CALGARY, ALBERTA–(Marketwired – June 9, 2016) – Cortex Business Solutions Inc. (TSX VENTURE:CBX), an online business-to-business network as a service, that helps companies reduce invoice processing times by connecting and interacting with each other, today announces the results for the three and nine months ended April 30, 2016.
Sandra Weiler, CFO of Cortex Business Solutions commented “Cutting costs is difficult for any company, but it is considerably more difficult to exhibit the discipline needed to maintain cost reductions without negatively impacting the company’s overall performance. Cortex has shown over the past 12 months a willingness to reduce costs and improve adjusted EBITDA, while improving other areas of the business, which has moved us closer to profitability than ever before.”
“The Company continues the financial discipline required to drive costs to appropriate levels while remaining focused on investing in strategic priorities to enable long-term growth” commented Joel Leetzow, President and CEO of Cortex Business Solutions, “our strategy remains expanding further into other verticals to minimize the fluctuations in commodities pricing. As well, we are recommitting to our growth strategies in the United States by hiring a Texas based VP of Sales giving us boots on the ground in our targeted geographical area”.
Three months ending April 30, 2016;
- Adjusted EBITDA of $(80)K, an improvement of 93% over same quarter last year.
- Net cash used in operating activities of $206K, an improvement of 85% over same quarter last year.
- Revenue of $2.4M, down 9% over same quarter last year.
- Access fees up 14% to $1.4M
- Usage fees down 30% to $0.85M
- Gross profit, net of amortization improved to 63%
- Three new buying organizations signed in the quarter for an estimated $200K in annualized revenue. Internal efficiencies are continuing to be improved with the re-architecture of our CRM and various other initiatives to improve data management and increase productivity.
- We are in the process of moving the production environment to a managed service agreement. This will provide Cortex with the following benefits:
- Eliminate the expenditure spikes in purchasing our own equipment
- Re-purpose the existing production equipment in our corporate infrastructure further reducing capital expenditures
- Reduce the amount spent on maintenance contracts
- Enhance our disaster recovery and back-up options
- The ability to add capacity at an accelerated rate
Nine months ended April 30, 2016;
- Adjusted EBITDA of $(448)K, an improvement of 89% over same period last year.
- Net cash used in operating activities of $744K, an improvement of 83% over same period last year.
- Revenue of $7.6M, down 6% over same period last year.
- Access fees up 22% to $4.1M
- Usage fees down 23% to $3.1M
- Gross profit, net of amortization improved to 63%
| Operational results: | |||||||||||||||
| Fiscal 2016 | Fiscal 2015 | ||||||||||||||
| Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||
| # | % Change | # | % Change | # | % Change | # | % Change | # | % Change | ||||||
| Buyer Integrations Completed |
91 | 1 | % | 90 | 5 | % | 86 | Nil | 86 | 2 | % | 84 | 8 | % | |
| In progress | 5 | 5 | 8 | 7 | 3 | ||||||||||
| Total | 96 | 1 | % | 95 | 1 | % | 94 | 1 | % | 93 | 7 | % | 87 | 1 | % |
| Billable Transactions | 982,990 | (13 | %) | 1,127,303 | (6 | %) | 1,196,362 | 3 | % | 1,166,258 | (5 | %) | 1,221,999 | (17 | %) |
| Total Documents exchanged |
2,540,249 | (13 | %) | 2,936,158 | (6 | %) | 3,109,103 | 2 | % | 3,054,263 | (9 | %) | 3,355,769 | (14 | %) |
| Active Suppliers | 8,622 | (4 | %) | 8,960 | (1 | %) | 9,038 | 0.5 | % | 8,997 | 1 | % | 8,890 | 2 | % |
Conference Call
Cortex management will host a conference call, followed by a question and answer period.
The details of the conference call are as follows:
| Date: | Friday, June 10, 2016 |
| Time: | 4:30 p.m. Eastern time (2:30 p.m. Mountain time) |
| Toll-free dial-in number: | 1-866-223-7781 |
| 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 17, 2016.
| Toll-free replay number: | 1-800-408-3053 |
| Toll replay number: | 1-905-694-9451 |
| Replay ID: | 2668375 |
About Cortex Business Solutions
Cortex Business Solutions Inc. (TSX VENTURE:CBX) is a business-to-business network that enables electronic invoicing for buying and suppling organizations. The Cortex network offers flexible connection methods to reduce the time required to process invoices and tools that 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.
For more information, please visit www.cortex.net.
| Cortex Business Solutions Inc. | |||||
| Condensed Consolidated Interim Statement of Financial Position | |||||
| (Prepared in Canadian dollars) | |||||
| (unaudited) | |||||
| April 30 | July 31 | ||||
| 2016 | 2015 | ||||
| Assets | |||||
| Current assets | |||||
| Cash | $ 5,896,618 | $ 3,986,950 | |||
| Short-term investments | 60,000 | 60,000 | |||
| Accounts receivable | 730,851 | 868,452 | |||
| Prepaid expenses and deposits | 175,261 | 154,861 | |||
| 6,862,730 | 5,070,263 | ||||
| Deposits | 35,061 | 35,061 | |||
| Property and equipment | 322,125 | 413,961 | |||
| Intangible assets | 473,119 | 1,763,804 | |||
| $ 7,693,035 | $ 7,283,089 | ||||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | $ 695,192 | $ 948,311 | |||
| Deferred revenue | 59,944 | 230,989 | |||
| Current portion of rebate provision | 496,426 | 695,207 | |||
| Income tax payable | 44,177 | 57,148 | |||
| 1,295,739 | 1,931,655 | ||||
| Rebate provision | 287,212 | 77,557 | |||
| 1,582,951 | 2,009,212 | ||||
| Shareholders’ Equity | |||||
| Share capital | 60,277,555 | 57,640,393 | |||
| Accumulated other comprehensive income | 510,288 | 580,502 | |||
| Warrants | – | 980,941 | |||
| Contributed surplus | 9,092,131 | 7,848,559 | |||
| Deficit | (63,769,890 | ) | (61,776,518 | ) | |
| 6,110,084 | 5,273,877 | ||||
| $ 7,693,035 | $ 7,283,089 | ||||
| Cortex Business Solutions Inc. | |||||||||
| Condensed Consolidated Interim Statement of Loss and Comprehensive Loss | |||||||||
| For the three and nine months ended April 30, 2016 and 2015 | |||||||||
| (Prepared in Canadian dollars) | |||||||||
| (unaudited) | |||||||||
| Three months ended April 30 | Nine months ended April 30 | ||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||
| Revenue | |||||||||
| Access and usage fees | $ 2,263,485 | $ 2,452,310 | $ 7,223,753 | $ 7,388,768 | |||||
| Integration fee and set-up fees | 127,025 | 167,025 | 335,810 | 459,594 | |||||
| Project management | 12,804 | 21,562 | 29,596 | 247,264 | |||||
| 2,403,314 | 2,640,897 | 7,589,159 | 8,095,626 | ||||||
| Cost of Sales | 1,319,152 | 1,381,534 | 4,128,834 | 4,626,865 | |||||
| Gross Profit | 1,084,162 | 1,259,363 | 3,460,325 | 3,468,761 | |||||
| Expenses | |||||||||
| Sales and marketing | 336,405 | 845,865 | 1,009,993 | 2,893,274 | |||||
| Research and development costs | 434,426 | 795,750 | 1,509,674 | 2,336,554 | |||||
| General and administrative | 846,457 | 1,070,314 | 2,722,685 | 3,654,007 | |||||
| Severance and employee termination costs | 46,862 | 216,600 | 208,596 | 480,225 | |||||
| 1,664,150 | 2,928,529 | 5,450,948 | 9,364,060 | ||||||
| Loss before finance income | (579,988 | ) | (1,669,166 | ) | (1,990,623 | ) | (5,895,299 | ) | |
| Finance (expense) income | 702 | (5,054 | ) | (3,793 | ) | 5,572 | |||
| Current tax recovery | 14,305 | – | 1,044 | – | |||||
| Net loss | $ (564,981 | ) | $ (1,674,220 | ) | $ (1,993,372 | ) | $ (5,889,727 | ) | |
| Other comprehensive earnings: | |||||||||
| Items that may be reclassified subsequently to net loss | |||||||||
| Foreign exchange (loss) gain on foreign operations | (216,076 | ) | (169,766 | ) | (70,214 | ) | 384,267 | ||
| Comprehensive loss | $ (781,057 | ) | $ (1,843,986 | ) | $ (2,063,586 | ) | $ (5,505,460 | ) | |
| Net loss per share-basic and diluted | $ (0.06 | ) | $ (0.23 | ) | $ (0.23 | ) | $ (0.80 | ) | |
| Cortex Business Solutions Inc. | |||||||||||||||
| Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity | |||||||||||||||
| (Prepared in Canadian dollars) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Number of Common shares | Common shares value | Number of Warrants | Warrants value | Contributed surplus | Accumulated Other Comprehensive Income | Deficit | Total shareholders’ equity | ||||||||
| Balance – July 31, 2014 | 7,233,949 | $56,778,460 | 447,580 | $980,941 | $7,500,703 | $(77,285 | ) | $(53,850,720 | ) | $ 11,332,099 | |||||
| Net loss | – | – | – | – | – | – | (5,889,727 | ) | (5,889,727 | ) | |||||
| Issued during the period | 192,400 | 865,800 | – | – | – | – | – | 865,800 | |||||||
| Share issue costs | – | (3,867 | ) | – | – | – | – | – | (3,867 | ) | |||||
| Foreign exchange translation of foreign operations | – | – | – | – | – | 384,267 | – | 384,267 | |||||||
| Stock-based compensation | – | – | – | – | 284,632 | – | – | 284,632 | |||||||
| Balance – April 30, 2015 | 7,426,349 | 57,640,393 | 447,580 | 980,941 | 7,785,335 | 306,982 | (59,740,447 | ) | 6,973,204 | ||||||
| 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 costs | – | (364,366 | ) | – | – | – | – | – | (364,366 | ) | |||||
| Expiration of warrants | – | – | (447,580 | ) | (980,941 | ) | 980,941 | – | – | – | |||||
| 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 | – | – | – | ||||||
| Balance – April 30, 2016 | 8,977,724 | $60,277,555 | – | $ – | $9,092,131 | $510,288 | $(63,769,890 | ) | $6,110,084 | ||||||
| Cortex Business Solutions Inc. | ||||||||||
| Condensed Consolidated Interim Statement of Cash Flows | ||||||||||
| For the three and nine months ended April 30, 2016 and 2015 | ||||||||||
| (Prepared in Canadian dollars) | ||||||||||
| (unaudited) | ||||||||||
| For the three months ended | For the nine months ended | |||||||||
| April 30 | April 30 | |||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||
| Cash provided by (used in) | ||||||||||
| Operating activities | ||||||||||
| Net loss | $(564,981 | ) | $(1,674,220 | ) | $(1,993,372 | ) | $(5,889,727 | ) | ||
| Items not affecting cash | ||||||||||
| Stock-based compensation | 39,620 | 65,740 | 161,409 | 284,632 | ||||||
| Amortization | 460,301 | 470,636 | 1,380,899 | 1,394,473 | ||||||
| Salaries paid in shares | – | – | – | 865,800 | ||||||
| Accretion on rebate provision | 1,245 | 7,988 | 10,874 | 23,962 | ||||||
| Loss on disposal of equipment | – | – | 2,811 | – | ||||||
| Cash from operating activities before non-cash working capital | (63,815 | ) | (1,129,856 | ) | (437,379 | ) | (3,320,860 | ) | ||
| Changes in non-cash working capital | (141,687 | ) | (201,239 | ) | (306,963 | ) | (1,164,772 | ) | ||
| Net cash used in operating activities | (205,502 | ) | (1,331,095 | ) | (744,342 | ) | (4,485,632 | ) | ||
| Financing activities | ||||||||||
| Proceeds from issuance of shares | – | – | 3,102,750 | – | ||||||
| Share issuance costs | – | – | (364,366 | ) | (3,867 | ) | ||||
| Net cash (used in) from financing activities | – | – | 2,738,384 | (3,867 | ) | |||||
| Investing activities | ||||||||||
| Acquisition of property and equipment | – | (63,347 | ) | (1,189 | ) | (152,297 | ) | |||
| Software and software development costs | – | (9,102 | ) | – | (14,508 | ) | ||||
| Net cash used in investing activities | – | (72,449 | ) | (1,189 | ) | (166,805 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents held in foreign currency | $ (377,756 | ) | $ (160,769 | ) | $ (83,185 | ) | $ 403,342 | |||
| Cash (outflow) inflow | (583,258 | ) | (1,564,313 | ) | 1,909,668 | (4,252,962 | ) | |||
| Cash, beginning of period | 6,479,876 | 6,859,012 | 3,986,950 | 9,547,661 | ||||||
| Cash, end of period | $ 5,896,618 | $ 5,294,699 | $ 5,896,618 | $ 5,294,699 | ||||||
| Non-cash transactions: | ||||||||||
| Issuance of shares in lieu of salaries and bonuses including prior period amounts accrued | $ – | $ – | $ – | $ 865,800 | ||||||
Joel Leetzow
President and CEO
[email protected]
403-219-2838
Sandra Weiler
CFO
[email protected]
403-219-2838
Andrew Stewart
Director, Marketing & Investor Relations
[email protected]
403-219-2838
