CALGARY, ALBERTA–(Marketwired – Dec. 6, 2016) – Cortex Business Solutions Inc. (TSX VENTURE:CBX), the online network helping companies connect and interact with each other to transmit documents and grow their businesses, today announces its three months ended October 31, 2016 (“Q1 F2017”) Management’s Discussion and Analysis and Condensed Interim Consolidated Financial Statements.
“As we share Q1 F2017 results today, I continue to be encouraged by the progress that we have made as an organization in the past year. My confidence in this Cortex Management Team to now deliver on our growth and financial strategy has never been stronger,” commented Joel Leetzow, President and CEO. “With the restructuring and internal transformation of Cortex now being mostly complete, F2017 is going to be a year of increased sales momentum with new customers and a continued focus on increasing our value to our current customers.
“Q1 results for F2017 provide further proof that our goal of profitability is within reach this fiscal year. These Q1 results were achieved despite an increase in sales and marketing expenses during the quarter. Although there were no new buyers signed in Q1 F2017, the business coming from within our current customer base was strong and the results can be seen with our 777% improvement in professional services revenue quarter over quarter.”
Q1 F2017 Highlights:
Cash Flow from Operations
- Net cash used in operating activities improved 9% to $126,248.
Revenue
- Total revenue was down 6%,
- Access and usage fees were down 7%:
- Access fees grew 6%,
- Usage fees declined 22%,
- Integration and set up fees were down 82%, and
- Project management fees were up 777%.
Expenses
- Total expenses were down 26%,
- Cost of sales were down 42%,
- Sales and marketing was up 32%,
- Research and development costs were down 25%,
- General and administrative costs were down 21%, and
- Severance and termination charges were down 62%.
“Q1 F2017 marked a great start to the 2017 fiscal year,” said Sandra Fawcett, CFO of Cortex. With the cost realignment behind us, the focus has moved towards generating new sales while maintaining the strict cost structure. The pipeline for sales was strong in Q1 F2017, however, no net new buyers contracts closed in the quarter. It was expected given the ongoing development of the sales team. Confidence remains in the ability to close additional buyers in the upcoming six months.”
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, December 7, 2016
Time: 10:00 a.m. Eastern time (8:00 a.m. Mountain time)
Toll-free dial-in number: 1-866-225-0198
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 December 14, 2016.
Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 6178544
About Cortex Business Solutions
Cortex Business Solutions Inc. (TSX VENTURE:CBX) is a business-to-business network that enables electronic invoicing for buying and supplying 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 Statements of Financial Position
(Prepared in Canadian dollars)
| October 31 | July 31 | ||||
| 2016 | 2016 | ||||
| Assets | |||||
| Current assets | |||||
| Cash | $ | 5,574,766 | $ | 5,621,835 | |
| Short-term investments | 60,000 | 60,000 | |||
| Accounts receivable | 854,150 | 866,142 | |||
| Prepaid expenses | 225,897 | 145,823 | |||
| 6,714,813 | 6,693,800 | ||||
| Long term receivables | 26,457 | – | |||
| Deposits | 35,061 | 35,061 | |||
| Property and equipment | 271,152 | 292,791 | |||
| Intangible assets | 39,666 | 42,882 | |||
| $ | 7,087,149 | $ | 7,064,534 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | $ | 1,041,920 | $ | 1,086,380 | |
| Deferred revenue | 49,818 | 46,854 | |||
| Rebate provision | 296,298 | 294,145 | |||
| Current tax provision | 65,449 | 59,647 | |||
| 1,453,485 | 1,487,026 | ||||
| Shareholders’ Equity | |||||
| Share capital | 60,291,515 | 60,291,515 | |||
| Accumulated other comprehensive income | 713,609 | 640,232 | |||
| Contributed surplus | 9,202,514 | 9,126,948 | |||
| Deficit | (64,573,974) | (64,481,187) | |||
| 5,633,664 | 5,577,508 | ||||
| $ | 7,087,149 | $ | 7,064,534 | ||
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Loss and Comprehensive Loss
For the three months ended October 31, 2016 and 2015
(Prepared in Canadian dollars)
| Three months ended October 31 | |||||
| 2016 | 2015 | ||||
| Revenue | |||||
| Access and usage fees | $ | 2,337,660 | $ | 2,516,293 | |
| Integration fee and set-up fees | 18,124 | 98,056 | |||
| Project management and other revenue | 113,284 | 12,923 | |||
| 2,469,068 | 2,627,272 | ||||
| Cost of Sales | 823,538 | 1,412,546 | |||
| Gross Profit | 1,645,530 | 1,214,726 | |||
| Expenses | |||||
| Sales and marketing | 459,909 | 348,634 | |||
| Research and development | 440,531 | 585,703 | |||
| General and administrative | 801,857 | 1,017,901 | |||
| Severance and termination charges | 21,388 | 56,108 | |||
| 1,723,685 | 2,008,346 | ||||
| Loss before finance expense and income taxes | (78,155) | (793,620) | |||
| Finance income (expense) | 9 | (2,536) | |||
| Income tax expense | (14,641) | (12,979) | |||
| Net loss | $ | (92,787) | $ | (809,135) | |
| Other comprehensive earnings | |||||
| Items that may be reclassified subsequently to net loss: | |||||
| Foreign exchange gain on foreign operations | 73,377 | 41,879 | |||
| Comprehensive loss | $ | (19,410) | $ | (767,256) | |
| Net loss per share – basic and diluted | $ | (0.01) | $ | (0.10) | |
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 | – | – | – | – | – | – | (809,135) | (809,135) | ||||||
| Issued during the period | 1,551,375 | 3,102,750 | – | – | – | – | – | 3,102,750 | ||||||
| Issuance cost | – | (364,366) | – | – | – | – | – | (364,366) | ||||||
| Translation of foreign operations | – | – | – | – | – | 41,879 | – | 41,879 | ||||||
| Stock based compensation | – | – | – | – | 65,161 | – | – | 65,161 | ||||||
| Compensation units issued in conjunction with private placement | – | (101,222) | – | – | 101,222 | – | – | – | ||||||
| Balance – October 31, 2015 | 8,977,724 | 60,277,555 | 447,580 | 980,941 | 8,014,942 | 622,381 | (62,585,653) | 7,310,166 | ||||||
| Balance – July 31, 2016 | 8,984,704 | 60,291,515 | – | – | 9,126,948 | 640,232 | (64,481,187) | 5,577,508 | ||||||
| Net loss | – | – | – | – | – | – | (92,787) | (92,787) | ||||||
| Translation of foreign operations | – | – | – | – | – | 73,377 | – | 73,377 | ||||||
| Stock based compensation | – | – | – | – | 75,566 | – | – | 75,566 | ||||||
| Balance – October 31, 2016 | 8,984,704 | $ | 60,291,515 | – | $ | – | $ | 9,202,514 | $ | 713,609 | $ | (64,573,974) | $ | 5,633,664 |
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three months ended October 31, 2016 and 2015
(Prepared in Canadian dollars)
(unaudited)
| For the three months ended October 31 | |||||
| 2016 | 2015 | ||||
| Cash provided by (used in) | |||||
| Operating activities | |||||
| Net loss | $ | (92,787) | $ | (809,135) | |
| Items not affecting cash | |||||
| Stock-based compensation | 75,566 | 65,161 | |||
| Amortization | 24,855 | 460,300 | |||
| Accretion on rebate provision | 2,153 | 4,830 | |||
| 9,787 | (278,844) | ||||
| Changes in non-cash working capital | (136,035) | 140,323 | |||
| Net cash used in operating activities | (126,248) | (138,521) | |||
| Financing activity | |||||
| Proceeds from issuance of shares | – | 3,102,750 | |||
| Share issuance costs | – | (364,366) | |||
| Net cash provided by financing activities | – | 2,738,384 | |||
| Investing activities | |||||
| Acquisition of property and equipment | – | (1,189) | |||
| Net cash used in investing activities | – | (1,189) | |||
| Effect of exchange rate changes on cash and cash equivalents held in foreign currency | 79,179 | 45,327 | |||
| Cash (outflow) inflow | (47,069) | 2,644,001 | |||
| Cash, beginning of period | 5,621,835 | 3,986,950 | |||
| Cash, end of period | $ | 5,574,766 | $ | 6,630,951 | |
Joel Leetzow
President and CEO
jleetzow@cortex.net
403-219-2838
Sandra Fawcett (formerly Weiler)
CFO
sfawcett@cortex.net
403-219-2838
Andrew Stewart
Director, Marketing & Investor Relations
astewart@cortex.net
403-219-2838