CALGARY, ALBERTA–(Marketwired – March 13, 2015) – Cortex Business Solutions Inc. (TSX VENTURE:CBX)(OTCQX:CTPNF), an enterprise e-Procurement solutions company, reported financial results for the fiscal second quarter ended January 31, 2015.
Operational Highlights:
- During Q2 F2015, five new buying organizations were sold in the quarter and two stopped receiving invoices.
- As of January 31, 2015 there were 78 active buying organizations on the Network, compared to 62 at January 31, 2014. 8 buying organization are in progress for implementation.
- Billable transactions:
- Increased 31% Q2 F2015 over Q2 F2014 (Q2 F2015 -1,423,818; Q2 F2014 – 1,082,982)
- Declined 3% Q2 F2015 over Q1 F2015 (Q2 F2015 -1,423,818; Q1 F2015 – 1,474,650)
- Active suppliers on the Cortex Network
- Increased 33% Q2 F2015 over Q2 F2014
- Increased 1% Q2 F2015 over Q1 F2015
- The Company is working on internal system integrations across the organization. This initiative will enhance productivity throughout the Company.
- Management continues to monitor the impact to transactional revenue, as oil prices remain 50% lower than one year ago and had adjusted its business strategy to accommodate this period of lower oil and gas activity.
- Cortex has accelerated development of its new product releases and looks forward to introducing Field Ticket Approver (“FTA”) in May, 2015. This will be followed by implementation of our three way match system capability later in 2015. These upgrades will add considerable functionality and revenue opportunity to our platform.
The Q2 F2015 financial highlights are:
- Total Revenue in Q2 F2015 was $2,823,082, an improvement of 42% over Q2 F2014 ($1,984,069). Access and usage fees grew 37% (Q2 F2015 – $2,506,230; Q2 F2014 – $1,829,303).
- Operational cash flow before working capital changes and employment termination expenses improved to $(597,490) in Q2 F2015 from $(708,223) in Q2 2014 and $(1,329,890) in Q1 2015.
- Cash gross profit1 improved to 61% in Q2 2015 from 49% in Q2 2014 demonstrating the leverage in our platform as we grow our supplier base.
- The working capital declined $640,179 from $7,087,153 at October 31, 2014 to $6,446,974 at January 31, 2015.
| Quarter ended January 31, 2015 summary financial information | |||||||||
| Q2 2015 | Q1 2015 | Q2 2014 | |||||||
| Revenue | $ | 2,823,082 | $ | 2,631,647 | $ | 1,984,069 | |||
| Cash gross profit (1) | $ | 1,712,819 | $ | 1,358,737 | $ | 804,741 | |||
| Cash used in operations (2) | $ | (597,490 | ) | $ | (1,329,890 | ) | $ | (708,223 | ) |
| Cash available | $ | 6,859,012 | $ | 8,623,308 | $ | 2,525,626 | |||
| (1) | Cash gross profit is Gross Profit net of amortization | ||
| (2) | Cash used in operations is Net cash flow used in operating activities before changes in non-cash working capital and before severance and employee termination costs |
Management Commentary
“Cortex is committed to maximizing the investment it has made in its Procurement to Payment platform” said Jim Barker, interim President and CEO. “The Company’s commercialization focus is increasingly directed toward product and market expansion, while exploring complimentary verticals that benefit from Cortex’s portfolio of products and services”. The second quarter was the tenth consecutive quarter of increased recurring access fees.
“Cortex had a challenging quarter with the sharp drop in oil prices impacting our customers and their future capital plans, combined with change in Cortex leadership. The management changes incurred some one-time costs in the quarter and additional costs have been incurred in the third quarter. With these one-time expenses behind us we are now focused on expanding our sales activity while focusing on improving our internal processes to reduce costs and expand our customer offering.
As we move through 2015, we will continue to develop new products to further enhance the Cortex Network experience. In fact Mobile Approval, originally schedule to be released during the fall of 2015, will be released in May 2015. This will be followed by our three way match product in Q1 F2016. These products are driven by customer demand and defined with market partners through our new Product Management process. Cortex expects this product to continue to expand the growth opportunities of the network.”
Conference Call
Cortex will hold a conference call Monday, March 16, 2015 at 11:00 a.m. Eastern time (9:00 a.m. Mountain time) to discuss its financial results for the second quarter ended January 31, 2015. The company’s Interim President and CEO, Jim Barker, and CFO, Sandra Weiler, will host the conference call, followed by a question and answer period.
Date: Monday, March 16, 2015
Time: 11:00 a.m. Eastern time (9:00 a.m. Mountain time)
Toll-free dial-in number: 1-800-355-4959
International dial-in number: 1-416-340-8527
Please call the conference telephone number ten minutes prior to the start time. An operator will register your name and organization.
A replay of the conference call will be available after the call through March 23, 2015 (23:59).
Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 2857539
About Cortex Business Solutions
Cortex Business Solutions Inc. (TSX VENTURE:CBX)(OTCQX:CTPNF) is an enterprise e-Procurement solutions company that improves efficiencies, reduces costs and streamlines procurement and supply chain processes for its customers. Accessing the Cortex Network enhances the exchange of business critical documents, such as purchase orders, receipts and invoices, resulting in improved cash flow management and business controls, while reducing day’s outstanding and administrative costs. Cortex is a low cost, low risk solution that can be implemented quickly by leveraging clients’ existing business environment. For more information, please visit www.cortex.net.
Forward-Looking Statements
Certain statements contained in this press release may constitute forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. In particular, this press release contains forward-looking statements pertaining to meaning revenue growth from e-billing solution and recurring revenue growth. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Cortex believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon by investors. With respect to forward-looking statements contained in this press release, Cortex has made assumptions regarding, among other things: Cortex’s continued success in gaining new customers in Canada and the United States, general economic and financial conditions, and other assumptions as set forth in the company’s annual filings. Cortex’s actual results could differ materially from those anticipated in these forward-looking statements as a result of risk factors that may include, but are not limited to: worse than expected general economic conditions in Canada and the United States, the inability of management to execute its business plan and manage growth successfully and the risk of slow service adoption. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Cortex’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
The forward-looking statements contained in this press release speak only as of the date of this press release and are expressly qualified, in their entirety, by this cautionary statement. Readers should not place undue reliance on forward-looking information. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements.
| Cortex Business Solutions Inc. | |||||||
| Condensed Consolidated Interim Statement of Financial Position | |||||||
| (Prepared in Canadian dollars) | |||||||
| (Unaudited) | |||||||
| January 31 | July 31 | ||||||
| 2015 | 2014 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash | $ | 6,859,012 | $ | 9,547,661 | |||
| Short-term investments | 60,000 | 60,000 | |||||
| Accounts receivable | 1,263,082 | 1,046,424 | |||||
| Prepaid expenses | 191,203 | 237,738 | |||||
| 8,373,297 | 10,891,823 | ||||||
| Deposits | 39,682 | 39,029 | |||||
| Property and equipment | 416,937 | 389,666 | |||||
| Intangible assets | 2,618,226 | 3,474,977 | |||||
| $ | 11,448,142 | $ | 14,795,495 | ||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 1,121,739 | $ | 2,057,348 | |||
| Current portion of deferred revenue | 280,991 | 128,061 | |||||
| Current portion of rebate provision | 550,532 | 523,592 | |||||
| 1,953,262 | 2,709,001 | ||||||
| Rebate provision | 743,429 | 754,395 | |||||
| 2,696,691 | 3,463,396 | ||||||
| Shareholders’ Equity | |||||||
| Share capital | 57,640,393 | 56,778,460 | |||||
| Accumulated other comprehensive income | 476,748 | (77,285 | ) | ||||
| Warrants | 980,941 | 980,941 | |||||
| Contributed surplus | 7,719,596 | 7,500,703 | |||||
| Deficit | (58,066,227 | ) | (53,850,720 | ) | |||
| 8,751,451 | 11,332,099 | ||||||
| $ | 11,448,142 | $ | 14,795,495 | ||||
| Cortex Business Solutions Inc. | |||||||||||||
| Condensed Consolidated Interim Statement of Loss and Comprehensive Loss | |||||||||||||
| For the three and six months ended January 31, 2015 and 2014 | |||||||||||||
| (Prepared in Canadian dollars) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended January 31 |
Six months ended January 31 |
||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Revenue | |||||||||||||
| Access and usage fees | $ | 2,506,230 | $ | 1,829,303 | $ | 4,936,458 | $ | 3,485,118 | |||||
| Integration fee and set-up fees | 149,993 | 149,191 | 292,569 | 283,958 | |||||||||
| Project management | 166,859 | 5,575 | 225,702 | 5,575 | |||||||||
| 2,823,082 | 1,984,069 | 5,454,729 | 3,774,651 | ||||||||||
| Cost of Sales | 1,541,545 | 1,294,233 | 3,245,331 | 2,356,957 | |||||||||
| Gross Profit | 1,281,537 | 689,836 | 2,209,398 | 1,417,694 | |||||||||
| Expenses | |||||||||||||
| Sales and marketing | 1,083,592 | 760,499 | 2,047,409 | 1,525,638 | |||||||||
| Research and development costs | 964,297 | 245,944 | 1,540,804 | 480,140 | |||||||||
| General and administrative | 1,253,361 | 865,630 | 2,583,693 | 2,056,220 | |||||||||
| Severance and employee termination costs | 263,625 | 263,625 | |||||||||||
| 3,564,875 | 1,872,073 | 6,435,531 | 4,061,998 | ||||||||||
| Loss before finance income | (2,283,338 | ) | (1,182,237 | ) | (4,226,133 | ) | (2,644,304 | ) | |||||
| Finance income (expense) | 2,229 | (7,753 | ) | 10,626 | (9,624 | ) | |||||||
| Net loss | $ | (2,281,109 | ) | $ | (1,189,990 | ) | $ | (4,215,507 | ) | $ | (2,653,928 | ) | |
| Other comprehensive earnings | |||||||||||||
| Items that may be reclassified subsequently to net loss: | |||||||||||||
| Foreign exchange gain on foreign operations | 315,462 | 101,380 | 554,033 | 101,380 | |||||||||
| Comprehensive loss | $ | (1,965,647 | ) | $ | (1,088,610 | ) | $ | (3,661,474 | ) | $ | (2,552,548 | ) | |
| Net loss per share-basic and diluted | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |
| Cortex Business Solutions Inc. | |||||||||||||||||||
| Condensed Consolidated Interim Statement of Changes in Shareholders’ Equity | |||||||||||||||||||
| (Prepared in Canadian dollars) | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Number of Common shares |
Common shares stated value |
Number of Warrants |
Warrants stated value |
Contributed surplus |
Accumulated Other Comprehensive Income |
Deficit | Total shareholders’ equity |
||||||||||||
| Balance – July 31, 2013 | 259,147,375 | $ | 47,713,288 | 22,379,000 | $ | 980,941 | $ | 6,492,492 | $ | – | $ | (47,963,620 | ) | $ | 7,223,101 | ||||
| Net loss | – | – | – | – | – | – | (2,653,930 | ) | (2,653,930 | ) | |||||||||
| Options exercised for cash | 65,852 | 13,480 | – | – | – | – | – | 13,480 | |||||||||||
| Transferred on exercise of options | – | 8,502 | – | – | (8,502 | ) | – | – | – | ||||||||||
| Issued in lieu of salaries and bonus | 2,484,200 | 397,472 | – | – | – | – | – | 397,472 | |||||||||||
| Issuance costs | – | (6,037 | ) | – | – | – | – | – | (6,037 | ) | |||||||||
| Stock-based compensation | – | – | – | – | 300,105 | – | – | 300,105 | |||||||||||
| Foreign exchange translation of foreign operations | – | – | – | – | – | 101,380 | – | 101,380 | |||||||||||
| Balance – January 31, 2014 | 261,697,427 | 48,126,705 | 22,379,000 | 980,941 | 6,784,095 | 101,380 | (50,617,550 | ) | 5,375,571 | ||||||||||
| Balance – July 31, 2014 | 361,697,427 | 56,778,460 | 22,379,000 | 980,941 | 7,500,703 | (77,285 | ) | (53,850,720 | ) | 11,332,099 | |||||||||
| Net loss | – | – | – | – | – | – | (4,215,507 | ) | (4,215,507 | ) | |||||||||
| Issued during the period | 9,620,000 | 865,800 | 865,800 | ||||||||||||||||
| Share issue costs | – | (3,867 | ) | – | – | – | – | – | (3,867 | ) | |||||||||
| Foreign exchange translation of foreign operations | – | – | – | – | – | 554,033 | – | 554,033 | |||||||||||
| Stock-based compensation | – | – | – | – | 218,893 | – | – | 218,893 | |||||||||||
| Balance – January 31, 2015 | 371,317,427 | $ | 57,640,393 | 22,379,000 | $ | 980,941 | $ | 7,719,596 | $ | 476,748 | $ | (58,066,227 | ) | $ | 8,751,451 | ||||
| Cortex Business Solutions Inc. | ||||||||||||||
| Condensed Consolidated Interim Statement of Cash Flows | ||||||||||||||
| For the three and six months ended January 31, 2015 and 2014 | ||||||||||||||
| (Prepared in Canadian dollars) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||
| January 31 | January 31 | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Cash provided by (used in) | ||||||||||||||
| Operating activities | ||||||||||||||
| Net loss | $ | (2,281,109 | ) | $ | (1,189,990 | ) | $ | (4,215,507 | ) | $ | (2,653,929 | ) | ||
| Items not affecting cash | ||||||||||||||
| Stock-based compensation | 80,908 | 148,837 | 218,893 | 300,105 | ||||||||||
| Amortization | 465,299 | 305,079 | 923,836 | 461,032 | ||||||||||
| Salaries paid in shares | 865,800 | 16,000 | 865,800 | 16,000 | ||||||||||
| Accretion on rebate provision | 7,987 | 11,851 | 15,974 | 23,702 | ||||||||||
| (861,115 | ) | (708,223 | ) | (2,191,004 | ) | (1,853,090 | ) | |||||||
| Changes in non-cash working capital | (1,288,626 | ) | (460,010 | ) | (963,533 | ) | (312,827 | ) | ||||||
| Net cash used in operating activities | (2,149,741 | ) | (1,168,233 | ) | (3,154,537 | ) | (2,165,917 | ) | ||||||
| Financing activities | ||||||||||||||
| Share issuance costs | (3,867 | ) | (3,282 | ) | (3,867 | ) | (6,037 | ) | ||||||
| Proceeds from exercise of stock options, net of costs | – | – | – | 13,480 | ||||||||||
| Net cash (used in) from financing activities | (3,867 | ) | (3,282 | ) | (3,867 | ) | 7,443 | |||||||
| Investing activities | ||||||||||||||
| Acquisition of property and equipment | (84,717 | ) | (2,666 | ) | (88,950 | ) | (5,325 | ) | ||||||
| Software and software development costs | (5,406 | ) | (226,654 | ) | (5,406 | ) | (577,732 | ) | ||||||
| Net cash used in investing activities | (90,123 | ) | (229,320 | ) | (94,356 | ) | (583,057 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents held in foreign currency | $ | 479,435 | $ | 88,091 | $ | 564,111 | $ | 88,091 | ||||||
| Cash (outflow) | (1,764,296 | ) | (1,312,744 | ) | (2,688,649 | ) | (2,653,440 | ) | ||||||
| Cash, beginning of period | 8,623,308 | 3,838,370 | 9,547,661 | 5,179,066 | ||||||||||
| Cash, end of period | $ | 6,859,012 | $ | 2,525,626 | $ | 6,859,012 | $ | 2,525,626 | ||||||
| Non-cash transactions: | ||||||||||||||
| Issuance of shares in lieu of salaries and bonuses including prior period amounts accrued | $ | 865,800 | $ | 16,000 | $ | 865,800 | $ | 16,000 | ||||||
Cortex Business Solutions Inc.
Jim Barker, Interim President and CEO
1-403-219-1503
jbarker@cortex.net
Cortex Business Solutions Inc.
Sandra Weiler, CFO
1-403-219-1500
sweiler@cortex.net
Cortex Business Solutions Inc.
Andrew Stewart, Director of Marketing
1-403-219-1532
astewart@cortex.net
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