CBX Cortex Business Solutions Inc.

Cortex Business Solutions Inc. (“Cortex”) (TSXV: CBX), a North American network-as-a-service complete document management & e-invoicing solutions provider, today announces its three months ended October 31, 2018 (“Q1 F2019”) Management’s Discussion and Analysis (“MD&A”) and Condensed Consolidated Interim Financial Statements (“F/S”).  The MD&A and F/S are available at www.sedar.com.

“With our first months now behind us after the Powervision acquisition, we are already starting to see the synergies that we had expected from combining the two companies.   We have made two new sales of the complete Cortex platform since the acquisition and our pipeline for the combined solution is growing rapidly,” said Joel Leetzow, President and CEO.

“As the Company’s key performance indicators including revenue and Adjusted EBITDA benefit from the Powervision acquisition and our new Intelligent Invoice Approval product release, we also had approximately $0.3 million of non-recurring expenses associated with the acquisition in this quarter.  The second quarter F2019 will include full quarter consolidated results of Powervision and we look forward to Adjusted EBITDA growth as we complete new sales and new economies of scale,” said Jason Baird, VP, Finance & CFO.

Q1 F2019 Financial Highlights

Three months ended October 31, 2018 compared to October 31, 2017

• Adjusted EBITDA(1)  increased 29% or by $0.2 million from $0.5 million to $0.7 million
• Adjusted EBITDA % Margin(2) increased by 3% from 16% to 19%
• Cash flow from operating activities increased 52% from $0.3 million to $0.5 million
• Overall revenue increased 3% or by $0.1 million from $3.2 million to $3.3 million
• Access and usage fees increased 16% or by $0.5 million from $2.8 million to $3.3 million
• Gross profit remained flat at $2.4 million

Cash Position

The overall cash position of Cortex reduced 51% or $4.2 million from $8.2 million at July 31, 2018, to $4.0 million at October 31, 2018. Net cash provided by operating activities of $0.5 million, in conjunction with the cash position at F2018 provided the flexibility to prudently use $4.8 million for the acquisition of Powervision in September 2018.

1. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, non-recurring charges and share based payments.  Adjusted EBITDA is a non-IFRS financial measure that does not have any standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other reporting issuers.  This measure assists the Company in evaluating the Company’s operating performance against its expectations and against other entities. Please refer to the Company’s MD&A for the quarter and year ended July 31, 2018 for further information on the Company’s use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to Net Income.
2. Adjusted EBITDA % Margin is the Adjusted EBITDA divided by Total revenue.

Cortex’s Management will host a conference call, followed by a question and answer period. 

The details of the conference call are as follows:

Date:	Thursday, December 6th, 2018
Time:	11:00 a.m. Eastern time (9:00 a.m. Mountain time)
Toll-free dial-in number:	1-800-273-9672
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 at 403-219-2838.

A replay of the conference call will be available after the call through December 13, 2018.

Toll-free replay number:	1-800-408-3053
Toll replay number:	1-905-694-9451
Replay ID:	1503476#

About Cortex

Cortex is a service-centric, digital transformation solutions provider focused on revolutionizing B2B document exchange. We help businesses save time and money by replacing traditional paper-based manual systems with AP and AR invoice automation. Companies on the Cortex Network are positioned for success with solutions that offer the scalability and flexibility needed to evolve with their unique business needs. Cortex specializes in the development and delivery of integrated electronic document intake and management solutions using flexible connection methods that leverage existing technologies and processes.

Cortex is currently enabling digital transformation in over 11,000 companies in the Oil & Gas, Mining, Manufacturing and Sports & Entertainment industries.  For more information, please visit www.cortex.net. 

Investor Relations Contacts:

Joel Leetzow	Jason Baird
President and CEO	VP, Finance & CFO
jleetzow@cortex.net	jbaird@cortex.net
403-219-2838	403-219-2838

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 

Cortex Business Solutions Inc. Consolidated Statement of Financial Position (Prepared in Canadian Dollars) (Unaudited)

						October 312018				July 312018
Assets
Current Assets
	Cash and cash equivalents					$	4,026,861			$	8,197,785
	Cash held in escrow for acquisitions						500,000				-
	Short-term investments						60,773				60,000
	Accounts receivable						1,178,127				907,108
	Prepaid expenses						180,148				167,822
							5,945,909				9,332,715
Long-term receivable							109,822				131,785
Deposits							32,379				32,379
Contracts assets							66,179				-
Property and equipment							163,898				148,479
Deferred tax assets							2,661,919				2,758,000
Intangible assets							3,252,888				21,012
Goodwill							4,481,329				-
						$	16,814,323			$	12,424,370
Liabilities
Current Liabilities
	Accounts payable and accrued liabilities					$	1,916,813			$	1,197,295
	Deferred revenue						470,535				309,967
	Current income tax payable						23,458				20,858
	Current portion of obligations under finance lease						22,923				22,923
	Current portion of promissory note						1,528,290				-
							3,962,019				1,551,043
Deferred rent							131,624				141,035
Obligations under finance lease							8,079				13,801
Promissory note							745,479				-
							4,847,201				1,705,879
Shareholders' Equity
Share capital							60,771,418				60,771,418
Accumulated other comprehensive income							632,675				620,433
Contributed surplus							9,933,317				9,881,276
Deficit							(59,370,288	)			(60,554,636	)
							11,967,122				10,718,491
						$	16,814,323			$	12,424,370

Cortex Business Solutions Inc. Consolidated Statement of Income and Comprehensive IncomeFor the three months ended October 31, 2018 and 2017(Prepared in Canadian Dollars) (Unaudited)

					Three months endedOctober 31
						2018				2017
Revenue
	Access and usage fees				$	3,261,753			$	2,809,912
	Integration fees					30,111				86,561
	Project management and other revenue					43,668				338,200
						3,335,532				3,234,673
Cost of Sales						925,357				832,300
Gross Profit						2,410,175				2,402,373
Expenses
	Sales and marketing					663,631				689,969
	Research and development					529,640				477,587
	General and administrative					940,807				797,419
	Severance and termination					-				155,922
						2,134,078				2,120,897
Income before finance income						276,097				281,476
Finance income						21,873				7,096
Income tax expense - current						2,379				2,108
Income tax (recovery) - deferred						(814,629	)			-
Net income					$	1,110,220			$	286,464
Other comprehensive earnings
	Items that may be reclassified subsequently to net income:
	Foreign exchange gain on foreign operations					12,242				13,936
Comprehensive income					$	1,122,462			$	300,400
Net income per share – basic and diluted					$	0.12			$	0.03

Cortex Business Solutions Inc. Consolidated Statement of Changes in Shareholders’ Equity (Prepared in Canadian Dollars) (Unaudited)

	Number of Common Shares	Share Capital		Accumulated Other Comprehensive Income		Contributed Surplus			Deficit			Total Shareholders’ Equity
Balance – July 31, 2017	9,069,983	$	60,562,286	$	591,752	$	9,526,341		$	(64,896,501	)	$	5,783,878
Net income	-		-		-		-			286,464			286,464
Translation of foreign operations	-		-		13,936		-			-			13,936
Compensation units & stock options exercised	21,158		70,290		-		(24,040	)		-			46,250
Stock based compensation	-		-		-		65,947			-			65,947
Balance – October 31, 2017	9,091,141		60,632,576		605,688		9,568,248			(64,610,037	)		6,196,475
Balance - July 31, 2018	9,137,700		60,771,418		620,433		9,881,276			(60,554,636	)		10,718,491
IFRS 15 net opening adjustment	-		-		-		-			74,128			74,128
Balance - August 1, 2018	9,137,700		60,771,418		620,433		9,881,276			(60,480,508	)		10,792,619
Net income	-		-		-		-			1,110,220			1,110,220
Translation of foreign operations	-		-		12,242		-			-			12,242
Stock based compensation	-		-		-		52,041			-			52,041
Balance – October 31, 2018	9,137,700		60,771,418		632,675		9,933,317			(59,370,288	)		11,967,122

Cortex Business Solutions Inc. Consolidated Statement of Cash FlowsFor the three months ended October 31, 2018 and 2017(Prepared in Canadian Dollars) (Unaudited)

					Three months endedOctober 31
						2018				2017
Cash provided by (used in)
Operating activities
Net income					$	1,110,220			$	286,464
Items not affecting cash
	Recovery for deferred taxes					(814,629	)			-
	Stock-based compensation					52,041				65,947
	Amortization					55,812				150,294
	Deferred Rent					(9,411	)			79,923
	Contract Assets					7,949				-
Long term receivables						21,963				(25,974	)
Changes in non-cash working capital						53,631				(242,791	)
Net cash provided by operating activities						477,576				313,863
Financing activities
Proceeds on exercise of compensation units & stock options						-				46,250
Finance lease payments						(5,722	)			(12,993	)
Net cash provided by (used in) financing activities						(5,722	)			33,257
Investing Activities
Cash paid on Powervision acquisition, net of cash assumed						(4,124,141	)			-
Additions to cash held in escrow						(500,000	)			-
Additions to short-term investments						(773	)			-
Acquisition of property and equipment						(30,106	)			(16,231	)
Net cash used in investing activities						(4,655,020	)			(16,231	)
Effect of exchange rate changes on cash and cash equivalents held in foreign currency						12,242				13,933
Cash (outflow) inflow						(4,170,924	)			344,822
Cash, beginning of year						8,197,785				6,248,176
Cash, end of year					$	4,026,861			$	6,592,998
Supplemental cash flow information
	Interest received during the year				$	22,610			$	14,442