NexJ Systems Reports Second Quarter 2016 Results

TORONTO, July 28, 2016 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of enterprise customer management solutions to the financial services industry, today announced financial results for its second quarter ended June 30, 2016.

Highlights

• $15.1 M in revenue for the six month period represents 13% growth over the same period in the prior year
• $396,000 in EBITDA for the six month period is a $1.3 M improvement over the EBITDA loss of $911,000 for the comparative period
• $11 M cash balance at the end of the quarter

Following the quarter, NexJ's CRM solution has been selected by the wealth management division of a top global financial services company for a roll out to over 10,000 users.

"With solid growth year-to-date and positive sales activity, we are on track to deliver another strong year," said William M. Tatham, Chief Executive Officer of NexJ. "We remain committed to delivering profitable growth and continue to execute against that objective."

As part of NexJ's support for the stock and our belief that it is attractively valued, the company will seek TSX approval to re-institute the Normal Course Issuer Bid (NCIB) to buy back up to 1 million additional shares as the current NCIB expires on August 23.

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 August 4, 2016 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 48858897.

NexJ Systems Inc.
Second Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)
			Quarter ended June,			Six Months ended June,
			2016	2015^(1)		2016^(1)	2015^(1)
Revenue:			$			$
	License fees		422	1,321		1,489	2,370
	Professional services		4,788	4,584		9,909	8,543
	Maintenance and support		1,790	1,281		3,690	2,491
			7,000	7,186		15,088	13,404
Expenses:
	Professional services		2,937	3,150		6,062	5,825
	Research and development, net		1,767	1,586		3,882	3,419
	Sales and marketing		1,025	1,328		2,159	2,503
	General and administrative, net		1,157	1,245		2,589	2,568
			6,886	7,309		14,692	14,315
Adjusted EBITDA			114	(123)		396	(911)
	Loss from discontinued operation^(1)		-	1,152		252	2,144
	Impairment of loan receivable		353	-		994	-
	Share-based payment expense		241	117		591	198
	Depreciation and amortization		218	459		430	926
	Lease-exit charges, net		-	351		-	351
Loss from operations			(698)	(2,202)		(1,871)	(4,530)
	Foreign exchange loss (gain)		32	174		905	(452)
	Finance income		(17)	(29)		(35)	(69)
Net loss for the period			(713)	(2,347)		(2,741)	(4,009)

⁽¹⁾  As of January 25, 2016, the Healthcare business unit was spun-off as a new corporation; the net of revenue
and expenses for Healthcare have been presented as part of the loss from discontinued operation for the
quarter and six months ended June 30, 2016 and 2015.

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 loss from discontinued operation, share-based payment expense, depreciation and amortization, impairment charge on non-financial assets, impairment of loan receivable, 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.

About NexJ Systems Inc.
NexJ Systems provides enterprise customer management solutions to the financial services industry. Our solutions include industry-specific customer relationship management (CRM) for multi-channel engagement and collaboration; customer process management (CPM) for client onboarding and KYC; and customer data management (CDM) to deliver a holistic view of customers across line of business and regional data silos. Our solutions integrate information from multiple systems into a unified view to help firms better understand and share information about their customers to increase loyalty, drive cross-sell and improve the customer experience.

Based in Toronto, NexJ has clients throughout North America, Asia Pacific and in Europe. For more information about NexJ visit www.nexj.com, e-mail [email protected], 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, 2015 dated February 18, 2016, 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.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)
			June 30, 2016		December 31, 2015
Assets
			$		$
Current assets:
	Cash and cash equivalents		11,040		14,699
	Accounts receivable		8,075		8,274
	Prepaid expenses and other assets		1,511		968
	Assets held for distribution		-		962
Total current assets			20,626		24,903
Non-current assets:
	Property and equipment		2,209		2,102
	Goodwill		1,753		1,753
	Other assets		260		260
Total non-current assets			4,222		4,115
Total assets			24,848		29,018
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities		4,605		5,424
	Deferred revenue		4,052		4,382
	Provisions		223		223
	Current portion of finance lease liability		148		-
	Liabilities held for distribution		-		964
Total current liabilities			9,028		10,993
Non-current liabilities:
	Accrued liabilities		849		658
	Provisions		112		224
	Finance lease liability		234		-
	Deferred revenue		-		304
Total non-current liabilities			1,195		1,186
Total liabilities			10,223		12,179
Shareholders' equity:
	Share capital		83,146		83,094
	Share purchase loans		(3,622)		(3,622)
	Contributed surplus		6,817		6,293
	Deficit		(71,716)		(68,926)
Total shareholders' equity			14,625		16,839
Total liabilities and shareholders' equity			24,848		29,018

NexJ Systems Inc.
Condensed Interim Consolidated Statements of Comprehensive Loss
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)
			Quarter ended June,			Six Months ended June,
			2016	2015^(1)		2016	2015^(1)
				(Restated)			(Restated)
Revenue:			$	$		$	$
	License fees		422	1,321		1,489	2,370
	Professional services		4,788	4,584		9,909	8,543
	Maintenance and support		1,790	1,281		3,690	2,491
			7,000	7,186		15,088	13,404
Expenses*:
	Professional services		3,004	3,175		6,230	5,877
	Research and development, net		1,848	1,638		4,077	3,504
	Sales and marketing		1,038	1,349		2,189	2,530
	General and administrative, net		1,455	2,074		3,217	3,879
	Impairment of loan receivable		353	-		994	-
			7,698	8,236		16,707	15,790
Loss from operations:			(698)	(1,050)		(1,619)	(2,386)
	Foreign exchange gain (loss)		(32)	(174)		(905)	452
	Finance income		17	29		35	69
			(15)	(145)		(870)	521
Loss from continuing operations:			(713)	(1,195)		(2,489)	(1,865)
Loss from discontinued operations			-	(1,152)		(252)	(2,144)
Loss for the period and comprehensive loss			(713)	(2,347)		(2,741)	(4,009)
Loss per share:
	Basic and diluted from continuing operations		(0.04)	(0.06)		(0.13)	(0.09)
	Basic and diluted from discontinued operation		-	(0.05)		(0.01)	(0.11)
	Basic and diluted		(0.04)	(0.11)		(0.14)	(0.20)
Weighted average number of
common shares outstanding:
	Basic and diluted		20,275	20,459		20,287	20,459
*Share-based payment expense has
been included in expenses as follows:
	Professional service		67	25		168	52
	Research and development, net		81	52		195	85
	Sales and marketing		13	21		30	27
	General and administrative, net		80	19		198	34
			241	117		591	198

⁽¹⁾ As of January 25, 2016, the Healthcare business unit was spun-off as a new corporation; the net of revenue and expenses
for Healthcare have been presented as part of the loss from discontinued operation for the quarter and six months ended
June 30, 2016 and 2015.

NexJ Systems Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)
				Six Months ended June 30,
				2016^(1)		2015^(1)
						(Restated)
Cash flows from (used in) operating activities:				$		$
	Loss for the period:			(2,741)		(4,009)
	Adjustments for:
		Impairment of loan receivable		994		-
		Depreciation and amortization		430		926
		Share-based payment expense		591		198
		Finance income		(35)		(69)
		Foreign exchange loss (gain)		251		(246)
		Loss from discontinued operation		252		2,144
	Change in non-cash operating working capital:
		Accounts receivable		273		(321)
		Prepaid expenses and other assets		(548)		(69)
		Accounts payable and accrued liabilities and provisions		(770)		749
		Deferred revenue		(656)		(1,189)
				(1,959)		(1,886)
Net cash flows used in discontinued operation				(270)		(2,592)
Net cash flows used in operating activities				(2,229)		(4,478)
Cash flows from (used in) financing activities:
		Repurchase of common shares		(159)		-
		Proceeds from exercise of stock options		144		-
		Payment of finance lease liability		(62)		-
Net cash flows used in financing activities				(77)		-
Cash flows from (used in) investing activities:
		Purchase of property and equipment		(103)		(13)
		Advances to NexJ Health Inc.		(994)		-
		Distribution, net of cash		(40)		-
		Interest received		35		69
Net cash flows from investing activities				(1,102)		56
	Effects of exchange rates on cash and cash equivalents			(251)		246
		Decrease in cash and cash equivalents		(3,659)		(4,176)
Cash and cash equivalents, beginning of period				14,699		18,298
Cash and cash equivalents, end of period				11,040		14,122
Supplemental cash flow information:
		Acquisition of property and equipment not yet paid for		30		39
		Acquisition of property and equipment under finance lease		444		-

⁽¹⁾ The six months ended June 30, 2016 and 2015 figures have been presented for the classification of the Healthcare
business as a discontinued operation.

SOURCE NexJ Systems Inc.

Media Contact: Matthew Bogart, 416-227-3708, [email protected]