Cortex Business Solutions Inc.

TSX VENTURE : CBX


Cortex Business Solutions Inc.

November 22, 2012 09:01 ET

Cortex Announces Fiscal 2012 Annual Financial Results

CALGARY, ALBERTA--(Marketwire - Nov. 22, 2012) - Cortex Business Solutions Inc. ("Cortex" or the "Company") (TSX VENTURE:CBX) is pleased to announce the Company's FY 2012 Financial and Operational Highlights. Complete financials and MD&A are available on Sedar (www.sedar.com).

Revenue was $4.9 million in the Fiscal Year of 2012, compared to $3.1 million in the Fiscal Year 2011, reflecting a 61% growth in total revenue and a 63% recurring revenue growth year over year.

At the end of the 2012 fiscal year, Cortex had signed agreements with 43 buying organizations ("Hubs"), 28 more than at the end of fiscal 2011. At the end of fiscal 2012, 21 of the 43 Hubs were available to receive invoices from their suppliers electronically. Hubs are the main driving force for the growth in the Company as each new Hub brings a list of additional customers to the Network and provides additional destinations for existing users to send to. Cortex added 2,860 new customers and increased total transactions through the system 65%.

Cortex had a net loss of $9,303,590 or $0.05 per basic and diluted share, compared to net loss of $9,548,936 or $0.06 per basic and diluted share. This modest improvement in net loss year over year is the result of the Company's continued investment into US expansion, market development and the new technology platform. The expenditure in these areas has been declining over the last two quarters of fiscal 2012 and are expected to continue to decline for fiscal 2013.

"Cortex continues to grow our network of companies with excellent growth in 2012 specifically in the areas of new Hub signings and transaction growth," said Art Smith, President & CEO of Cortex. "Our revenue growth is accelerating with the network effect of our recurring revenue and we expect 2013 to be a significant year for the company as we expand our network in Canada and the United States."

Outlook

Cortex will continue to expand the Network by adding buying organizations (Hubs) and their supplier groups through current and new partnerships. Cortex will explore new sources of revenue, industry and partnership opportunities in Canada and the U.S.

Building on the strong Network growth in 2012, Cortex begins fiscal 2013 with 43 buying organizations signed to the Network, 21 Hubs active on the Network and 7,933 contracted suppliers. This is a strong improvement over where we started fiscal 2012 with 15 buying organizations and 5,073 suppliers. Our continued strong relationship with our clients will provide continued month over month revenue growth from increasing transaction volumes between our 43 Hub customers and their suppliers.

Organic Network growth, both in the number of customers connected and the number of transactions they do, has provided a solid revenue foundation for the Company. Management expects to see continued Hub signings in 2013 projecting to exit fiscal year ended July 31, 2013 with over 100 Hub customers.

Strategic partnerships with Full Circle, Powervision, Pandell, Basware, and Verian Technologies are providing numerous opportunities to add buying organizations in both Canada and the U.S.

With the addition of multiple buying organizations to the Network, management expects the growth of access and usage fee revenue stream to accelerate. This growth was 63% Fiscal year 2012 over Fiscal year 2011.

In the coming year, Management expects to complete more partnerships, launch new features to the Network and continue increasing recurring revenue.

Organic Network growth, both in the number of customers connected and the number of transactions they do, has provided a solid revenue foundation for the Company. Management expects to see continued Hub signings in 2013 projecting to exit fiscal year ended July 31, 2013 with over 100 Hub customers.

The Company has applied to the TSX Venture Exchange for the issuance of 2,207,900 common shares in alignment with the Company's Employee Performance Management ("EPM") Program. The issuance of these shares was voted on at the Company's AGM on June 11, 2012. These shares were applied for at a deemed price of $0.225. Of this amount 366,500 are to be issued to insiders.

Annual Results Conference Call

To call in for the live conference call please contact:

Toll-Free Dial-In Number: (877) 440-9795

Local Dial-In #: (416) 340-9432 (Toronto)

Time: 2:00 PM MST

A replay of the conference call will be available two hours after the call's completion and will expire by 11:59 pm EST on November 29, 2012. You may listen to the recording by calling (905) 694-9451 or toll-free at 1-800-408-3053. The password for the replay is 6143140.

About Cortex Business Solutions

Cortex Business Solutions Inc. is a leading eCommerce service 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 its customers existing business environment - evolving business. For more information please visit our website at www.cortex.net.

Forward-Looking Statements

Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading "Risk Factors" and elsewhere in the Company's periodic filings with Canadian securities regulators. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume the obligation to update any forward-looking statement.

Cortex Business Solutions Inc.
Consolidated Statements of Financial Position
(Prepared in Canadian dollars)
July 31 2012 July 31 2011
Assets
Cash $ 6,750,970 $ 9,695,210
Accounts receivable 847,847 514,877
Prepaids and deposits 168,160 213,063
7,766,977 10,423,150
Property and equipment 611,082 744,565
Intangible asset 2,970,245 1,833,019
$ 11,348,304 $ 13,000,734
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 1,842,431 $ 1,613,030
Current portion of deferred revenue 710,598 688,766
2,553,029 2,301,796
Deferred revenue 342,368 771,843
2,895,397 3,073,639
Shareholders' Equity
Share capital 41,858,963 33,851,308
Warrants 753,202 1,135,282
Contributed surplus 5,029,271 4,825,444
Deficit (39,188,529 ) (29,884,939 )
8,452,907 9,927,095
$ 11,348,304 $ 13,000,734
Cortex Business Solutions Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the years ended July 31, 2012 and 2011
(Prepared in Canadian dollars)
2012 2011
Revenue
Access and usage fee $ 4,093,869 $ 2,512,978
Integration fees 552,601 -
Set-up fees 290,847 399,527
Project management - 150,000
4,937,317 3,062,505
Expenses
General and administrative 1,356,068 734,477
Internet and hosting costs 124,363 85,696
Market expansion and product development 2,273,850 1,875,279
Professional fees 181,896 163,642
Rent 322,493 317,849
Salaries, employee benefits and subcontract 8,922,904 8,032,615
Stock-based compensation 496,396 1,233,010
Amortization 603,562 224,763
14,281,532 12,667,331
Loss before the following (9,344,215 ) (9,604,826 )
Finance income 40,625 55,890
Net loss and comprehensive loss $ (9,303,590 ) $ (9,548,936 )
Net loss per share-basic and diluted $ (0.05 ) $ (0.06 )
Cortex Business Solutions Inc.
Consolidated Statements of Cash Flows
For the years ended July 31, 2012 and 2011
(Prepared in Canadian dollars)
2012 2011
Cash provided by (used in)
Operating activities
Net loss $ (9,303,590 ) $ (9,548,936 )
Items not affecting cash
Stock-based compensation 496,396 1,233,010
Amortization 603,562 224,763
Salaries paid in shares 10,687 133,711
(8,192,945 ) (7,957,452 )
Changes in non-cash working capital 332,878 (265,966 )
Net cash used in operating activities (7,860,067 ) (8,223,418 )
Financing activity
Proceeds from issuance of shares and warrants, net of issue costs 6,647,402 8,431,249
Net cash from financing activity 6,647,402 8,431,249
Investing activities
Acquisition of property and equipment (125,364 ) (406,498 )
Software development costs (1,481,941 ) (1,833,019 )
Changes in non-cash working capital (124,270 ) 84,012
Net cash used in investing activities (1,731,575 ) (2,155,505 )
Cash outflow (2,944,240 ) (1,947,674 )
Cash, beginning of year 9,695,210 11,642,884
Cash, end of year $ 6,750,970 $ 9,695,210

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.

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