Cortex Completes Strong Fiscal 2018 with Record Adjusted EBITDA(1) and cash flows from operations

CALGARY, Alberta, Oct. 23, 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 and twelve months ended July 31, 2018 (“Q4 F2018”) Management’s Discussion and Analysis (“MD&A”) and Consolidated Annual Financial Statements (“F/S”).  The MD&A and F/S are available at www.sedar.com.

“I believe these results are just the beginning of the momentum that we are building at Cortex.  Our team has delivered our strongest results yet in F2018 while remaining focused on helping our customers to deliver their own successful results and savings with our ever-expanding service.  With our most recent acquisition we are able to work with customers on many new levels by adding new product breadth and supply chain value.  I could not be more excited with the trajectory that Cortex is on and look forward to another year of growth and expansion” said Joel Leetzow, President and CEO.

“The strong financial results including revenue which increased organically year over year by 13% and record Adjusted EBITDA of $2.1 million for fiscal 2018 continue to show that Cortex is adding consistent value for its shareholders.” said Jason Baird, VP, Finance & CFO.

“Cortex completed a transformational fiscal year with the recent strategic acquisition of Powervision Software Inc. (“Powervision”) which is estimated to not only increases Cortex’s revenue, Adjusted EBITDA, margins and cash flows, but has also improved the solutions that Cortex can offer our customers as a network-as-a service”

Q4 F2018 and F2018 Financial Highlights

Three months ended July 31, 2018 compared to July 31, 2018

  • Adjusted EBITDA(1)  increased 136% or by $0.2 million to $0.4 million from $0.2 million
  • Cash flow from operating activities increased 32% or by $0.2 million to $0.7 million from $0.5 million
  • Overall revenue increased 5% or by $0.2 million to $3.1 million from $2.9 million
  • Access and usage fees increased 14% or by $0.4 million to $3.0 million from $2.6 million
  • Access fees increased 34% to $2.1 million from $1.6 million
  • Gross profit improved 3% or by $0.1 million to $2.2 million
  • Net income improved by $3.2 million to $3.1 million from a net loss of $0.1 million

Fiscal 2018 compared to Fiscal 2017

  • Adjusted EBITDA(1)  increased 282% or by $1.6 million to $2.2 million from $0.6 million
  • Cash flow from operating activities increased 281% or by $1.5 million to $2.0 million from $0.5 million
  • Overall revenue increased 13% or by $1.4 million to $12.5 million from $11.1 million
  • Access and usage fees increased 16% or by $1.6 million to $11.6 million from $10.0 million
  • Access fees increased 28% to $7.7 million from $6.0 million
  • Gross profit improved 17% or by $1.3 million to $9.2 million from $7.8 million
  • Net income improved by $4.7 million to $4.3 million from a net loss of $0.4 million

Cash Position

The overall cash position of Cortex improved 31% to $8.2 million at July 31, 2018, 2018 from $6.2 million at July 31, 2017 driven predominantly from an increase in net cash provided by operating activities mainly from higher access and usage fees and project management revenues.  The cash position of Cortex provided the flexibility to prudently use $4.7 million in 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.

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:Wednesday, October 24th, 2018
Time:10:00 a.m. Eastern time (8:00 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 October 31, 2018.

Toll-free replay number:1-800-408-3053
Toll replay number:1-905-694-9451
Replay ID:7332117#

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.netjbaird@cortex.net
403-219-2838403-219-2838


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 Statements of Financial Position
(Prepared in Canadian Dollars)

 July 31
2018
 July 31
2017
Assets   
    
Current Assets   
 Cash and cash equivalents$  8,197,785  $  6,248,176 
 Short-term investments   60,000     60,000 
 Accounts receivable   907,108     1,220,442 
 Prepaid expenses   167,822     180,710 
    
    9,332,715     7,709,328 
    
Long-term receivable   131,785     98,761 
Deposits   32,379     35,061 
Property and equipment   148,479     178,118 
Intangible assets   21,012     30,018 
Deferred tax assets   2,758,000     - 
    
 $  12,424,370  $  8,051,286 
    
Liabilities   
    
Current Liabilities   
 Accounts payable and accrued liabilities$  1,197,295  $  1,834,471 
 Deferred revenue   309,967     423,734 
 Current income tax payable   20,858     9,203 
 Current portion of obligations under finance lease   22,923     - 
    
    1,551,043     2,267,408 
    
Deferred rent   141,035     - 
Obligations under finance lease   13,801     - 
    
    1,705,879     2,267,408 
Shareholders' Equity   
    
Share capital   60,771,418     60,562,286 
Accumulated other comprehensive income   620,433     591,752 
Contributed surplus   9,881,276     9,526,341 
Deficit   (60,554,636)    (64,896,501)
    
    10,718,491     5,783,878 
    
 $  12,424,370  $  8,051,286 

Cortex Business Solutions Inc.
Consolidated Statement of Income (Loss) and Comprehensive Income (Loss)
For the years ended July 31, 2018 and 2017
(Prepared in Canadian Dollars) 

 Years ended
July 31
 
  2018   2017 
Revenue     
 Access and usage fees$  11,562,518  $  9,964,212 
 Integration fees   240,227     268,579 
 Project management and other revenue   651,035     826,501 
      
    12,453,780     11,059,292 
      
Cost of Sales   3,287,242     3,217,622 
      
Gross Profit    9,166,538     7,841,670 
      
Expenses     
 Sales and marketing   2,248,966     2,382,665 
 Research and development   1,900,089     1,869,596 
 General and administrative   3,276,424     3,676,862 
 Severance and termination   184,911     138,897 
 Onerous contract   -     217,638 
      
    7,610,390     8,285,658 
      
Income (loss) before finance income   1,556,148     (443,988)
      
Finance income   36,481     6,546 
    
Income tax (expense) recovery - current   (8,764)    22,128 
Income tax recovery - deferred   2,758,000     - 
      
Net income (loss)$  4,341,865  $   (415,314)
      
Other comprehensive income     
 Items that may be reclassified subsequently to net income (loss):    
      
 Foreign exchange gain (loss) on foreign operations   28,681     (48,480)
      
Comprehensive income (loss)$  4,370,546  $  (463,794)
      
  Basic Diluted   BasicDiluted 
Net income (loss) per share$0.48$0.47  $(0.05)$(0.05)


Cortex Business Solutions Inc.
Consolidated Statement of Changes in Shareholders’ Equity
(Prepared in Canadian Dollars)

               

 Number of Common SharesShare CapitalAccumulated Other Comprehensive IncomeContributed SurplusDeficitTotal Shareholders’ Equity
       
Balance – July 31, 2016  8,984,704$  60,291,515$  640,232 $  9,126,948 $  (64,481,187)$  5,577,508 
       
Net loss  -   -   -    -    (415,314)   (415,314)
Translation of foreign operations  -   -   (48,480)   -    -    (48,480)
Compensation units & stock options exercised  85,279   270,771   -    (100,480)   -    170,291 
Deferred share units issued  -   -   -    200,000    -    200,000 
Stock based compensation  -   -   -    299,873    -    299,873 
       
Balance – July 31, 2017  9,069,983$ 60,562,286$  591,752 $  9,526,341 $ (64,896,501)$  5,783,878 
       
Net income  -   -   -    -    4,341,865    4,341,570 
Translation of foreign operations  -   -   28,681    -    -    28,681 
Compensation units & stock options exercised  27,163   89,132   -    (31,051)   -    58,081 
Deferred share units exercised for shares  40,554   120,000   -    (120,000)   -    - 
Deferred share units issued      200,000     200,000 
Stock based compensation  -   -   -    305,986    -    305,986 
       
Balance – July 31, 2018  9,137,700$  60,771,418$  620,433 $  9,881,276 $ (60,554,636)$  10,718,491 


Cortex Business Solutions Inc.
Consolidated Statement of Cash Flows
For the years ended July 31, 2018 and 2017
(Prepared in Canadian Dollars) 

 Years ended
July 31
  2018   2017 
    
Cash provided by (used in)   
    
Operating activities   
Net income (loss)$  4,341,865  $  (415,314)
Items not affecting cash   
 Recovery for deferred taxes   (2,758,000)    - 
 Stock-based compensation   505,986     499,873 
 Amortization   183,624     139,051 
 Deferred Rent   141,035     - 
 Accretion on rebate provision   -     7,896 
 Loss on disposal of equipment   868     1,096 
Long term receivables   (33,024)    (98,761)
Rebate Payment     (302,041)
Changes in non-cash working capital   (410,384)    685,343 
    
Net cash provided by operating activities   1,971,970     517,143 
    
Financing activities   
Proceeds on exercise of compensation units & stock options    58,081     170,291 
Finance lease payments   (30,081)    - 
    
Net cash provided by financing activities   28,000     170,291 
    
Investing Activities   
Acquisition of property and equipment   (79,043)    (12,610)
    
Net cash used in investing activities   (79,043)    (12,610)
    
Effect of exchange rate changes on cash and cash equivalents
  held in foreign currency
 28,682    (48,483)
    
Cash inflow   1,949,609     626,341 
    
Cash, beginning of year   6,248,176     5,621,835 
    
Cash, end of year$  8,197,785  $ 6,248,176