CALGARY, ALBERTA–(Marketwired – March 14, 2017) – Cortex Business Solutions Inc. (TSX VENTURE:CBX)(OTC PINK:CTPNF), the online network helping companies connect and interact with each other to transmit documents and grow their businesses, today announces its three and six months ended January 31, 2017 (“Q2 F2017”) Management’s Discussion and Analysis and Condensed Interim Consolidated Financial Statements.
“We are excited to share the Q2 F2017 results today. With the restructuring and internal transformation behind us, the team continues to move forward with strong sales momentum with new and existing customers,” commented Joel Leetzow, President and CEO. “The sales organization was able to close six buyers in the quarter and to add to this momentum, our delivery organization was able to move one of these buyers through the integration process before the end of January allowing them to start transacting in the quarter.
In addition, there are lots of opportunities in our sales pipeline. We have more customers willing to work with Cortex on Case Studies to share their success stories. This has helped other buying organizations understand the benefits that can be achieved through increased automation levels, visibility into the monthly operational expenses and improved efficiencies.”
Q2 F2017 Highlights:
Cash Flow used in Operations
As the Company continues to improve its cost management and revenue the cash used in operations continues to improve.
Three months ended January 31, 2017 compared to January 31, 2016
- The cash used in operating activities improved to $108,755 compared to $400,319 during the three months ended January 31, 2016.
Six months ended January 31, 2017 compared to January 31, 2017
- The cash used in operating activities improved to $235,003 compared to $538,840 during the six months ended January 31, 2017 and 2016 respectively.
Revenue
The trending in revenue continues to show improvement as the oil and gas community starts to rebound as well as the investment into our sales organization starts to materialize into sales results.
Three months ended January 31, 2017 compared to January 31, 2016
- Total revenue improved 6% to $2,721,676 Q2 F2017 compared to Q2 F2016 of $2,558,573.
- Access and usage fees were down 2%:
- Access fees grew 2%,
- Usage fees declined 7%,
- Integration and set up fees were down 26%, and
- Project management fees were up 6130%.
- Billable transactions improved 3% while active suppliers decreased 10%.
Six months ended January 31, 2017 compared to January 31, 2017
- Total revenue was flat at $5,190,744 compared to $5,185,845 during the six months ended January 31, 2017 and 2016 respectively.
- Access and usage fees were down 5%:
- Access fees grew 4%,
- Usage fees declined 15%,
- Integration and set up fees were down 52%, and
- Project management fees were up 2010%.
- Billable transactions were down 5%.
Expenses
The cost controls for non-revenue generating activities continued into Q2 F2017. The maintenance of these costs did not limit the Company’s ability to deliver on sales and maintain customer satisfaction levels. The sales and marketing expenditures in the quarter grew in line with the size of the sales team and the resulting travel required to close six buyers in the quarter.
Three months ended January 31, 2017 compared to January 31, 2017
- Total expenses declined 9%.
- Cost of sales declined 45%
- Sales and marketing expenses increased 80%
- Research and development expenses declined 6%
- General and administrative expenses increased 18%
- Severance and employee termination costs declined 34%
Six months ended January 31, 2017 compared to January 31, 2017
- Total expenses declined 17% or $1,145,791.
- Cost of sales declined 43%
- Sales and marketing expenses increased 55%
- Research and development expenses declined 16%
- General and administrative expenses declined 3%
- Severance and employee termination costs declined 43%
“Q2 F2017 was a great follow up to Q1 F2017.” said Sandra Fawcett, CFO of Cortex. “The Company was able to improve its gross profit from 67% in Q1F2017 to 72% for Q2 F2017 ending at 69% for the six months ended January 31, 2017. As the Company continues to maintain its cost structure, the additional sales will continue to improve the gross profit.”
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, March 15, 2017 | |
| 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 March 22, 2017.
| Toll-free replay number: | 1-800-408-3053 | |
| Toll replay number: | 1-905-694-9451 | |
| Replay ID: | 1982971 |
About Cortex Business Solutions
Cortex Business Solutions Inc. (TSX VENTURE:CBX)(OTC PINK:CTPNF) 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)
(Unaudited)
| January 31 | July 31 | ||||||
| 2017 | 2016 | ||||||
| Assets | |||||||
| Current assets | |||||||
| Cash | $ | 5,364,124 | $ | 5,621,835 | |||
| Short-term investments | 60,000 | 60,000 | |||||
| Accounts receivable | 1,009,098 | 866,142 | |||||
| Prepaid expenses | 165,105 | 145,823 | |||||
| 6,598,327 | 6,693,800 | ||||||
| Long term receivables | 53,034 | – | |||||
| Deposits | 35,061 | 35,061 | |||||
| Property and equipment | 250,666 | 292,791 | |||||
| Intangible assets | 36,450 | 42,882 | |||||
| $ | 6,973,538 | $ | 7,064,534 | ||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 940,451 | $ | 1,086,380 | |||
| Deferred revenue | 36,787 | 46,854 | |||||
| Rebate provision | 298,452 | 294,145 | |||||
| Current tax provision | 78,358 | 59,647 | |||||
| 1,354,048 | 1,487,026 | ||||||
| Shareholders’ Equity | |||||||
| Share capital | 60,309,883 | 60,291,515 | |||||
| Accumulated other comprehensive income | 612,783 | 640,232 | |||||
| Contributed surplus | 9,467,183 | 9,126,948 | |||||
| Deficit | (64,770,359) | (64,481,187) | |||||
| 5,619,490 | 5,577,508 | ||||||
| $ | 6,973,538 | $ | 7,064,534 | ||||
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Loss and Comprehensive Loss
For the three and six months ended January 31, 2017 and 2016
(Prepared in Canadian dollars)
(unaudited)
| Three months ended January 31 | Six months ended January 31 | ||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||
| Revenue | |||||||||||||
| Access and usage fees | $ | 2,398,153 | $ | 2,443,975 | $ | 4,735,813 | $ | 4,960,268 | |||||
| Integration fees and set-up fees | 82,475 | 110,729 | 100,599 | 208,785 | |||||||||
| Project management fees | 241,048 | 3,869 | 354,332 | 16,792 | |||||||||
| 2,721,676 | 2,558,573 | 5,190,744 | 5,185,845 | ||||||||||
| Cost of Sales | 772,442 | 1,397,136 | 1,595,980 | 2,809,682 | |||||||||
| Gross Profit | 1,949,234 | 1,161,437 | 3,594,764 | 2,376,163 | |||||||||
| Expenses | |||||||||||||
| Sales and marketing | 584,152 | 324,954 | 1,044,061 | 673,588 | |||||||||
| Research and development costs | 462,159 | 489,545 | 902,690 | 1,075,248 | |||||||||
| General and administrative | 1,014,480 | 858,327 | 1,816,337 | 1,876,228 | |||||||||
| Severance and employee termination costs | 70,233 | 105,626 | 91,621 | 161,734 | |||||||||
| 2,131,024 | 1,778,452 | 3,854,709 | 3,786,798 | ||||||||||
| Loss before finance income | (181,790) | (617,015) | (259,945) | (1,410,635) | |||||||||
| Finance income (expense) | 429 | (1,959) | 438 | (4,495) | |||||||||
| Current tax expense | (15,024) | (282) | (29,665) | (13,261) | |||||||||
| Net loss | $ | (196,385) | $ | (619,256) | $ | (289,172) | $ | (1,428,391) | |||||
| Other comprehensive earnings | |||||||||||||
| Items that may be reclassified subsequently to net loss: | |||||||||||||
| Foreign exchange gain on foreign operations | (100,826) | 244,411 | (27,449) | 286,290 | |||||||||
| Comprehensive loss | $ | (297,211) | $ | (374,845) | $ | (316,621) | $ | (1,142,101) | |||||
| Net loss per share-basic and diluted | $ | (0.02) | $ | (0.07) | $ | (0.03) | $ | (0.16) | |||||
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 | – | – | – | – | – | – | (1,428,391) | (1,428,391) | ||||||||||||||
| Issued during the period | 1,551,375 | 3,102,750 | – | – | – | – | – | 3,102,750 | ||||||||||||||
| Issuance cost | – | (364,366) | – | – | – | – | – | (364,366) | ||||||||||||||
| Translation of foreign operations | – | – | – | – | – | 286,290 | – | 286,290 | ||||||||||||||
| Stock based compensation | – | – | – | – | 121,789 | – | – | 121,789 | ||||||||||||||
| Compensation units issued in conjunction with private placement | – | (101,222) | – | – | 101,222 | – | – | – | ||||||||||||||
| Balance – January 31, 2016 | 8,977,724 | $ | 60,277,555 | 447,580 | $ | 980,941 | $ | 8,071,570 | $ | 866,792 | $ | (63,204,909) | $ | 6,991,949 | ||||||||
| Balance – July 31, 2016 | 8,984,704 | 60,291,515 | – | – | 9,126,948 | 640,232 | (64,481,187) | 5,577,508 | ||||||||||||||
| Net loss | – | – | – | – | – | – | (289,172) | (289,172) | ||||||||||||||
| Compensation units exercised | 3,491 | 6,982 | – | – | – | 6,982 | ||||||||||||||||
| Compensation units contributed surplus | 11,386 | (11,386) | – | |||||||||||||||||||
| Translation of foreign operations | – | – | – | – | – | (27,449) | – | (27,449) | ||||||||||||||
| Stock based compensation | – | – | – | – | 151,621 | – | – | 151,621 | ||||||||||||||
| Deferred share units issued | – | – | – | – | 200,000 | – | – | 200,000 | ||||||||||||||
| Balance – January 31, 2017 | 8,988,195 | $ | 60,309,883 | – | $ | – | $ | 9,467,183 | $ | 612,783 | $ | (64,770,359) | $ | 5,619,490 | ||||||||
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three and six months ended January 31, 2017 and 2016
(Prepared in Canadian dollars)
(unaudited)
| For the three months ended January 31 | For the six months ended January 31 | |||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||
| Cash provided by (used in) | ||||||||||||||
| Operating activities | ||||||||||||||
| Net loss | $ | (196,385) | $ | (619,256) | $ | (289,172) | $ | (1,428,391) | ||||||
| Items not affecting cash | ||||||||||||||
| Stock-based compensation | 276,055 | 56,628 | 351,621 | 121,789 | ||||||||||
| Amortization | 25,030 | 460,298 | 49,885 | 920,598 | ||||||||||
| Long term receivables | (26,577) | – | (53,034) | – | ||||||||||
| Accretion on rebate provision | 2,154 | 4,799 | 4,307 | 9,629 | ||||||||||
| Loss on disposal of equipment | 1,012 | 2,811 | 1,012 | 2,811 | ||||||||||
| 81,289 | (94,720) | 64,619 | (373,564) | |||||||||||
| Changes in non-cash working capital | (190,044) | (305,599) | (299,622) | (165,276) | ||||||||||
| Net cash used in operating activities | (108,755) | (400,319) | (235,003) | (538,840) | ||||||||||
| Financing activities | ||||||||||||||
| Proceeds from issuance of shares | 3,102,750 | |||||||||||||
| Share issuance costs | – | – | – | (364,366) | ||||||||||
| Proceeds from exercise of compensation units | 6,982 | – | 6,982 | – | ||||||||||
| Net cash (used in) from financing activities | 6,982 | – | 6,982 | 2,738,384 | ||||||||||
| Investing activities | ||||||||||||||
| Acquisition of property and equipment | (2,340) | – | (2,340) | (1,189) | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents held in foreign currency | $ | (106,529) | $ | 249,244 | $ | (27,350) | $ | 294,571 | ||||||
| Cash (outflow) | (210,642) | (151,075) | (257,711) | 2,492,926 | ||||||||||
| Cash, beginning of period | 5,574,766 | 6,630,951 | 5,621,835 | 3,986,950 | ||||||||||
| Cash, end of period | $ | 5,364,124 | $ | 6,479,876 | $ | 5,364,124 | $ | 6,479,876 | ||||||
Joel Leetzow
President and CEO
[email protected]
403-219-2838
Sandra Fawcett (formerly Weiler)
CFO
[email protected]
403-219-2838
Andrew Stewart
Director, Marketing & Investor Relations
[email protected]
403-219-2838
