Cortex Business Solutions Announces Q1 and Fiscal 2019 Financial Results

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.

  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 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.
  2. 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
jleetzow@cortex.net  jbaird@cortex.net  
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  

 

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