NexJ Systems Reports Third Quarter Fiscal 2014 Results

TORONTO, Oct. 30, 2014 /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 third quarter ended September 30, 2014.

Financial Highlights for Q3 2014

• Third quarter revenue was $5.2 million, a difference of 21% Y/Y
• Adjusted EBITDA (as defined below) was a loss of $3.2 million or $0.16 per share (basic and diluted) for the quarter ended September 30, 2014 as compared to an adjusted EBITDA loss of $3.9 million or $0.19 per share (basic and diluted) for the comparative period in 2013
• Net loss was $3.4 million or $0.17 per share (basic and diluted) for the quarter ended September 30, 2014, as compared to a net loss of $3.8 million or $0.19 per share (basic and diluted) for the comparative period in 2013

Financial Highlights Year-to-Date 2014

• Nine month revenue was $19.5 million, a difference of 2% Y/Y
• Adjusted EBITDA (as defined below) was a loss of $7.4 million or $0.36 per share (basic and diluted) for the nine months ended September 30, 2014 as compared to an adjusted EBITDA loss of $14.6 million or $0.72 per share (basic and diluted) for the comparative period in 2013
• Net loss was $7.8 million or $0.38 per share (basic and diluted) for the nine months ended September 30, 2014, as compared to a net loss of $15.7 million or $0.77 per share (basic and diluted) for the comparative period in 2013

"We are very pleased with new bookings.  Our first corporate banking contract in Asia-Pacific opens new markets for us," said William M. Tatham, Chief Executive Officer of NexJ.  "We also believe our new contract in healthcare signifies the start of the commercialization phase for NexJ Health."

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 November 6, 2014 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 22642438.

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, 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 September 30,		Nine months ended September 30,
	2014	2013	2014	2013
	(in thousands of dollars, except percentages)		(in thousands of dollars, except percentages)
Total revenue	$5,215	$6,623	$19,495	19,935
Net loss	(3,377)	(3,779)	(7,789)	(15,668)
Add back:
Share-based payment expense	80	137	254	582
Depreciation and amortization	510	470	1,357	1,366
Lease-exit charges, net	—	—	(625)	—
Earn-out expense (recovery)	—	(745)	—	(310)
Foreign exchange loss (gain)	(398)	80	(455)	(246)
Finance income	(53)	(90)	(204)	(336)
Finance Cost	50	—	89	—
Adjusted EBITDA	(3,188)	(3,927)	(7,373)	(14,612)
Adjusted EBITDA margin	(61%)	(59%)	(38%)	(73%)

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 [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 may contain words considered forward-looking statements or information under applicable securities laws. These statements are based on NexJ'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. NexJ's assumptions, although considered reasonable by the company at the date of this press release, may prove to be inaccurate and consequently its actual results could differ materially from the expectations set out herein. For additional information with respect to risks and other factors which could occur, see NexJ's securities filings with the OSC and other securities regulators. NexJ securities filings are available on www.sedar.com.  Unless otherwise required by applicable securities laws, NexJ 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)
		September 30, 2014		December 31, 2013
Assets
		$		$
Current assets:
	Cash and cash equivalents	20,310		29,293
	Accounts receivable	6,706		7,246
	Prepaid expenses and other assets	1,578		1,727
	Total current assets	28,594		38,266
Non-current assets:
	Property and equipment	2,666		3,014
	Intangible assets	1,916		1,643
	Goodwill	4,504		3,640
	Other assets	260		260
Total non-current assets		9,346		8,557
Total assets		37,940		46,823
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable and accrued liabilities	4,594		4,677
	Deferred revenue	4,105		5,021
	Provisions	119		572
	Contingent consideration	641		-
Total current liabilities		9,459		10,270
Non-current liabilities:
	Accrued liabilities	451		596
	Provisions	264		742
	Deferred revenue	-		212
	Deferred tax liability	16		-
Total non-current liabilities		731		1,550
Total liabilities		10,190		11,820
Shareholders' equity:
	Share capital	83,300		83,018
	Share purchase loans	(3,622)		(3,622)
	Contributed surplus	5,769		5,515
	Deficit	(57,697)		(49,908)
Total shareholders' equity		27,750		35,003
Total liabilities and shareholders' equity		37,940		46,823

NexJ Systems Inc.
Condensed Interim Consolidated Statements of Comprehensive Loss
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)
		Three Months ended September,			Six Months ended September,
		2014	2013		2014	2013
Revenue:		$	$		$	$
	License and subscription fees	639	336		2,207	961
	Professional services	3,405	4,757		13,118	14,514
	Maintenance and support	1,171	1,530		4,170	4,460
		5,215	6,623		19,495	19,935
Expenses*:
	Professional service costs	2,710	3,573		9,567	11,893
	Research and development, net	2,378	3,326		7,522	10,756
	Sales and marketing	1,595	1,412		4,886	6,519
	General and administrative, net	2,310	2,101		5,879	7,017
		8,993	10,412		27,854	36,185
Loss from operations:		(3,778)	(3,789)		(8,359)	(16,250)
	Foreign exchange gain (loss)	398	(80)		455	246
	Finance income	53	90		204	336
	Finance costs	50	-		89	-
		401	10		570	582
Loss before income taxes		(3,377)	(3,779)		(7,789)	(15,668)
	Income taxes	-	-		-	-
Net Loss and comprehensive loss		(3,377)	(3,779)		(7,789)	(15,668)
Loss per share:
	Basic and diluted	(0.17)	(0.19)		(0.38)	(0.77)
Weighted average number of common shares
outstanding:
	Basic and diluted	20,458	20,378		20,385	20,372
*Share-based payment expense has been
included in expenses as follows:
	Professional service costs	39	59		120	184
	Research and development, net	25	5		42	140
	Sales and marketing	6	34		43	124
	General and administrative, net	10	39		49	134
		80	137		254	582

NexJ Systems Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)
Nine Months ended September 30, 2014 and 2013
			2014		2013
Cash flows from (used in) operating activities:			$		$
	Loss for the period:		(7,789)		(15,668)
	Adjustments for:
		Depreciation and amortization	1,357		1,366
		Share-based payment expense	254		582
		Finance income	(204)		(336)
		Finance costs	89		-
		Foreign exchange gain (loss)	(310)		(190)
	Change in non-cash operating working capital:
		Accounts receivable	582		675
		Prepaid expenses and other assets	303		(874)
		Income taxes receivable	-		146
		Accounts payable and accrued liabilities and provisions	(1,419)		(2,863)
		Deferred revenue	(1,308)		(1,036)
Net cash flows used in operating activities			(8,445)		(18,198)
Cash flows from (used in) financing activities:
		Repurchase of common shares	(218)		-
		Repayment of bank indebtedness	(66)		-
		Repayment of loan	(496)		-
		Exercise of employee stock options	-		25
		Interest paid	(3)		-
Net cash flows from (used in) financing activities			(783)		25
Cash flows from (used in) investing activities:
		Purchase of property and equipment	(269)		(332)
		Interest received	204		336
Net cash flows from (used in) investing activities			(65)		4
	Effects of exchange rates on cash and cash equivalents		310		190
		Decrease in cash and cash equivalents	(8,983)		(17,979)
Cash and cash equivalents, beginning of period			29,293		46,263
Cash and cash equivalents, end of period			20,310		28,284
Supplemental cash flow information:
		Acquisition of property and equipment not yet paid for	13		-

SOURCE: NexJ Systems Inc.

Matthew Bogart, Senior Director, Corporate Communications, NexJ Systems Inc., 416-227-3708, [email protected]