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

Cortex Business Solutions Inc.

November 28, 2014 08:35 ET

Cortex Reports Record Fiscal Fourth Quarter and Full Year 2014 Financial Results

Q4 Revenues up 73% to $2.8 Million; Recurring Access and Usage Revenues up 45% to $2.1 Million

CALGARY, ALBERTA--(Marketwired - Nov. 28, 2014) - Cortex Business Solutions Inc. (TSX VENTURE:CBX)(OTCQX:CTPNF), an enterprise e-Procurement solutions company, reports financial results for the fiscal fourth quarter ("Q4 F2014") and full year ended July 31, 2014 ("F2014").

Fiscal Q4 2014 Financial Highlights vs. Same Year-Ago Quarter

  • Total revenues increased 73% to a record $2.8 million.
  • Revenue from recurring access and usage fees increased 45% to $2.1 million.
  • Cash on hand at the end of Q4 F2014 was $9,547,661, compared to $10,669,125 at the end of Q3 F2014. During Q4 F2014 the Company had an outflow $1,121,462 of which, $426,332 was the annual rebate payment leaving $695,130 as the outflow net of rebate.

Fiscal 2014 Financial Highlights vs, F2013

  • Total Revenue in F2014 was $9.0 million which was an improvement of 45% over F2013 (6.2 million) and usage fees grew 41% F2014 over F2013, an increase of $2.2 million.
  • An increase in billable transactions year over year of 26%. During F2014 there were 4.5 million billable transactions compared to 3.6 million in F2013.
  • Net cash used in operating activities improved from $(6.2 million) in F2013 to ($4.5 million) in F2014, an improvement of 27%.

Management Commentary

"Fiscal 2014 was a record year for our organization, highlighted by accelerating, sequential double-digit revenue growth throughout all four quarters," said Art Smith, president and CEO of Cortex. "The continued growth in our Cortex Trading Partner Network also resulted in record billable transactions for the F2014 fiscal year demonstrating the organic growth power of the Cortex Network.

"While we continue to focus on growing our recurring revenue stream, we have been successful rolling out additional service offerings to our customers, including the AP Services product line. In fact, during the quarter, 2 clients signed up for the service and we expect this incremental value-added offering to be a contributor to our growth in fiscal 2015. This new growth opportunity is also in addition to our 100% e-billing solution, which continues to progress according to plan.

"Thus far in fiscal 2015, our overall activity remains strong with continued increases across our network. We also continue to ramp our U.S. sales team to further access this market opportunity. Through multiple avenues for growth, particularly our new service offerings and recurring revenue streams, we expect fiscal 2015 to be another record year for our organization."

Fiscal Q4 2014 Financial Results

Total revenues in the Q4 F2014 increased 73% to $2.8 million compared to $1.6 million in the fiscal fourth quarter of 2013 ("Q4 F2013"). The key growth was in the access and usage revenue stream, which increased 45% as a result of billable transactions flowing through the network of 21% (Q4 F2014 - 1,182,665; Q4 F2013 - 974,193). This increase in billable transactions is the direct result of the sales of additional buying organizations in the fiscal year; with the suppliers starting to transact on the Network or increasing their transactions in Q4 F2014.

On a sequential basis, total revenues increased 18% compared to $2.4 million in the third quarter of 2014 ("Q3 F2014"). Recurring access and usage fees increased 3% to $2.1 million in Q4 F2014

Gross Profit net of amortization was $1,069,268 or 38% of revenue.

Net loss in Q4 F2014 was $1.6 million compared to a net loss of $1.5 million in Q4 F2013.

Fiscal Q4 2014 Operational Metrics

  • Three new 100% e-Billing solution customers were signed
  • Six new buying organizations were signed in Canada, with one signed in the U.S.
  • 581 new suppliers were added to the Cortex Network
  • Active buying organizations on the network increased by 34% for a total of 75, compared to 56 in the year-ago quarter
  • Total active suppliers on the network increased 36% to 8,236, compared to 6,047 in the year-ago quarter
  • Billable transactions increased 21% to 1,182,665, compared to 974,193 in the year-ago quarter
  • Total transactions increased 25% to 3,279,344, compared to 2,613,928 in the year-ago quarter

Full Year Fiscal 2014 Financial Result

Total revenues in F2014 increased 45% to $9 million compared to $6.2 million in F2013. Access and usage fees in F2014 increased 41% to $7.7 million compared to $5.5 million in F2013.

Gross Profit net of amortization for the F2014 was $4,288,255 or 48% of revenue.

Net loss in F2014 improved to $5.9 million or $(0.02) per diluted common share, compared to a net loss of $6.9 million or $(0.03) per diluted common share in F2013.

Net cash used in operating activities improved from ($6.2 million) in F2013 to ($4.5 million) in F2014, an improvement of 29%.

During the fourth quarter of 2014, management revisited a certain contract that the Company entered into during fiscal 2009 (the "Agreement"). As a result, the Company determined a restatement was required and as such has restated its F2013 (with F2012 comparatives) and Q1, Q2 and Q3 F2014. The details of the restatement can be found in the press release and restated financial statements and MD&A for the year ended July 31, 2013 with comparatives for the year ended July 31, 2012; the Q1 F2014; Q2 F2014 and Q3 F2014 filed on SEDAR on November 28, 2014

Conference Call

Cortex will conduct a conference call on Friday, November 28, 2014 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss its financial results for the fiscal fourth quarter and full year ended July 31, 2014. The financial results will be issued in a press release prior to the call.

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

Date: Friday, November 28, 2014
Time: 10:00 a.m. Eastern time (8:00 a.m. Mountain time)
Toll-free dial-in number: 1-866-223-7781
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 Liolios Group at 1-949-574-3860.

A replay of the conference call will be available after the call through December 5, 2014.

Toll-free replay number: 1-800-408-3053
Toll replay number: 1-905-694-9451
Replay ID: 6253981

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)
July 31
2014
July 31
2013
Assets
Current assets
Cash $ 9,547,661 $ 5,179,066
Short-term investments 60,000 50,000
Accounts receivable 1,046,424 651,782
Prepaid expenses 237,738 167,870
10,891,823 6,048,718
Deposits 39,029 -
Property and equipment 389,666 476,735
Intangible assets 3,474,977 4,275,120
$ 14,795,495 $ 10,800,573
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 2,057,348 $ 1,376,201
Current portion of deferred revenue 128,061 539,853
Current portion of rebate provision 523,592 382,315
2,709,001 2,298,369
Deferred revenue - 4,500
Rebate provision 754,395 1,274,600
3,463,396 3,577,469
Shareholders' Equity
Share capital 56,778,460 47,713,288
Accumulated other comprehensive income (77,285 ) -
Warrants 980,941 980,941
Contributed surplus 7,500,703 6,492,495
Deficit (53,850,720 ) (47,963,620 )
11,332,099 7,223,104
$ 14,795,495 $ 10,800,573
Cortex Business Solutions Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the years ended July 31, 2014 and 2013
(Prepared in Canadian dollars)
2014 2013
Revenue
Access and usage fees $ 7,673,009 $ 5,459,909
Integration fee and set-up fees 631,556 704,229
Project management 672,778 -
8,977,343 6,164,138
Cost of Sales 5,757,401 3,880,606
Gross Profit 3,219,942 2,283,532
Expenses
Sales and marketing 3,218,063 3,823,011
Research and development costs 1,493,684 1,472,637
General and administrative 4,403,382 3,870,694
9,115,129 9,166,342
Loss before finance income (5,895,187 ) (6,882,810 )
Finance income (expense) 8,087 5,506
Net loss $ (5,887,100 ) $ (6,877,304 )
Other comprehensive earnings
Items that may be reclassified subsequently to net loss:
Foreign exchange gain on foreign operations (77,285 ) -
Comprehensive loss $ (5,964,385 ) $ (6,877,304 )
Net loss per share-basic and diluted $ (0.02 ) $ (0.03 )
Cortex Business Solutions Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Prepared in Canadian dollars)
Number
of
Common
Shares
Common
Shares
Number
of
Warrants
Warrants
Value
Contributed
Surplus
Accumulated
Other
Comprehensive
Income
Deficit Total
Shareholders'
Equity
Balance - July 31, 2012 217,261,141 $ 41,858,963 9,806,563 $ 753,202 $ 5,029,271 $ - $ (41,086,316 ) $ 6,555,120
Net loss - - - - - - (6,877,304 ) (6,877,304 )
Stock-based compensation - - - - 480,080 - - 480,080
Options exercised for cash 191,667 28,750 - - - - - 28,750
Transferred on exercise of stock options - 31,855 - - (31,855 ) - - -
Issued in lieu of salaries and bonus 2,774,567 536,247 - - - - - 536,247
Prospectus offering for cash 38,920,000 6,168,820 22,379,000 1,148,140 - - - 7,316,960
Expiration of Compensation Units - - (9,806,563 ) (753,202 ) 753,202 - - -
Issuance costs - (911,347 ) - (167,199 ) 261,797 - - (816,749 )
Balance - July 31, 2013 259,147,375 47,713,288 22,379,000 980,941 6,492,495 - (47,963,620 ) 7,223,104
Net loss - - - - - - (5,887,100 ) (5,887,100 )
Cumulative translation difference - - - - - (77,285 ) - (77,285 )
Prospectus offering for cash 100,000,000 10,000,000 - - - - - 10,000,000
Compensation units issues in conjunction with prospectus (share issue costs) - (462,000 ) - - 462,000 - - -
Options exercised for cash 65,852 13,480 - - - - - 13,480
Transferred on exercise of stock options - 8,505 - - (8,505 ) - - -
Issued in lieu of salaries and wages 2,484,200 397,472 - - - - - 397,472
Issuance costs - (892,285 ) - - - - - (892,285 )
Stock based compensation - - - - 554,713 - - 554,713
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
Cortex Business Solutions Inc.
Consolidated Statements of Cash Flows
For the years ended July 31, 2014 and 2013
(Prepared in Canadian dollars)

2014
2013
Cash provided by (used in)
Operating activities
Net loss $ (5,887,100 ) $ (6,877,304 )
Items not affecting cash
Stock-based compensation 554,713 480,080
Amortization 1,239,050 667,275
Salaries paid in shares 16,000 (74,314 )
Accretion on rebate provision 47,404 38,618
(4,029,933 ) (5,765,645 )
Rebate payment (426,332 ) (540,682 )
Changes in non-cash working capital (16,588 ) 93,265
Net cash used in operating activities (4,472,853 ) (6,213,062 )
Financing activity
Proceeds from issuance of shares 10,000,000 7,316,960
Share issuance costs (892,285 ) (787,999 )
Proceeds on exercise of stock options for cash 13,480 -
Net cash from financing activities 9,121,195 6,528,961
Investing activities
Acquisition of property and equipment (54,212 ) (170,335 )
Software development costs (297,626 ) (1,667,468 )
Increase in short-term investments (10,000 ) (50,000 )
Net cash used in investing activities (361,838 ) (1,887,803 )
Effect of exchange rate changes on cash and cash equivalents held in foreign currency 82,091 -
Cash inflow (outflow)
4,368,595

(1,571,904
)
Cash, beginning of year 5,179,066 6,750,970
Cash, end of year $ 9,547,661 $ 5,179,066
Supplemental cash flow information:
Interest received during the year $ 55,491 $ 44,121
Non-cash transactions:
Issuance of shares in lieu of salaries and bonuses including prior years amounts accrued in accounts payable and accrued liabilities $ 381,472 $ 536,247

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