Cortex Completes First Quarter After Significant Powervision Acquisition
CALGARY, Alberta, Dec. 04, 2018 (GLOBE NEWSWIRE) — Cortex Business Solutions Inc. (“Cortex”) (TSXV: CBX), a North American network-as-a-service complete document management & e-invoicing solutions provider, today announces its three months ended October 31, 2018 (“Q1 F2019”) Management’s Discussion and Analysis (“MD&A”) and Condensed Consolidated Interim Financial Statements (“F/S”). The MD&A and F/S are available at www.sedar.com.
“With our first months now behind us after the Powervision acquisition, we are already starting to see the synergies that we had expected from combining the two companies. We have made two new sales of the complete Cortex platform since the acquisition and our pipeline for the combined solution is growing rapidly,” said Joel Leetzow, President and CEO.
“As the Company’s key performance indicators including revenue and Adjusted EBITDA benefit from the Powervision acquisition and our new Intelligent Invoice Approval product release, we also had approximately $0.3 million of non-recurring expenses associated with the acquisition in this quarter. The second quarter F2019 will include full quarter consolidated results of Powervision and we look forward to Adjusted EBITDA growth as we complete new sales and new economies of scale,” said Jason Baird, VP, Finance & CFO.
Q1 F2019 Financial Highlights
Three months ended October 31, 2018 compared to October 31, 2017
- Adjusted EBITDA(1) increased 29% or by $0.2 million from $0.5 million to $0.7 million
- Adjusted EBITDA % Margin(2) increased by 3% from 16% to 19%
- Cash flow from operating activities increased 52% from $0.3 million to $0.5 million
- Overall revenue increased 3% or by $0.1 million from $3.2 million to $3.3 million
- Access and usage fees increased 16% or by $0.5 million from $2.8 million to $3.3 million
- Gross profit remained flat at $2.4 million
Cash Position
The overall cash position of Cortex reduced 51% or $4.2 million from $8.2 million at July 31, 2018, to $4.0 million at October 31, 2018. Net cash provided by operating activities of $0.5 million, in conjunction with the cash position at F2018 provided the flexibility to prudently use $4.8 million for the acquisition of Powervision in September 2018.
- 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 MD&A for the quarter and year ended July 31, 2018 for further information on the Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to Net Income.
- Adjusted EBITDA % Margin is the Adjusted EBITDA divided by Total revenue.
Cortex’s Management will host a conference call, followed by a question and answer period.
The details of the conference call are as follows:
| Date: | Thursday, December 6th, 2018 |
| Time: | 11:00 a.m. Eastern time (9:00 a.m. Mountain time) |
| Toll-free dial-in number: | 1-800-273-9672 |
| 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 at 403-219-2838.
A replay of the conference call will be available after the call through December 13, 2018.
| Toll-free replay number: | 1-800-408-3053 |
| Toll replay number: | 1-905-694-9451 |
| Replay ID: | 1503476# |
About Cortex
Cortex is a service-centric, digital transformation solutions provider focused on revolutionizing B2B document exchange. We help businesses save time and money by replacing traditional paper-based manual systems with AP and AR invoice automation. Companies on the Cortex Network are positioned for success with solutions that offer the scalability and flexibility needed to evolve with their unique business needs. Cortex specializes in the development and delivery of integrated electronic document intake and management solutions using flexible connection methods that leverage existing technologies and processes.
Cortex is currently enabling digital transformation in over 11,000 companies in the Oil & Gas, Mining, Manufacturing and Sports & Entertainment industries. For more information, please visit www.cortex.net.
Investor Relations Contacts:
| Joel Leetzow | Jason Baird |
| President and CEO | VP, Finance & CFO |
| [email protected] | [email protected] |
| 403-219-2838 | 403-219-2838 |
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cortex Business Solutions Inc.
Consolidated Statement of Financial Position
(Prepared in Canadian Dollars)
(Unaudited)
| October 31 2018 |
July 31 2018 |
|||||||||||
| Assets | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 4,026,861 | $ | 8,197,785 | ||||||||
| Cash held in escrow for acquisitions | 500,000 | – | ||||||||||
| Short-term investments | 60,773 | 60,000 | ||||||||||
| Accounts receivable | 1,178,127 | 907,108 | ||||||||||
| Prepaid expenses | 180,148 | 167,822 | ||||||||||
| 5,945,909 | 9,332,715 | |||||||||||
| Long-term receivable | 109,822 | 131,785 | ||||||||||
| Deposits | 32,379 | 32,379 | ||||||||||
| Contracts assets | 66,179 | – | ||||||||||
| Property and equipment | 163,898 | 148,479 | ||||||||||
| Deferred tax assets | 2,661,919 | 2,758,000 | ||||||||||
| Intangible assets | 3,252,888 | 21,012 | ||||||||||
| Goodwill | 4,481,329 | – | ||||||||||
| $ | 16,814,323 | $ | 12,424,370 | |||||||||
| Liabilities | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued liabilities | $ | 1,916,813 | $ | 1,197,295 | ||||||||
| Deferred revenue | 470,535 | 309,967 | ||||||||||
| Current income tax payable | 23,458 | 20,858 | ||||||||||
| Current portion of obligations under finance lease | 22,923 | 22,923 | ||||||||||
| Current portion of promissory note | 1,528,290 | – | ||||||||||
| 3,962,019 | 1,551,043 | |||||||||||
| Deferred rent | 131,624 | 141,035 | ||||||||||
| Obligations under finance lease | 8,079 | 13,801 | ||||||||||
| Promissory note | 745,479 | – | ||||||||||
| 4,847,201 | 1,705,879 | |||||||||||
| Shareholders’ Equity |
|
|||||||||||
| Share capital | 60,771,418 | 60,771,418 | ||||||||||
| Accumulated other comprehensive income | 632,675 | 620,433 | ||||||||||
| Contributed surplus | 9,933,317 | 9,881,276 | ||||||||||
| Deficit | (59,370,288 | ) | (60,554,636 | ) | ||||||||
| 11,967,122 | 10,718,491 | |||||||||||
| $ | 16,814,323 | $ | 12,424,370 | |||||||||
Cortex Business Solutions Inc.
Consolidated Statement of Income and Comprehensive Income
For the three months ended October 31, 2018 and 2017
(Prepared in Canadian Dollars)
(Unaudited)
| Three months ended October 31 |
||||||||||
| 2018 | 2017 | |||||||||
| Revenue | ||||||||||
| Access and usage fees | $ | 3,261,753 | $ | 2,809,912 | ||||||
| Integration fees | 30,111 | 86,561 | ||||||||
| Project management and other revenue | 43,668 | 338,200 | ||||||||
| 3,335,532 | 3,234,673 | |||||||||
| Cost of Sales | 925,357 | 832,300 | ||||||||
| Gross Profit | 2,410,175 | 2,402,373 | ||||||||
| Expenses | ||||||||||
| Sales and marketing | 663,631 | 689,969 | ||||||||
| Research and development | 529,640 | 477,587 | ||||||||
| General and administrative | 940,807 | 797,419 | ||||||||
| Severance and termination | – | 155,922 | ||||||||
| 2,134,078 | 2,120,897 | |||||||||
| Income before finance income | 276,097 | 281,476 | ||||||||
| Finance income | 21,873 | 7,096 | ||||||||
| Income tax expense – current | 2,379 | 2,108 | ||||||||
| Income tax (recovery) – deferred | (814,629 | ) | – | |||||||
| Net income | $ | 1,110,220 | $ | 286,464 | ||||||
| Other comprehensive earnings | ||||||||||
| Items that may be reclassified subsequently to net income: | ||||||||||
| Foreign exchange gain on foreign operations | 12,242 | 13,936 | ||||||||
| Comprehensive income | $ | 1,122,462 | $ | 300,400 | ||||||
| Net income per share – basic and diluted | $ | 0.12 | $ | 0.03 | ||||||
Cortex Business Solutions Inc.
Consolidated 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, 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 | ||||||
| Balance – July 31, 2018 | 9,137,700 | 60,771,418 | 620,433 | 9,881,276 | (60,554,636 | ) | 10,718,491 | ||||||
| IFRS 15 net opening adjustment | – | – | – | – | 74,128 | 74,128 | |||||||
| Balance – August 1, 2018 | 9,137,700 | 60,771,418 | 620,433 | 9,881,276 | (60,480,508 | ) | 10,792,619 | ||||||
| Net income | – | – | – | – | 1,110,220 | 1,110,220 | |||||||
| Translation of foreign operations | – | – | 12,242 | – | – | 12,242 | |||||||
| Stock based compensation | – | – | – | 52,041 | – | 52,041 | |||||||
| Balance – October 31, 2018 | 9,137,700 | 60,771,418 | 632,675 | 9,933,317 | (59,370,288 | ) | 11,967,122 | ||||||
Cortex Business Solutions Inc.
Consolidated Statement of Cash Flows
For the three months ended October 31, 2018 and 2017
(Prepared in Canadian Dollars)
(Unaudited)
| Three months ended October 31 |
|||||||||||
| 2018 | 2017 | ||||||||||
| Cash provided by (used in) | |||||||||||
| Operating activities | |||||||||||
| Net income | $ | 1,110,220 | $ | 286,464 | |||||||
| Items not affecting cash | |||||||||||
| Recovery for deferred taxes | (814,629 | ) | – | ||||||||
| Stock-based compensation | 52,041 | 65,947 | |||||||||
| Amortization | 55,812 | 150,294 | |||||||||
| Deferred Rent | (9,411 | ) | 79,923 | ||||||||
| Contract Assets | 7,949 | – | |||||||||
| Long term receivables | 21,963 | (25,974 | ) | ||||||||
| Changes in non-cash working capital | 53,631 | (242,791 | ) | ||||||||
| Net cash provided by operating activities | 477,576 | 313,863 | |||||||||
| Financing activities | |||||||||||
| Proceeds on exercise of compensation units & stock options | – | 46,250 | |||||||||
| Finance lease payments | (5,722 | ) | (12,993 | ) | |||||||
| Net cash provided by (used in) financing activities | (5,722 | ) | 33,257 | ||||||||
| Investing Activities | |||||||||||
| Cash paid on Powervision acquisition, net of cash assumed | (4,124,141 | ) | – | ||||||||
| Additions to cash held in escrow | (500,000 | ) | – | ||||||||
| Additions to short-term investments | (773 | ) | – | ||||||||
| Acquisition of property and equipment | (30,106 | ) | (16,231 | ) | |||||||
| Net cash used in investing activities | (4,655,020 | ) | (16,231 | ) | |||||||
| Effect of exchange rate changes on cash and cash equivalents held in foreign currency | 12,242 |
13,933 |
|||||||||
| Cash (outflow) inflow | (4,170,924 | ) | 344,822 | ||||||||
| Cash, beginning of year | 8,197,785 | 6,248,176 | |||||||||
| Cash, end of year | $ | 4,026,861 | $ | 6,592,998 | |||||||
| Supplemental cash flow information | |||||||||||
| Interest received during the year | $ | 22,610 | $ | 14,442 | |||||||
