Cortex Business Solutions Inc.
TSX VENTURE : CBX
OTCQX : CTPNF

Cortex Business Solutions Inc.

December 15, 2014 08:30 ET

Cortex Reports Fiscal First Quarter 2015 Financial Results

Q1 Recurring Access and Usage Revenue up 15% sequentially to $2.4 Million

CALGARY, ALBERTA--(Marketwired - Dec. 15, 2014) - Cortex Business Solutions Inc. (TSX VENTURE:CBX)(OTCQX:CTPNF), an enterprise e-Procurement solutions company, reported financial results for the fiscal first quarter ended October 31, 2014.

Fiscal Q1 2015 Financial Highlights

  • Total revenue increased 47% year-over-year to a record $2.6 million.
  • Revenue from recurring access and usage fees increased 47% year-over-year and 15% sequentially to a record $2.4 million.
  • Gross margin, net of amortization, improved to 52% compared to 47% in Q1 2014 and 38% in Q4 2014.
  • Cash used in operations, before working capital change and including software development costs decreased $164K from $(1.494K) in Q1 F2014 to $(1.330K) in Q1 F2015.
  • The working capital declined $(1.1M) from $8.2M at July 31, 2014 to $7.1M at October 31, 2014.

Fiscal Q1 2014 Operational Metrics

  • Signed three new 100% e-Billing solution customers.
  • Signed four new buying organizations in Canada.
  • Added 706 new suppliers to the Cortex Network, an increase of 22% from Q4 2014.
  • Active buying organizations on the Cortex Network totaled 78, an increase of 4% from Q4 2014.
  • Active suppliers on the Cortex Network increased 5% to 8,630 compared to Q4 2014.
  • Billable transactions increased 25% to 1,474,650 compared to Q4 2014.
  • Total transactions increased 23% to 4,021,739 compared to Q4 2014.

Management Commentary

"Cortex is committed to monetizing 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 first quarter was the ninth consecutive quarter of increased recurring access and usage fees and we continue to exceed our goal of growing this number at 10% sequentially. These results were driven by continued robust growth in suppliers transacting on the network, strong growth in both the U.S. and Canadian markets, and the rollout of value-added services.

"As we move through 2015, we will continue to develop new products to further enhance the Cortex Network. In fact Field Ticket Mobile Approver is expected to be released during the fall of 2015. This product introduction is being driven by customer feedback and market demand. Cortex expects this product to continue to expand the growth opportunities of the network."

Fiscal Q1 2015 Financial Results

Total revenue in Q1 F2015 increased 47% to $2.6 million compared to $1.8 million in Q1 F2014. The key growth driver was in the recurring access and usage revenue stream, which increased 47% as a result of increased billable suppliers on the network and increased billable transactions flowing through the network.

On a sequential basis, total revenue decreased 6% compared to $2.8 million in the fourth quarter of 2014 due to the completion of a large AP service initiative in the fourth quarter, which was classified within project management revenue. Recurring access and usage fees increased 15% to $2.4 million in the first quarter of 2015. This growth can be attributed to an increase in the number of suppliers transacting on the network.

Gross margin net of amortization increased significantly to 52% compared to 47% in the year-ago quarter and 38% in the fourth quarter of 2014.

Net loss in Q1 F2015 was $1.9 million or $(0.01) per diluted common share, compared to a net loss of $1.5 million or $(0.01) per diluted common share in Q1 F2014.

At October 31, 2014, cash totaled $8.6 million compared to $3.8 million at October 31, 2013. The company continues to carry no debt.

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 fiscal first quarter ended October 31, 2014. The company's Interim President and CEO, Jim Barker, CFO, Sandra Weiler, and Senior Vice President of U.S. Operations and Business Development, Ryan Lailey, will host the conference call, followed by a question and answer period.

Date: Monday, December 15, 2014
Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)
Toll-free dial-in number: 1-866-696-5910
International dial-in number: 1-416-340-2217

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 Liolios Group at 1-949-574-3860.

A replay of the conference call will be available after the call through December 22, 2014.

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 9276156

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.
Consolidated Statements of Financial Position
(Prepared in Canadian dollars)
(unaudited)
October 31
2014
July 31
2014
Assets
Current assets
Cash $ 8,623,308 $ 9,547,661
Short-term investments 60,000 60,000
Accounts receivable 1,359,916 1,046,424
Prepaid expenses and deposits 116,303 237,738
10,159,527 10,891,823
Deposits 39,146 39,029
Property and equipment 366,237 389,666
Intangible assets 3,044,102 3,474,977
$ 13,609,012 $ 14,795,495
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 2,301,730 $ 2,057,348
Current portion of deferred revenue 247,052 128,061
Current portion of rebate provision 523,592 523,592
3,072,374 2,709,001
Rebate provision 762,382 754,395
3,834,756 3,463,396
Shareholders' Equity
Share capital 56,778,460 56,778,460
Accumulated other comprehensive income 161,286 (77,285 )
Warrants 980,941 980,941
Contributed surplus 7,638,688 7,500,703
Deficit (55,785,119 ) (53,850,720 )
9,774,256 11,332,099
$ 13,609,012 $ 14,795,495
Cortex Business Solutions Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the three months ended October 31, 2014 and 2013
(Prepared in Canadian dollars)
(unaudited)
Three months ended October 31
2014 2013
Revenue
Access and usage fees $ 2,430,228 $ 1,655,815
Integration fee and set-up fees 142,576 134,767
Project management 58,843 -
2,631,647 1,790,582
Cost of Sales 1,703,786 1,062,724
Gross Profit 927,861 727,858
Expenses
Sales and marketing 963,817 765,139
Research and development costs 576,507 234,196
General and administrative 1,330,332 1,190,590
2,870,657 2,189,925
Loss before finance income (1,942,796 ) (1,462,067 )
Finance income (expense) 8,397 (1,871 )
Net loss $ (1,934,399 ) $ (1,463,938 )
Other comprehensive earnings
Items that may be reclassified subsequently to net loss:
Foreign exchange gain on foreign operations 238,571 -
Comprehensive loss $ (1,695,828 ) $ (1,463,938 )
Net loss per share-basic and diluted $ (0.01 ) $ (0.01 )
Cortex Business Solutions Inc.
Consolidated Statements 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 - - - - - - (1,463,938 ) (1,463,938 )
Options exercised for cash 65,852 13,480 - - - - - 13,480
Transferred on exercise of options - 8,505 - - (8,505 ) - - -
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 - (49,427,558 ) 5,921,153
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 - - - - - - (1,934,399 ) (1,934,399 )
Options exercised for cash - - - - - - - -
Transferred on exercise of options - - - - - - - -
Issued in lieu of salaries and bonus - - - - - - - -
Foreign exchange - - - - - 238,571 - 238,571
Stock-based compensation - - - - 137,985 - - 137,985
Balance - October 31, 2014 361,697,427 $ 56,778,460 22,379,000 $ 980,941 $ 7,638,688 $ 161,286 $ (55,785,119 ) $ 9,774,256
Cortex Business Solutions Inc.
Condensed Consolidated Interim Statement of Cash Flows
For the three months ended October 31, 2014 and 2013
(Prepared in Canadian dollars)
(unaudited)
For the three months ended October 31
2014 2014
Cash provided by (used in)
Operating activities
Net loss $ (1,934,399 ) $ (1,463,938 )
Items not affecting cash
Stock-based compensation 137,985 151,268
Amortization 458,537 155,953
Accretion on rebate provision 7,987 11,851

(1,329,890
)
(1,144,866
)
Changes in non-cash working capital 325,093 147,182
Net cash used in operating activities (1,004,797 ) (997,684 )
Financing activities
Proceeds from exercise of stock options, net of costs - 10,725
Net cash from financing activities
-

10,725
Investing activities
Acquisition of property and equipment (4,233 ) (4,988 )
Software development costs - (348,749 )
Net cash used in investing activities (4,233 ) (353,737 )
Effect of exchange rate changes on cash and cash equivalents held in foreign currency $
84,677
$
-
Cash (outflow)
(924,353
)
(1,340,696
)
Cash, beginning of period 9,547,661 5,179,066
Cash, end of period $ 8,623,308 $ 3,838,370
Non-cash transactions:
Issuance of shares in lieu of salaries and bonuses including prior period amounts accrued $ - $ 54,445

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