 Financial Results

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Continued positive cash flows from operations and record increase of 272% Adjusted EBITDA(1)

CALGARY, Alberta, March 06, 2018 (GLOBE NEWSWIRE) -- Cortex Business Solutions Inc. (TSXV:CBX), a North American network-as-a-service e-invoicing solutions provider, today announces its three and six months ended January 31, 2018 ("Q2 F2018") Management's Discussion and Analysis and Consolidated Financial Statements. 

"As represented by our year to date 20% increase in total revenue and record Adjusted EBITDA(1) along with a flat cost line, Cortex's strategy to grow and to add shareholder value has been successful in the first half of fiscal 2018. We will continue to focus on these key metrics and to execute on our growth strategy," said Joel Leetzow, President and CEO of Cortex Business Solutions. "In what has now been another year of uncertainty across the Canadian energy sector, we have more often than not been the benefactor of asset changes and company transactions across Canada, but this quarter we recently lost two Cortex clients in Calgary due to the purchase and consolidation of certain Canadian assets. That said, our programs for diversifying our revenue are working. Because of this, Cortex is positioned to sustain and build on these record results.

This quarter has also been a major shift for me personally regarding where I am able to focus my time with the addition of Jason Baird as our CFO.  I have been able to transfer many of my former day-to-day operating activities of the company over to Jason and this has allowed me to work closer with the Cortex commercial teams on growing revenue."

"Cortex continues to deliver consistent positive results each quarter and has achieved its highest quarterly Adjusted EBITDA(1) of $0.6 million in the history of the company.  Furthermore, the six months ended Adjusted EBITDA(1) of $1.1 million is already greater than the entire fiscal 2017," said Jason Baird, VP, Finance & CFO of Cortex Business Solutions.  "I am very excited to be completing my first quarter at Cortex and witnessing first-hand the successful implementation of our corporate strategy translating into increased shareholder value. With a strong balance sheet showing $6.7 million in cash and no debt, Cortex is on track to take its business to the next stage."

Cortex would also like to thank Scott Lamacraft and Greg Mark for their commitment and valuable service as Directors to the Company and wish them well in future endeavors. 

Q2 F2018 Financial Highlights

Three months ended January 31, 2018 compared to January 31, 2017

  • Adjusted EBITDA(1)  increased 272% or by $0.4 million to $0.6 million from $0.2 million
  • Positive cash flow from operating activities increased 230% to $0.1 million from negative cash flows from operating activities of $(0.1) million
  • Overall revenue increased 11% or by $0.3 million to $3.0 million from $2.7 million
  • Access and usage fees increased 19% or by $0.5 million to $2.9 million from $2.4 million
  • Gross profit improved 14% or by $0.3 million to $2.2 million from $1.9 million
  • Net income improved 264% or by $0.5 million to $0.3 million from $(0.2) million


Six months ended January 31, 2018 compared to January 31, 2017

  • Adjusted EBITDA(1)  increased 418% or by $0.9 million to $1.1 million from $0.2 million
  • Positive cash flow from operating activities increased 294% to $0.5 million from negative cash flows from operating activities of $(0.2) million
  • Overall revenue increased 20% or by $1.1 million to $6.3 million from $5.2 million
  • Access and usage fees increased 20% or by $0.9 million to $5.6 million from $4.7 million
  • Gross profit improved 29% or by $1.0 million to $4.6 million from $3.6 million
  • Net income improved 310% or by $0.9 million to $0.6 million from $(0.3) million

Cash Position

The overall cash position of Cortex improved 7% to $6.7 million at January 31, 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. 

(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 January 31, 2018 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, March 7, 2018
Time:                                                                     11:00 a.m. Eastern time (9:00 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 March 14, 2018.

Toll-free replay number:                                   1-800-408-3053
Toll replay number:                                           1-905-694-9451
Replay ID:                                                           6644640#

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.

                              

Cortex Business Solutions Inc.
Condensed Consolidated Interim Statements of Financial Position
(Prepared in Canadian Dollars)
(Unaudited)

             
          January 31
2018
July 31
2017
Assets            
               
Current Assets          
  Cash and cash equivalents   $ 6,675,340     $ 6,248,176  
  Short-term investments     60,000       60,000  
  Accounts receivable   1,363,850        1,220,442  
  Prepaid expenses       95,014       180,710  
               
               8,194,204       7,709,328  
               
Long-term receivable       134,046       98,761  
Deposits         99,978       35,061  
Property and equipment     108,673       178,118  
Intangible assets       25,515       30,018  
               
               
          $ 8,562,416     $ 8,051,286  
               
Liabilities            
               
Current Liabilities          
  Accounts payable and accrued liabilities $ 1,088,992     $ 1,834,471  
  Deferred revenue       498,408       423,734  
  Current income tax payable     17,917       9,203  
  Current portion of obligations under finance lease   22,867        -  
               
            1,628,184       2,267,408  
               
Deferred rent       159,845        -  
Obligations under finance lease   25,262       -  
               
            1,813,291       2,267,408  
Shareholders' Equity          
               
Share capital       60,651,418       60,562,286  
Accumulated other comprehensive income   541,906       591,752  
Contributed surplus       9,843,688       9,526,341  
Deficit         (64,287,887)     (64,896,501)
               
            6,749,125       5,783,878  
               
               
          $ 8,562,416     $ 8,051,286  

Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Income (Loss) and Comprehensive Income (Loss)
For the three and six months ended January 31, 2018 and 2017
(Prepared in Canadian Dollars)
(Unaudited)

          Three months ended
January 31
Six months ended
January 31
            2018       2017       2018       2017  
Revenue                    
  Access and usage fees      $   2,853,893     $   2,398,153     $   5,663,805     $   4,735,813  
  Integration fees         50,683         82,475         137,244         100,599  
  Project management and other
  revenue
    114,379         241,048         452,579         354,332  
                       
              3,018,955         2,721,676         6,253,628         5,190,744  
                       
Cost of
Sales
         789,504         772,442         1,621,804         1,595,980  
                       
Gross Profit           2,229,451         1,949,234         4,631,824         3,594,764  
                       
Expenses                    
  Sales and
marketing
        484,593         584,152         1,174,562         1,044,061  
  Research and
development
      459,143         462,159         936,730         902,690  
  General and
administrative
      971,726         1,014,480         1,769,145         1,816,337  
  Severance and
termination
      2,762         70,233         158,684         91,621  
                       
              1,918,224         2,131,024         4,039,121         3,854,709  
                       
Income (loss) before finance
income
    311,227         (181,790 )       592,703         (259,945 )
                       
Finance income         13,065         429         20,161         438  
                       
Income tax expense         (2,142 )       (15,024 )       (4,250 )       (29,665 )
                       
                                   
Net income (loss)     $   322,150     $   (196,385 )   $   608,614     $   (289,172 )
                       
                       
Other comprehensive
earnings
               
        Items that may be reclassified subsequently to net income (loss):
       
                       
  Foreign exchange loss on
  foreign operations
   (63,782 )      (100,826

)
    (49,846 )     (27,449 )
                       
                       
Comprehensive income (loss)   $   258,368     $   (297,211 )   $   558,768     $   (316,621 )
                       
Net income (loss) per share – basic
  and diluted


$
 

  0.04
   

$
 

  (0.02


)
 

$
 

  0.07
   

$
 

  (0.03


)


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   -       -     -       -       (289,172 )     (289,172 )
Translation of foreign
operations
  -       -     (27,449 )     -       -       (27,449 )
Compensation units & stock
options exercised
 
3,491
     
 18,368
   
  -
     
 (11,386


)
   
  -
     
  6,982
 
Deferred share units issued -     -   -       200,000     -       200,000  
Stock based compensation   -       -     -       75,566       -       75,566  
               
Balance – January 31, 2017   8,988,195       60,309,883     612,783       9,391,128       (64,770,359 )     5,543,435  
               
Balance - July 31, 2017   9,069,983       60,562,286     591,752       9,526,341       (64,896,501 )     5,783,878  
               
Net income   -       -     -       -       608,614       608,614  
Translation of foreign operations   -       -     (49,846 )     -       -       (49,846 )
Compensation units & stock options exercised  
27,163
     
 89,132
   
  -
     
  (31,051


)
   
  -
     
  58,081
 
Deferred share units issued -     -   -       200,000     -       200,000  
Stock based compensation   -       -     -       148,398       -       148,398  
               
Balance – January 31, 2018   9,097,146   $   60,651,418 $   541,906   $   9,843,688   $  (64,287,887 ) $   6,749,125  


Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three and six months ended January 31, 2018 and 2017
(Prepared in Canadian Dollars)
(unaudited)

          Three months ended
January 31
Six months ended
January 31
            2018       2017       2018       2017  
                       
Cash provided by (used in)                  
                       
Operating activities                  
Net income (loss)     $   322,150     $   (196,385 )   $   608,614     $   (289,172 )
Items not affecting cash                  
  Stock-based compensation       282,451         276,055         348,398         351,621  
  Amortization         8,167         25,030         158,461         49,885  
  Deferred Rent         79,922         -         159,845         -  
  Accretion on rebate provision       -         2,154         -         4,307  
  Loss on disposal of equipment       -         1,012         -         1,012  
Long term receivables         (9,311 )       (26,577 )       (35,285 )       (53,034 )
Changes in non-cash working capital       (541,926 )       (190,044 )       (784,717 )       (299,622 )
                       
Net cash provided by (used in)
operating
  activities
   
  141,453
       
  (108,755


)
     
  455,316
       
  (235,003


)
                       
Financing activities                  
Proceeds on exercise of compensation
units
  & stock options
   
 11,831
       
  6,982
       
  58,081
       
  6,982
 
Finance lease payments         (5,683 )       -         (18,676 )       -  
                       
Net cash provided by financing
activities
      6,148         6,982         39,405         6,982  
                       
Investing Activities                  
Acquisition of property and
equipment
      (1,478 )       (2,340 )       (17,709 )       (2,340 )
                       
Net cash used in investing
activities
      (1,478 )       (2,340 )       (17,709 )       (2,340 )
                       
Effect of exchange rate changes
on cash
   and cash equivalents held in
foreign
  currency
    (63,781)     (106,529)      (49,848)     (27,350)
                       
Cash inflow (outflow)         82,342         (210,642 )       427,164         (257,711 )
                       
Cash, beginning of
period
        6,592,998         5,574,766         6,248,176         5,621,835  
                       
Cash, end of period     $   6,675,340     $   5,364,124     $   6,675,340     $   5,364,124  


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      

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