Cortex Business Solutions Inc.
TSX VENTURE : CBX
OTC PINK : CTPNF

Cortex Business Solutions Inc.

June 09, 2016 21:26 ET

CORRECTION FROM SOURCE: Cortex Business Solutions Announces Third Quarter 2016 Financial Results

CALGARY, ALBERTA--(Marketwired - June 9, 2016) - A correction from source is being issued with respect to the Cortex Business Solutions Inc. release that was issued June 09, 2016 at 17:58 ET. The time and Toll-free dial-in number for the conference call were incorrect. The complete and corrected release follows.

Cortex Business Solutions Inc. (TSX VENTURE:CBX), an online business-to-business network as a service, that helps companies reduce invoice processing times by connecting and interacting with each other, today announces the results for the three and nine months ended April 30, 2016.

Sandra Weiler, CFO of Cortex Business Solutions commented "Cutting costs is difficult for any company, but it is considerably more difficult to exhibit the discipline needed to maintain cost reductions without negatively impacting the company's overall performance. Cortex has shown over the past 12 months a willingness to reduce costs and improve adjusted EBITDA, while improving other areas of the business, which has moved us closer to profitability than ever before."

"The Company continues the financial discipline required to drive costs to appropriate levels while remaining focused on investing in strategic priorities to enable long-term growth" commented Joel Leetzow, President and CEO of Cortex Business Solutions, "our strategy remains expanding further into other verticals to minimize the fluctuations in commodities pricing. As well, we are recommitting to our growth strategies in the United States by hiring a Texas based VP of Sales giving us boots on the ground in our targeted geographical area".

Three months ending April 30, 2016;

  • Adjusted EBITDA of $(80)K, an improvement of 93% over same quarter last year.
  • Net cash used in operating activities of $206K, an improvement of 85% over same quarter last year.
  • Revenue of $2.4M, down 9% over same quarter last year.
  • Access fees up 14% to $1.4M
  • Usage fees down 30% to $0.85M
  • Gross profit, net of amortization improved to 63%
  • Three new buying organizations signed in the quarter for an estimated $200K in annualized revenue. Internal efficiencies are continuing to be improved with the re-architecture of our CRM and various other initiatives to improve data management and increase productivity.
  • We are in the process of moving the production environment to a managed service agreement. This will provide Cortex with the following benefits:
    • Eliminate the expenditure spikes in purchasing our own equipment
    • Re-purpose the existing production equipment in our corporate infrastructure further reducing capital expenditures
    • Reduce the amount spent on maintenance contracts
    • Enhance our disaster recovery and back-up options
    • The ability to add capacity at an accelerated rate

Nine months ended April 30, 2016;

  • Adjusted EBITDA of $(448)K, an improvement of 89% over same period last year.
  • Net cash used in operating activities of $744K, an improvement of 83% over same period last year.
  • Revenue of $7.6M, down 6% over same period last year.
  • Access fees up 22% to $4.1M
  • Usage fees down 23% to $3.1M
  • Gross profit, net of amortization improved to 63%
Operational results:
Fiscal 2016 Fiscal 2015
Q3 Q2 Q1 Q4 Q3
# % Change # % Change # % Change # % Change # % Change
Buyer
Integrations
Completed
91 1 % 90 5 % 86 Nil
86

2
%
84

8
%
In progress 5 5 8 7 3
Total 96 1 % 95 1 % 94 1 % 93 7 % 87 1 %
Billable Transactions 982,990 (13 %) 1,127,303 (6 %) 1,196,362 3 % 1,166,258 (5 %) 1,221,999 (17 %)
Total
Documents exchanged
2,540,249 (13 %) 2,936,158 (6 %) 3,109,103 2 % 3,054,263 (9 %) 3,355,769 (14 %)
Active Suppliers 8,622 (4 %) 8,960 (1 %) 9,038 0.5 % 8,997 1 % 8,890 2 %

Conference Call

Cortex management will host a conference call, followed by a question and answer period.

The details of the conference call are as follows:

Date: Friday, June 10, 2016
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 June 17, 2016.

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 2668375

About Cortex Business Solutions

Cortex Business Solutions Inc. (TSX VENTURE:CBX) is a business-to-business network that enables electronic invoicing for buying and suppling 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 Statement of Financial Position
(Prepared in Canadian dollars)
(unaudited)
April 30 July 31
2016 2015
Assets
Current assets
Cash $ 5,896,618 $ 3,986,950
Short-term investments 60,000 60,000
Accounts receivable 730,851 868,452
Prepaid expenses and deposits 175,261 154,861
6,862,730 5,070,263
Deposits 35,061 35,061
Property and equipment 322,125 413,961
Intangible assets 473,119 1,763,804
$ 7,693,035 $ 7,283,089
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 695,192 $ 948,311
Deferred revenue 59,944 230,989
Current portion of rebate provision 496,426 695,207
Income tax payable 44,177 57,148
1,295,739 1,931,655
Rebate provision 287,212 77,557
1,582,951 2,009,212
Shareholders' Equity
Share capital 60,277,555 57,640,393
Accumulated other comprehensive income 510,288 580,502
Warrants - 980,941
Contributed surplus 9,092,131 7,848,559
Deficit (63,769,890 ) (61,776,518 )
6,110,084 5,273,877
$ 7,693,035 $ 7,283,089
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Loss and Comprehensive Loss
For the three and nine months ended April 30, 2016 and 2015
(Prepared in Canadian dollars)
(unaudited)
Three months ended April 30 Nine months ended April 30
2016 2015 2016 2015
Revenue
Access and usage fees $ 2,263,485 $ 2,452,310 $ 7,223,753 $ 7,388,768
Integration fee and set-up fees 127,025 167,025 335,810 459,594
Project management 12,804 21,562 29,596 247,264
2,403,314 2,640,897 7,589,159 8,095,626
Cost of Sales 1,319,152 1,381,534 4,128,834 4,626,865
Gross Profit 1,084,162 1,259,363 3,460,325 3,468,761
Expenses
Sales and marketing 336,405 845,865 1,009,993 2,893,274
Research and development costs 434,426 795,750 1,509,674 2,336,554
General and administrative 846,457 1,070,314 2,722,685 3,654,007
Severance and employee termination costs 46,862 216,600 208,596 480,225
1,664,150 2,928,529 5,450,948 9,364,060
Loss before finance income (579,988 ) (1,669,166 ) (1,990,623 ) (5,895,299 )
Finance (expense) income 702 (5,054 ) (3,793 ) 5,572
Current tax recovery 14,305 - 1,044 -
Net loss $ (564,981 ) $ (1,674,220 ) $ (1,993,372 ) $ (5,889,727 )
Other comprehensive earnings:
Items that may be reclassified subsequently to net loss
Foreign exchange (loss) gain on foreign operations (216,076 ) (169,766 ) (70,214 ) 384,267
Comprehensive loss $ (781,057 ) $ (1,843,986 ) $ (2,063,586 ) $ (5,505,460 )
Net loss per share-basic and diluted
$ (0.06
)
$ (0.23
)
$ (0.23
)
$ (0.80
)
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity
(Prepared in Canadian dollars)
(unaudited)

Number of Common shares
Common shares value Number of Warrants Warrants value Contributed surplus Accumulated Other Comprehensive Income Deficit Total shareholders' equity
Balance - July 31, 2014 7,233,949 $56,778,460 447,580 $980,941 $7,500,703 $(77,285 ) $(53,850,720 ) $ 11,332,099
Net loss - - - - - - (5,889,727 ) (5,889,727 )
Issued during the period 192,400 865,800 - - - - - 865,800
Share issue costs - (3,867 ) - - - - - (3,867 )
Foreign exchange translation of foreign operations - - - - - 384,267 - 384,267
Stock-based compensation - - - - 284,632 - - 284,632
Balance - April 30, 2015 7,426,349 57,640,393 447,580 980,941 7,785,335 306,982 (59,740,447 ) 6,973,204
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 - - - - - - (1,993,372 ) (1,993,372 )
Issued during the period 1,551,375 3,102,750 3,102,750
Issuance costs - (364,366 ) - - - - - (364,366 )
Expiration of warrants - - (447,580 ) (980,941 ) 980,941 - - -
Translation of foreign operations - - - - - (70,214 ) - (70,214 )
Stock-based compensation - - - - 161,409 - - 161,409
Compensation units issued in conjunction with private placement - (101,222 ) - - 101,222 - - -
Balance - April 30, 2016 8,977,724 $60,277,555 - $ - $9,092,131 $510,288 $(63,769,890 ) $6,110,084
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three and nine months ended April 30, 2016 and 2015
(Prepared in Canadian dollars)
(unaudited)
For the three months ended For the nine months ended
April 30 April 30
2016 2015 2016 2015
Cash provided by (used in)
Operating activities
Net loss $(564,981 ) $(1,674,220 ) $(1,993,372 ) $(5,889,727 )
Items not affecting cash
Stock-based compensation 39,620 65,740 161,409 284,632
Amortization 460,301 470,636 1,380,899 1,394,473
Salaries paid in shares - - - 865,800
Accretion on rebate provision 1,245 7,988 10,874 23,962
Loss on disposal of equipment - - 2,811 -
Cash from operating activities before non-cash working capital
(63,815
)
(1,129,856
)
(437,379
)
(3,320,860
)
Changes in non-cash working capital (141,687 ) (201,239 ) (306,963 ) (1,164,772 )
Net cash used in operating activities (205,502 ) (1,331,095 ) (744,342 ) (4,485,632 )
Financing activities
Proceeds from issuance of shares - - 3,102,750 -
Share issuance costs - - (364,366 ) (3,867 )
Net cash (used in) from financing activities - - 2,738,384 (3,867 )
Investing activities
Acquisition of property and equipment - (63,347 ) (1,189 ) (152,297 )
Software and software development costs - (9,102 ) - (14,508 )
Net cash used in investing activities - (72,449 ) (1,189 ) (166,805 )
Effect of exchange rate changes on cash and cash equivalents held in foreign currency $ (377,756 ) $ (160,769 ) $ (83,185 ) $ 403,342
Cash (outflow) inflow (583,258 ) (1,564,313 ) 1,909,668 (4,252,962 )
Cash, beginning of period 6,479,876 6,859,012 3,986,950 9,547,661
Cash, end of period $ 5,896,618 $ 5,294,699 $ 5,896,618 $ 5,294,699
Non-cash transactions:
Issuance of shares in lieu of salaries and bonuses including prior period amounts accrued $ - $ - $ - $ 865,800

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