Cortex Business Solutions Inc.
TSX VENTURE : CBX

Cortex Business Solutions Inc.

December 12, 2013 16:05 ET

Cortex Reports Fiscal First Quarter 2014 Financial Results

Q1 Total Revenues Up 28% to $1.8 Million; Recurring Access and Usage Revenues Up 34% to $1.7 Million

CALGARY, ALBERTA--(Marketwired - Dec. 12, 2013) - Cortex Business Solutions Inc. (TSX VENTURE:CBX) (Cortex), an enterprise eProcurement solutions company, reported financial results for the fiscal first quarter ended October 31, 2013.

Fiscal Q1 2014 Financial Highlights vs. Same Year-Ago Quarter

  • Total revenues increased 28% to $1.8 million.
  • Revenue from recurring access and usage fees increased 34% to $1.7 million.
  • Net loss improved to $1.5 million or $(0.01) per diluted share, compared to a net loss of $1.8 million or $(0.01) per diluted share.

Fiscal Q1 2014 Financial Results

Total revenues in the fiscal first quarter of 2014 increased 28% to $1.8 million, compared to $1.4 million in the fiscal first quarter of 2013. The increase in revenues was primarily due to increased recurring access and usage fees, which grew 34% in the first quarter to $1.7 million from $1.2 million in the year-ago quarter.

On a sequential basis, total revenues in the first quarter increased 10% from $1.6 million in the fourth quarter of 2013. Recurring access and usage fees increased 13% from $1.5 million in the fourth quarter of 2013.

Total expenses in the first quarter increased marginally to $3.3 million as compared to the same year-ago quarter. Excluding one-time severance costs of $133,000, total expenses would have decreased 2% to $3.2 million.

Net loss in the first quarter improved to $1.5 million or $(0.01) per diluted common share, compared to a net loss of $1.8 million or $(0.01) per diluted common share in the year-ago quarter. The improvement was primarily due to the increase in revenues and prudent expense management.

At October 31, 2013, cash totaled $3.8 million, compared to $5.2 million at July 31, 2013. The company continues to carry no debt.

Fiscal Q1 2014 Operational Metrics

  • Signed 4 hubs onto the network for a total of 78, compared to 14 signed in the first quarter of 2013 for a total of 56.
  • Active hubs on the network increased by 4 to a total of 60, compared to an increase of 13 in the first quarter of 2013 to a total of 34.
  • Signed three new 100% eBilling customers, including Matrix Solutions, Zedi and Sunbelt Rentals.
  • Total suppliers transacting on the network increased 16% to 6,304, compared to 5,417 in the first quarter of 2013.
  • Total transactions increased 19% to 3,000,632, compared to 2,522,913 in the first quarter of 2013.
  • Supplier initiated transactions increased 24% to 939,794, compared to 749,059 in the first quarter of 2013.

Management Commentary

"The solid momentum we built throughout fiscal 2013 continued into the first quarter of 2014," said Art Smith, president and CEO of Cortex. "During the first quarter, total revenues grew by 28% and were the highest in the company's history. The quarter was highlighted by the continued growth in our Cortex Trading Partner Network, which resulted in our record quarterly revenue and transaction volume. In fact, we were able to achieve these results while keeping expenses nearly flat.

"We continue to gain market share throughout the U.S. and Canada, supplemented by the introduction of new revenue and industry opportunities, such as our 100% e-billing solution, which is experiencing strong demand in the marketplace. In fact, we recently went live with our first e-billing customer and the rollout is progressing as planned, with revenues expected to materialize as we move though fiscal 2014.

"So far in our fiscal second quarter, overall activity in the marketplace remains strong, both in terms of transaction volume and the onboarding of new customers. As the Cortex Network expands, we are confident the combination of our prudent expense management and continued introduction of value added services will result in steady, recurring revenue growth."

Conference Call

Cortex will hold a conference call today at 4:30 p.m. Eastern time (2:30 p.m. Mountain time) to discuss its financial results for the first quarter ended October 31, 2013. The Company's President and CEO Art Smith and Senior Vice President of U.S. Operations & Business Development Ryan Lailey will host the conference call, followed by a question and answer period.

Date: Thursday, December 12, 2013
Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)
Toll-free dial-in number: 1-800-565-0813
Local dial-in number: 1-416-340-8527 (Toronto)

Please call the conference telephone number 5-10 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 Liolios Group at 1-949-574-3860.

A replay of the conference call will be available after 7:30 p.m. Eastern time through December 19, 2013.

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 9044660

About Cortex Business Solutions Inc.

Cortex Business Solutions Inc. (TSX VENTURE:CBX) is an enterprise eProcurement 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

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.
Condensed Consolidated Statement of Financial Position
(Prepared in Canadian dollars)
(unaudited)
October 31 July 31
2013 2013
Assets
Current assets
Cash $ 3,838,370 $ 5,179,066
Short-term investments 50,000 50,000
Accounts receivable 704,001 651,782
Prepaid expenses and deposits 109,032 167,870
4,701,403 6,048,718
Property and equipment 537,702 573,761
Intangible assets 4,411,939 4,178,094
$ 9,651,044 $ 10,800,573
Liabilities Current liabilitiesAccounts payable and accrued liabilities



$ 1,791,246




$ 1,404,716
Current portion of deferred revenue 387,099 539,853
2,178,345 1,944,569
Deferred revenue - 4,500
2,178,345 1,949,069
Shareholders' EquityShare capital
47,732,515

47,713,288
Warrants 980,941 980,941
Contributed surplus 6,635,255 6,492,495
Deficit (47,876,012 ) (46,335,220 )
7,472,699 8,851,504
$ 9,651,044 $ 10,800,573
Cortex Business Solutions Inc.
Condensed Consolidated Statement of Loss and Comprehensive Loss
For the three months ended October 31, 2013 and 2012
(Prepared in Canadian dollars)
(unaudited)
2013 2012
Revenue
Access and usage fees $ 1,655,815 $ 1,237,896
Integration fees 89,577 59,042
Set-up fees 45,190 106,604
1,790,582 1,403,542
Expenses
Salaries, employee benefits and subcontractor expenses 2,264,123 2,110,048
General and administrative 287,235 230,433
Commissions, credit card charges and rebates 193,657 155,535
Professional fees 159,661 43,890
Rent 105,449 81,512
Internet and hosting costs 24,008 27,468
Market expansion and product development - 330,170
Stock-based compensation 151,268 109,337
Amortization 155,953 169,137
3,341,354 3,257,530
Loss before the following (1,550,772 ) (1,853,988 )
Finance income 9,980 13,272
Net loss and comprehensive loss
$ (1,540,792
)
$ (1,840,716
)
Net loss per share-basic and diluted
$ (0.01
)
$ (0.01
)
Cortex Business Solutions Inc.
Condensed Consolidated 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 Deficit Total shareholders' equity
Balance - July 31, 2012 217,261,141 $ 41,858,963 9,806,563 $ 753,202 $ 5,029,271 $ (39,188,529 ) $ 8,452,907
Net loss - - - - - (1,840,716 ) (1,840,716 )
Options exercised for cash 191,667 28,750 - - - - 28,750
Transferred on exercise of options - 31,855 - - (31,855 ) - -
Issued in lieu of salaries and bonus 311,111 54,445 - - - - 54,445
Issuance costs - (2,442 ) - - - - (2,442 )
Stock-based compensation - - - - 109,337 - 109,337
Balance - October 31, 2012 217,763,919 41,971,571 9,806,563 753,202 5,106,753 (41,029,245 ) 6,802,281
Balance - July 31, 2013 259,147,375 47,713,288 22,379,000 980,941 6,492,492 (46,335,220 ) 8,851,501
Net loss - - - - - (1,540,792 ) (1,540,792 )
Options exercised for cash 65,852 13,480 - - - - 13,480
Transferred on exercise of options - 8,505 - - (8,505 ) - -
Issued in lieu of salaries and bonus - - - - - - -
Issuance costs - (2,758 ) - - - - (2,758 )
Stock-based compensation - - - - 151,268 - 151,268
Balance - October 31, 2013 259,213,227 $ 47,732,515 22,379,000 $ 980,941 $ 6,635,255 $ (47,876,012 ) $ 7,472,699
Cortex Business Solutions Inc.
Condensed Consolidated Statement of Cash Flows
For the three months ended October 31, 2013 and 2012
(Prepared in Canadian dollars)
(unaudited)
2013 2012
Cash provided by (used in)
Operating activities
Net loss $ (1,540,792 ) $ (1,840,716 )
Items not affecting cash
Stock-based compensation 151,268 109,337
Amortization 155,953 169,137
Adjustment to salaries expense in the period for salaries paid in shares - (6,222 )
(1,233,571 ) (1,568,464 )
Changes in non-cash working capital 235,887 (108,079 )
Net cash used in operating activities (997,684 ) (1,676,543 )
Financing activities
Proceeds from issuance of shares, net of costs - 26,308
Proceeds from exercise of stock options, net of costs 10,725 -
Net cash from financing activities
10,725

26,308
Investing activities
Acquisition of property and equipment (4,988 ) (8,833 )
Software development costs (348,749 ) (362,829 )
Net cash used in investing activities (353,737 ) (371,662 )
Decrease in cash (1,340,696 ) (2,021,897 )
Cash, beginning of period 5,179,066 6,750,970
Cash, end of period $ 3,838,370 $ 4,729,073
Non-cash transactions:
Issuance of shares in lieu of salaries and bonuses including prior period amounts accrued $ - $ 54,445

Contact Information

  • Liolios Group, Inc. - Investor Relations Contact
    Cody Slach or Greg Falesnik
    1-949-574-3860
    CBX@Liolios.com

    Brisco Capital Partners - Investor Relations Contact
    Scott Koyich
    1-403-215-5979
    skoyich@briscocapital.com