NexJ Systems Reports Fourth Quarter and Full Year Fiscal 2014 Results

TORONTO, Feb. 19, 2015 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance, and healthcare industries, today announced financial results for its fourth quarter and year ended December 31, 2014.

Financial Highlights for Q4 2014

  • Fourth quarter revenue was $6.3 million, a difference of $1.0M Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $1.9 million or $0.10 per share (basic and diluted) for the quarter ended December 31, 2014 as compared to an adjusted EBITDA loss of $1.8 million or $0.09 per share (basic and diluted) for the comparative period in 2013
  • Net loss was $4.1 million or $0.20 per share (basic and diluted) for the quarter ended December 31, 2014, as compared to a net loss of $3.1 million or $0.15 per share (basic and diluted) for the comparative period in 2013

Financial Highlights Full Year 2014

  • Annual revenue was $25.8 million, a difference of 5% Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $9.3 million or $0.46 per share (basic and diluted) for the year ended December 31, 2014 as compared to an adjusted EBITDA loss of $16.4 million or $0.81 per share (basic and diluted) for the comparative period in 2013
  • Net loss was $11.9 million or $0.58 per share (basic and diluted) for the year ended December 31, 2014, as compared to a net loss of $18.8 million or $0.92 per share (basic and diluted) for the comparative period in 2013

The Financial Services segment of our business has successfully entered the global Corporate Banking, Commercial Banking & Capital Markets verticals and now has charter customers in each.

"We believe the new deals in the financial services segment introduce strategic global growth opportunities for us," said William M. Tatham, Chief Executive Officer of NexJ.  "Our newest product, NexJ Data Governance, is being well received in the market place, and we are confident the financial services segment will be profitable in 2015."

With our patient empowerment solutions, our Healthcare segment is at the forefront of the population health management market. Our selection by global pharmaceutical companies and leading foundations is encouraging and demonstrates the potential of the commercial opportunity.

"Our new bookings in the Healthcare segment signify our transition from the development phase to the commercialization phase.  We have now engaged an investment banker to evaluate financing alternatives for the healthcare business," continued William M. Tatham

Conference Call Information
NexJ will be hosting an earnings report conference call today at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America Toll Free).  Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin.

A replay of the call will be available beginning today at 8:00 p.m. ET through 11:59 p.m. on February 26, 2015 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 77823978.

Non-IFRS Measures

This news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS.  The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.

The term "Adjusted EBITDA" refers to net income/loss before adjusting for share-based payment expense, depreciation and amortization, impairment charge on non-financial assets, lease-exit charges, net, earn-out expense (recovery), foreign exchange gain/loss, finance income, finance costs and income taxes.  "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.

The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS.  Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers.  Investors are cautioned that Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.

The following table reconciles Adjusted EBITDA to net income (loss):



Three months ended

December 31,


Year Ended

December 31,



2014


2013


2014


2013



(in thousands of dollars, except
percentages)


(in thousands of dollars, except
percentages)










Total revenue


$6,347


$7,379


$25,842


$27,314










Net loss


(4,089)


(3,141)


(11,878)


(18,809)

Add back:









Share-based payment expense


20


113


274


695

Depreciation and amortization


357


580


1,714


1,946

Impairment charge


1,887



1,887


Lease-exit charges, net



1,008


(625)


1,008

Earn-out expense (recovery)



(74)



(384)

Foreign exchange gain


(98)


(200)


(553)


(446)

Finance income


(61)


(82)


(265)


(418)

Finance costs


37



126











Adjusted EBITDA


(1,947)


(1,796)


(9,320)


(16,408)

Adjusted EBITDA margin


(30)%


(24)%


(36)%


(60)%

About NexJ Systems Inc.
NexJ is a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance and healthcare industries. Our next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.

Based in Toronto, NexJ has clients throughout North America, Europe and Asia Pacific. For more information about NexJ, visit www.nexj.com, e-mail info@nexj.com, or call 416-222-5611. Join us on LinkedIn, follow us on Twitter, subscribe to our YouTube channel, like us on Facebook or hang out with us on Google+.

NexJ Forward-looking Statement

Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.

Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company's customers and the marketplace of new technologies and solutions; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company's competitive position in the CRM market and its ability to take advantage of future opportunities in this market; (vii) the Company's ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the CRM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.

The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our dependence on a limited number of customers and large project size; (ii) fluctuation in our quarterly operating results; (iii) our dependence on key personnel and our compensation structure; (iv) risks associated with managing large and complex software implementation projects; (v) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (vi) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (vii) market acceptance of our products and services; (viii) commercial success of products resulting from our investment in research and development; (ix) our success in expanding sales into new international markets; * risks associated with expansion into healthcare and other new industry verticals; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) global financial market conditions; (xviii) failure to manage our growth successfully; and (xix) failure to successfully manage and integrate acquisitions.

For additional information with respect to risks and other factors which could occur, see the Company's most recently filed Annual Information Form for the year ended December 31, 2014 dated February 19, 2015, and other securities filings with the Canadian securities regulators available on www.sedar.com.  Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NexJ Systems Inc.





Consolidated Statements of Financial Position





(Expressed in thousands of Canadian dollars)





(Unaudited)












December 31, 2014


December 31, 2013






Assets







$


$

Current assets:






Cash and cash equivalents


18,298


29,293


Accounts receivable


7,853


7,246


Prepaid expenses and other assets


1,448


1,727

Total current assets


27,599


38,266






Non-current assets:






Property and equipment


2,472


3,014


Intangible assets


1,756


1,643


Goodwill


2,617


3,640


Other assets


260


260

Total non-current assets


7,105


8,557






Total assets


34,704


46,823






Liabilities and Shareholders' Equity










Current liabilities:






Accounts payable and accrued liabilities


4,619


4,677


Deferred revenue


4,726


5,021


Provisions


121


572


Contingent consideration


678


-

Total current liabilities


10,144


10,270






Non-current liabilities:






Accrued liabilities


391


596


Provisions


234


742


Deferred tax liability


16


-


Deferred revenue


238


212

Total non-current liabilities


879


1,550






Total liabilities


11,023


11,820






Shareholders' equity:






Share capital


83,306


83,018


Share purchase loans


(3,622)


(3,622)


Contributed surplus


5,783


5,515


Deficit


(61,786)


(49,908)

Total shareholders' equity


23,681


35,003






Total liabilities and shareholders' equity


34,704


46,823

 

NexJ Systems Inc.

Consolidated Statements of Comprehensive Loss

(Expressed in thousands of Canadian dollars, except per share amounts)

(Unaudited)












Three Months ended December 31


Year ended December 31



2014


2013


2014


2013










Revenue:


$


$


$


$


License fees


1,244


1,328


3,451


2,289


Professional services


3,872


4,502


16,990


19,016


Maintenance and support


1,231


1,549


5,401


6,009



6,347


7,379


25,842


27,314










Expenses*:










Professional service costs


2,835


3,230


12,402


15,123


Research and development, net


2,303


2,691


9,825


13,448


Sales and marketing


1,526


1,731


6,412


8,251


General and administrative


2,007


3,150


7,886


10,165


Impairment charge


1,887


-


1,887


-



10,558


10,802


38,412


46,987










Loss from operations:


(4,211)


(3,423)


(12,570)


(19,673)











Foreign exchange gain


98


200


553


446


Finance income


61


82


265


418


Finance costs


(37)


-


(126)


-



122


282


692


864










Loss before income taxes


(4,089)


(3,141)


(11,878)


(18,809)











Income taxes


-


-


-


-










Net Loss and comprehensive loss 


(4,089)


(3,141)


(11,878)


(18,809)










Loss per share:










Basic and diluted


(0.20)


(0.15)


(0.58)


(0.92)










Weighted average number of common shares









outstanding:










Basic and diluted


20,459


20,374


20,403


20,377










*Share-based payment expense has been









included in expenses as follows:










Professional service costs


13


46


133


230


Research and development, net


5


53


47


193


Sales and marketing


(5)


(16)


38


108


General and administrative


7


30


56


164












20


113


274


695

 

NexJ Systems Inc.







Consolidated Statements of Cash Flows







(Expressed in thousands of Canadian dollars)







(Unaudited)







Years ended December 31, 2014 and 2013

















2014



2013








Cash flows from (used in) operating activities:



$



$


Loss for the period:



(11,878)



(18,809)


Adjustments for:









Depreciation and amortization



1,714



1,946



Share-based payment expense



274



695



Finance income



(265)



(418)



Finance costs



126



-



Foreign exchange gain



(457)



(333)



Impairment charge



1,887



-


Change in non-cash operating working capital:









Accounts receivable



(565)



2,267



Income tax receivable



-



146



Prepaid expenses and other assets



881



(735)



Accounts payable and accrued liabilities and provisions



(1,916)



(1,962)



Deferred revenue










(449)



(104)

Net cash flows used in operating activities



(10,648)



(17,307)








Cash flows from (used in) financing activities:









Exercise of employee stock options



-



25



Proceeds from repayment of loan



(496)



-



Repayment of bank indebtness



(66)



-



Repurchase of common shares



(218)



(107)



Interest paid



(4)



-

Net cash flows used in financing activities



(784)



(82)








Cash flows from (used in) investing activities:









Purchase of property and equipment



(285)



(332)



Interest received



265



418

Net cash flows from (used in) investing activities



(20)



86









Effects of exchange rates on cash and cash equivalents



457



333










Decrease in cash and cash equivalents



(10,995)



(16,970)








Cash and cash equivalents, beginning of year



29,293



46,263








Cash and cash equivalents, end of year



18,298



29,293








Supplemental cash flow information:









Acquisition of property and equipment not yet paid for



-



2

 

SOURCE NexJ Systems Inc.

For further information: Matthew Bogart, Senior Director, Corporate Communications, NexJ Systems Inc., 416-227-3708, Matthew.bogart@nexj.com

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