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 LeetzowJason Baird 
President and CEOVP, 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 CapitalAccumulated Other
Comprehensive
Income
Contributed
Surplus
DeficitTotal
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